The Commission said it hoped to draw on the ‘expertise and experience of all parties interested in commenting on cross-border inheritance tax issues’ including comment from individual citizens, member states, tax administrations, and tax practitioners.
Prior to 2003 the Commission said it did not feel it was necessary for it to examine whether or not the inheritance tax rules of member states were compatible with EU Treaty rules. However, since then it has ruled in eight inheritance tax cases member states’ national courts had referred for preliminary hearings. Furthermore, the Commission said it is receiving an increasing number of complaints about cross-border inheritance and therefore the issue seems to be one of ‘growing concern for EU citizens’.
In six of the eight cases on which the Court of Justice of the EU ruled it found the inheritance tax laws of the member states in question were in fact incompatible with the EU Treaty rules on free movement of capital because the laws provided for less favourable rules where either the assets or the beneficiaries were located outside the member state under examination.
In addition to these cases, the Commission said research it has conducted so far indicates citizens and businesses can face two types of inheritance tax problems. First, they may be exposed to ‘discriminatory application of member states’ inheritance tax rules in cross-border situations. And second, there is the risk of ‘unrelieved double or even multiple taxation of a single inheritance by several member states, which, in the absence of appropriate tax relief mechanisms, could lead to an excessively high rate of overall taxation’.
The Commission said it hoped through conducting this consultation and through the completion of its research it would obtain a real picture of the problem and its financial impact on EU citizens and can find solutions to those problems identified.
The consultation was launched on the 25 June and will close on 22 September 2010. To view and add your thoughts on the issue click here.
