(This article was originally published on www.practicallaw.com – Private Client Service)

The European Commission has launched a public consultation on problems related to cross-border inheritance tax (IHT) within the EU and possible solutions to these problems. The consultation will run until 22 September 2010. Several cross-border IHT cases have been referred to the European Court of Justice (ECJ) in recent years. Among the problems that can occur in cross-border inheritance situations are double taxation and discriminatory application of IHT rules. When these problems arise, they can result in very high overall IHT rates and may, therefore, deter citizens and businesses from moving and operating freely within the internal market. The public consultation will play a valuable role in helping the Commission to establish the extent of any problems in this area and to determine what measures need to be taken with regard to cross-border IHT.

This article examines the background to the consultation, including EU competence over taxation, ECJ case law on inheritance and gift taxes, and the impact of the draft Regulation on succession law.

European Commission consultation on problems related to cross-border inheritance tax - August 2010.pdf