EU action on multiple tax

Friday, 01 February 2013
The key messages from the recent joint European Commission-STEP conference on inheritance tax

The tax services of the European Commission were delighted to cooperate with STEP and Schuman Associates in organising a conference on inheritance tax in Brussels on 12 November 2012.

The Commission believes an important element of putting the EU economy back on track is enabling EU citizens to exercise their right to move, work and invest freely across borders in the EU. For that reason it has in recent years been devoting increased attention to the tax problems that inhibit citizens from exercising their rights within the EU Internal Market and it has taken several steps to tackle these tax problems. Its inheritance tax package of 15 December 20111 was one such step.

The aim of the conference was to allow tax experts from the public and private sectors to exchange views on the package, which included a recommendation concerning steps member states could individually adopt to prevent double and multiple taxation of inheritances, and a Commission-staff working paper that sets out principles for non-discriminatory inheritance tax systems.

From the Commission’s perspective, the conference was a success, as we received useful feedback on the package, as well as new ideas and suggestions for follow-up work. Regular consultation of experts and stakeholders is and will continue to be vital to ensure that the Commission is best placed to make proposals that are in the general European interest.

Richard Frimston TEP (Chair, STEP EU Committee, UK) chaired the conference. The speakers included Prof Guglielmo Maisto (Catholic University of Piacenza, Italy), Timothy Lyons QC TEP (STEP EU Committee expert, UK), Vincent Farrugia (Member of the European Economic and Social Committee and rapporteur for the Committee’s opinion on the Commission’s inheritance tax package) and a panel of experts from Malta, Spain, Belgium, France and Germany.

All experts acknowledged the need for action to combat cross-border problems in inheritance, particularly problems of double taxation, although there were differences of opinion regarding how this should be achieved. Several welcomed the Commission’s recommendation and thought a soft law approach was best, but others argued that the Commission should propose EU binding legislation to tackle the problems in a definitive way.

Feedback from delegates

‘Excellent level of speakers, and I was directly interested in the topic as I am about to publish a book on Swiss, national and international tax aspects connected to cross-border succession. The developments at European level are important, including for third-party states such as Switzerland.’

Sibilla Cretti TEP, Avocate au Barreau de Neuchâtel

‘An overwhelming sense that I was witness to law in the making, which was very exciting. It was humbling to be surrounded by such a wealth of experience from all over Europe and some of the best minds in the industry; the highlight for me was Timothy Lyons QC putting the case so succinctly.’

Catherine Pugsley, Solicitor, Como, Italy

Prof Maisto stressed the importance of a clear definition of immovable property (and its location) and the value of guidance on the definition of the state of residence in tie-breaker situations, suggesting that personal ties should take precedence over occupational ties. He also suggested that a reciprocity rule could be considered, whereby member states would only have to allow tax relief in respect of taxation in member states which themselves also allow tax relief. Timothy Lyons suggested that since the EU is committed to observing human rights law (Art 6.3 of the EU Treaty) and member states have a duty of sincere cooperation to attain the union’s objectives, EU member states may even have a legal obligation to prevent double taxation in the internal market in some circumstances. Vincent Farrugia suggested that the Commission should establish a tax observatory to scrutinise all tax obstacles that citizens face in the single market.

The panel of speakers focused on the cross-border inheritance tax problems arising in their respective countries.

Questions from the floor included the double-tax problems that can arise in the case of trusts and the need for coherence between EU civil-law rules applicable to cross-border inheritances2 and the tax rules applicable to such inheritances.

We have taken note of the above points as well as the many other ideas, comments and questions raised by speakers and participants. The Commission will, as guardian of the treaties, continue to act against discriminatory features of member states’ inheritance tax rules. In addition, it has committed itself to preparing a report in three years’ time evaluating member states’ inheritance tax rules and to taking appropriate steps, including proposing legislation if necessary, if multiple tax problems persist. We will consult stakeholders formally as part of this.

Comments and suggestions may be made by email

  • 1See ‘EU Commission tackles IHT cross-border obstacles,’ by European Commissioner Algirdas Šemeta, in the STEP Journal, Vol20 Iss2 (March 2012), pages 16–17.
  • 2See Regulation (EU) No 650/2012 of 4 July 2012.
Author block
Philip Kermode

Philip Kermode is the Director of Directorate D (direct taxation, tax coordination and economic analysis and evaluation) in the European Commission’s Directorate General for Taxation and the Customs Union.

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