Lunch-Debate on Inheritance Tax – 17 May 2016

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On Tuesday 17 May 2016, the CNUE held a lunch-debate in its offices on the topic “Inheritance tax: the missing puzzle in Regulation 650/2012?”. Before an audience including representatives of the European institutions and the Member States, the CNUE wanted to give a first overview of the application of the Regulation on international successions since 17 August 2016. In this context, the issue of taxation is important, since although it is expressly excluded from the scope of the regulation, the reality on the ground shows that it remains significant.

Indeed, in the absence of European legislation that would require unanimity between the Member States, bilateral conventions settle the risks of double taxation. Yet these conventions do not cover all countries and, in their absence, the possibilities of double or even multiple taxation are very real. As recalled by Mr Paolo Pasqualis, CNUE President, the European Commission created an expert group, which met between 2014 and 2015, to find practical answers to these difficulties. The notariat participated in this group.

However, Mr Bertrand Savouré, a notary in Paris and member of the Commission’s expert group, stressed that application of EU Regulation 650/2012 also had indirect consequences on taxation. In most Member States, the portion transmitted to the heir is taxed, rather than the estate. Yet thanks to EU Regulation 650/2012, it is possible to determine the law applicable to a succession and this law determines the portion destined for the heirs. Consequently, the choice of inheritance law has an impact on the settlement of the succession from a tax perspective. To conclude, Mr Savouré suggested that, following the example of the succession regulation, the European Commission could propose to move towards a single inheritance tax based on the place of residence, according to the “one succession-one tax” principle.

Mr Albert Raedler, a representative from the European Commission’s DG TAXUD, elaborated in detail on the Commission’s follow-up to this issue from an initiative launched in 2005 as part of the Lisbon strategy to the recent implementation of the expert group. Also observing the difficulties there would be in proposing a solution at European level, he stressed that the Court of Justice case law had nonetheless enabled some progress in terms of respect for the European Treaties concerning tax discrimination and certain cases of multiple taxation (Judgments C-364/01 Barbier, C-51/03 van Hilten-van der Heijden, C-256/06 Jaeger, C-510/08 Mattner, C-181/12 Welte).

Finally, Mr Stephan Matyk, a representative from the European Commission’s DG Justice, drew some conclusions from the speeches, thanking the European notariat for the precious feedback regarding the practical implementation of EU Regulation 650/2012 and, in particular, its indirect impact on the question of taxation.