The EU Commission has issued recommendations on how to tackle problems related to cross-border inheritance tax in the EU. The recommendations include broader and more flexible application of national double taxation relief measures and adherence to the Treaty principles on non-discrimination.

EU citizens that inherit foreign property are frequently faced with a tax bill from more than one Member State. The Commission acknowledges that in extreme cases the total value of a cross-border inherited asset might have to be paid in tax, because several Member States may claim taxing rights on the same inheritance or tax foreign inheritances more heavily than local inheritances.

The Communication from the Commission identifies two main problems when it comes to cross-border inheritance tax in the EU.

The first is double taxation, where more than one Member State claims the right to tax the same inheritance. The Commission does not propose harmonisation of Member States’ inheritance tax rules but instead recommends broader and more flexible application of national double taxation relief measures to reach a pragmatic, speedy and cost-effective solution to the significant tax burdens facing many citizens.

The second inheritance tax problem identified by the Commission is that citizens can encounter discrimination. The Commission's paper sets out the principles on non-discriminatory inheritance and gift tax, using case-law to support the principles. According to the Commission, this will help Member States to bring their provisions into line with EU law.

The Commission will launch discussions with Member States to ensure appropriate follow up to the recommendation. The Commission will present an evaluation report showing how the situation has evolved over a three year period, and decide whether further measures are necessary at national or EU level.

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