The European Commission has announced the launch of a consultation on tackling cross-border inheritance tax obstacles within the European Union.
In a research paper commissioned for release alongside the consultation, it was noted that there are several issues with respect to cross-border inheritance tax.
In particular, the paper notes that domestic rules on inheritance tax vary substantially among the 27 member states of the European Union. A majority of the 27 member states (18) have an inheritance or an estate tax, which is respectively levied on the heirs or the estate of a deceased person. Out of these 18 member states, 15 have an inheritance tax, and 4 have an estate tax. Denmark is the only member state with both inheritance tax and estate tax. Thus, nine member states impose neither an inheritance tax nor an estate tax.
The paper notes, in particular, two internal market problems for discussion:
Firstly, that cross-border discrimination may arise if non-domestic assets and/or liabilities are subjected to higher levels of inheritance taxes than equivalent domestic categories. Secondly, assets and liabilities may end up being taxed for inheritance purposes in more than one EU tax jurisdiction, potentially leading to very high levels of taxation. Both problems arise from the fact that EU citizens own assets outside their home member state and may have relatives as well in other EU member states.
The paper goes on to discuss various solutions, but the Commission has in addition called on all stakeholders, including the public, businesses, member states, tax administrations, intergovernmental, non-governmental and business organizations, tax practitioners and academia, to provide their views on the matter. Comments are to be received until September 22.
In a research paper commissioned for release alongside the consultation, it was noted that there are several issues with respect to cross-border inheritance tax.
In particular, the paper notes that domestic rules on inheritance tax vary substantially among the 27 member states of the European Union. A majority of the 27 member states (18) have an inheritance or an estate tax, which is respectively levied on the heirs or the estate of a deceased person. Out of these 18 member states, 15 have an inheritance tax, and 4 have an estate tax. Denmark is the only member state with both inheritance tax and estate tax. Thus, nine member states impose neither an inheritance tax nor an estate tax.
The paper notes, in particular, two internal market problems for discussion:
Firstly, that cross-border discrimination may arise if non-domestic assets and/or liabilities are subjected to higher levels of inheritance taxes than equivalent domestic categories. Secondly, assets and liabilities may end up being taxed for inheritance purposes in more than one EU tax jurisdiction, potentially leading to very high levels of taxation. Both problems arise from the fact that EU citizens own assets outside their home member state and may have relatives as well in other EU member states.
The paper goes on to discuss various solutions, but the Commission has in addition called on all stakeholders, including the public, businesses, member states, tax administrations, intergovernmental, non-governmental and business organizations, tax practitioners and academia, to provide their views on the matter. Comments are to be received until September 22.
