Unfair double tax for owners of properties outside the UK

The EU Commission has launched a consultation on ways to tackle cross border inheritance tax obstacles within the EU.  European property owners are amongst those waiting to hear the outcome that aims to tackle unfair cross-border inheritance taxes levied by member states which can leave families paying taxes twice.

The Commission has called for the review to tackle three main concerns, with a view to establishing an EU wide protocol to determine what tax is paid by whom in each state:

• The inheritance tax rules applied by member states often impose higher levels of tax on the estates of citizens who lived in other member states or who owned assets in other countries.
• There can be instances of multiple taxation when a person dies, because some states tax the estate of the deceased, as happens in the UK, but other states tax the beneficiary.  Although double taxation can be avoided where there is an agreement between states, currently there are only 33 double taxation agreements between EU states out of a possible 351.
• The Commission is concerned that these problems are discouraging EU citizens from exercising fully their right to move, and own property, freely within the EU.

An EU wide protocol to determine what tax is paid by whom in each state would provide clear guidance.  The current situation runs counter to the EU rules on free movement of capital and a number of inheritance tax disputes have been successfully referred to the European Court of Justice since 2003 on these grounds.

If you would like further advice and help with assets and property outside the UK please contact either Andrew Procter or David Stokes on 01482 324591 or email acp@sjplaw.co.uk or dps@sjplaw.co.uk.

Back to news listing