News December 2016: ECJ ruling on German inheritance tax for foreigners
The European Court of Justice (ECJ) has recently once again made it clear that the German legislator is not permitted to treat Germans, citizens of third countries and nationals of other EU member states and to some extent even those who are citziens for third countries unequally for the purposes of inheritance tax (ECJ Hünnebeck case, ECJ decision of 8 June 2016, CS 459/14). The ECJ had already in 2010 found the German tax-free allowance of EUR 2000 for non-Germans as opposed to an allowance many times greater for resident taxpayers to be incompatible with European law (ECJ Mattner case, ECJ decision of 22 April 2010, CS 510/08). In reaction to that 2010 decision, the German legislator gave foreigners at least the possibility of making a special application to be treated like residents (Sec. 3.2 of the Inheritance Tax Act, ErbStG). But these arrangements are now void as well and the German legislator must put arrangements in place which satisfy the requirements set by the ECJ in accordance with the principle of freedom of movement of capital within the EU.
News August 2015: New German Long-Arm Statute
For deaths occurring after Aug. 17th. 2015, when new EC Regulation No. 650/12 comes into effect, Germany´s statutory inheritance right will also cover real estate located in England, the USA, Hong Kong, Australia and many other common law jurisdictions if the deceased´s last place of habitual residence was in Germany.
News January 2015: Spanish legislator enacts new law for inheritance and gift taxes in relation to non-residents.
Last Autumn, the European Court of Justice declared existing Spanish inheritance and gift tax legislation to be in breach of EU law because it discriminates between residents and non-residents in Spain (ECJ judgement of 3 September 2014 (Case No. C-127/12)). The Spanish legislator has now reacted to this. With effect from 1 January 2015, the various Spanish regions have what amounts to general precedence in inheritance and gift tax matters (Law Number 26/2014 of 27 Nov. 14). This is in most cases beneficial for non-Spanish legatees and donees, as the allowances under these regional tax arrangements are generally higher than those for Spanish federal inheritance tax, and the rates of tax are lower.