ECJ Judgment on German Inheritance Tax. Spain in next?


11 Nov. 2013

The European Court of Justice has recently (17 October) stated that the taxable base of the inheritance tax of a non-resident heir, where he is partially subject to inheritance tax in Germany, is less than that of a resident or non-resident heir who is wholly subject to that tax in that Member State, and this is incompatible with free movement of capital (case C-181/12).

The European Commission has referred also Spain to the Court of Justice because non-residents in Spain are not entitled to enjoy tax reductions set by the Spanish Regions on the Inheritance and Gift Tax (case C-127/12) so it is expected a similar judgment soon.

The Supreme Court of Spain has raised a question before the Constitutional Court based upon similar grounds. In fact, current legislation creates a huge problem for those families whose kids have gone abroad to study or work as they become non-resident in Spain.

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