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ECJ Judgment on German Inheritance Tax. Spain in next?

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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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