3.1.4.1 Introduction

Administrative difficulties associated with a cross-border inheritance and donation constitute the fourth important problem of cross-border inheritances and donations. Cross-border inheritances and donations are often exposed to difficulties of administrative nature simply because of their cross-border element. The establishment of worldwide inheritance and gift tax jurisdiction based on the deceased’s or donor’s personal nexus often gives rise to a situation where the tax is also levied on foreign-located inherited or donated assets. Thus, the state concerned must be aware of the deceased’s or donor’s total property, including property located abroad. In the same vein, the persons who are liable to pay the inheritance or gift tax may not reside in the state that establishes worldwide tax jurisdiction due to the deceased’s personal nexus with its territory. This means that they must pay the tax in the latter state and, thus, deal with a foreign body and a procedure with which they are not familiar.

The 2015 inheritance tax report lists the administration of inheritance and gift taxes as one of the three significant obstacles in a cross-border setting.1 While the 2015 inheritance tax report is EU-orientated, I recognise that these obstacles can be identified in cases involving both EU and international inheritances and donations. Under the report, the administration of inheritance taxes runs the risk of the following barriers:

I have decided to elaborate on the diversity of the obstacles arising with respect to the administration of cross-border inheritances and donations by means of an example.