3.3.3.2 Double or multiple non-taxation

As in the case of double or multiple taxation, very little progress has been made towards addressing the problem of double or multiple non-taxation of cross-border inheritances and donations. In that regard, I observe that Article 4.2. of the EC’s recommendation 2011/856/EU deals with double non-taxation issues. More specifically, Article 4.2. of the recommendation precludes the EU Member State of the objective nexus to tax the movable property (other than movable property connected to a PE) “[p]rovided that such tax is applied by another Member State by reason of the personal link of the deceased and/or the heir to that other Member State”. This Article is particularly effective in situations involving more than two EU Member States. This is because the EU Member State of the objective nexus is precluded from exercising its taxing rights only if the EU Member State of the deceased’s or beneficiaries’ personal nexus taxes. On the contrary, the EU Member State of the objective nexus may still exercise its taxing rights if no tax is levied by either the EU Member State of the deceased’s or the beneficiaries’ personal nexus. Therefore, Article 4.2. deals both with double or multiple taxation and double or multiple non-taxation issues.

However, as previously noted, the EC’s expert group was of the view that several years have passed since the adoption of the recommendation, and it seems that it has failed to generate sufficient action and is not going to lead to any fundamental change in the approach of EU Member States to the problem of double taxation of inheritances.1 This is also true, in my view, for the problem of double non-taxation of inheritance in general (to which the report of the EC’s expert group refers, in places, despite the fact that the group did not classify double or multiple non-taxation as an obstacle of cross-border inheritances).