1.1 The current situation

In my view, death taxation remains a neglected area of law, as to date limited progress has been made towards addressing the issues arising from the application of death taxes in an international context while the current academic literature lags behind in addressing this topic due to a lack of international developments. First, from a revenue perspective, death taxes are not considered “profitable” for the states; revenue derived from such taxes represents a meagre percentage of the total state budget, and collection costs often exceed the revenue that the states earn through death taxation.1 Second, states seem to focus on cross-border corporate income tax issues, especially after 2015, as a result of the base erosion and profit shifting (BEPS) project of the Organisation for Economic Cooperation and Development (OECD). Besides, taxes on income, profits and capital gains represent an essential source of tax revenue for the states that justifies – to a certain extent – the focus of the states on cross-border corporate income tax issues. Finally, not all states levy death taxes and some states have even abolished their death taxes in the last 20 years.

These three reasons (low revenue, increasing interest in cross-border corporate income tax issues, no imposition or abolition of death tax laws) may explain – to a certain extent – the modest interest of states and international organisations (in particular, the OECD and the European Union) in changing the status quo around death taxes. This may not necessarily be a burden from the perspective of a state but it certainly poses problems for individuals. In that regard, I observe that the 2015 report of the European Commission (EC) expert group “Ways to tackle inheritance cross-border tax obstacles facing individuals within the EU” (hereinafter referred to as: “the 2015 inheritance tax report” or “the report”) represents the most recent effort discussing the problems which death taxes (and particularly inheritance taxes) may pose to individuals.2

In my view, the status quo around death taxes and their problems can be examined from both a domestic (section 1.1.1) and a cross-border perspective (section 1.1.2).