3.3.3.1 Double or multiple taxation

I observe that at the EU level very little progress has been made towards addressing the problem of double or multiple taxation of cross-border inheritances and donations. To start with, the EU fundamental freedoms do not provide protection against juridical double taxation, as first ruled by the Court in its judgment in Kerckhaert and Morres (C-513/04).1 Although in the inheritance tax case Van Hilten (C-513/03) the Court did raise the importance of the unilateral credit for the foreign inheritance tax by the state of the deceased’s extended residence (in the context of the Netherlands ten-year residence rule), it became apparent from its subsequent judgment in Block (C-67/08) that the EU Member States’ legislatures are not obliged “[t]o adapt their own tax systems to the different systems of tax of the other Member States”2

“30. Community law, in the current stage of its development and in a situation such as that in the main proceedings, does not lay down any general criteria for the attribution of areas of competence between the Member States in relation to the elimination of double taxation within the European Community. Consequently, […] no uniform or harmonisation measure designed to eliminate double taxation has as yet been adopted at Community law level (see Kerckhaert and Morres, paragraph 22, and Columbus Container Services, paragraph 45).”3

Although to date, such a uniform or harmonisation measure has not been proposed in the EU (albeit possible, in principle, under Article 115 TFEU), a coordinating measure had been proposed in 2011. This measure is the EC’s recommendation 2011/856/EU of 15 December 2011 regarding relief for double taxation of inheritances (hereinafter: the “EC’s recommendation” or the “recommendation”). The recommendation aims to coordinate the EU Member States’ systems on relief for double taxation of inheritances and donations. In the EC’s view, if the EU Member States follow the recommendation and integrate its provisions in their national inheritance and gift tax systems, the juridical double taxation problem of inheritances can be resolved.4 Nevertheless, as the EC’s expert group stated in its report, 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.5^, 6