3.1.1.5.3 The EU Succession Regulation

As mentioned above, the choice of the connecting factor falls within the competence of the states. This is no longer the case within the EU because of the application of the Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession (hereinafter: the “EU Succession Regulation” or the “Regulation”).1

The Regulation harmonised the EU Member States’ private international laws on succession and applies to succession of persons who die on or after 17 August 2015. It follows from Article 1(1) of the Regulation that taxation falls outside the scope of the Regulation. It should, therefore, be for national law to determine, for instance, how taxes and other liabilities of a public-law nature are calculated and paid, whether these be taxes payable by the deceased at the time of death or any type of succession-related tax to be paid by the estate or the beneficiaries. It should also be for national law to determine whether the release of succession property to beneficiaries under this Regulation or the recording of succession property in a register may be made subject to the payment of taxes.”2

The legal basis of the EU Succession Regulation was Article 81(2) of the Treaty on the Functioning of the European Union (the “TFEU”), which forms part of the chapter “Judicial Cooperation in Civil Matters”. This Article allows the EU to adopt measures particularly for the proper functioning of the internal market, aimed at ensuring, inter alia, (a) the mutual recognition and enforcement, between EU Member States, of judgments and decisions in extrajudicial cases, and (b) the compatibility of the rules applicable in the EU Member States concerning conflicts of laws and of jurisdiction. The Regulation does not apply to the UK, Ireland, and Denmark, which, based on certain protocols – 21 (UK and Ireland) and 22 (Denmark) of the TFEU – do not participate in the adoption of measures in this area.

Briefly, the Regulation provides for the deceased’s habitual residence at the time of his death as the connecting factor for the determination of the applicable law of succession (Article 21(1) of the Regulation). Nevertheless, if it appears, from all the circumstances of the case, that a deceased was manifestly more closely connected with a state other than the state of his habitual residence, the law applicable to the succession shall be the law of that other state (“escape clause”). Under Article 22(1) of the Regulation, a person may choose the law of the state whose nationality he possesses at the time of making a choice or at the time of death to govern his succession. There is no escape clause in this case.

Although the Regulation does not define the term “habitual residence”, the preambles no. 23 and no. 24 shed more light on this concept. The term should “reveal a close and stable connection with the State concerned taking into account the specific aims of this Regulation.” (Italics, VD)3 Such a close and stable connection is identified by “an overall assessment of the circumstances of the life of the deceased during the years preceding his death and at the time of his death, taking account of all relevant factual elements, in particular the duration and regularity of the deceased’s presence in the State concerned and the conditions and reasons for that presence”.4 Moreover, “[t]he deceased could, depending on the circumstances of the case, be considered still to have his habitual residence in his State of origin in which the centre of interests of his family and his social life was located.”5

Another point to keep in mind is that the applicable succession law can be any law, whether or not it is the law of an EU Member State.6 Therefore, if the connecting factors of the Regulation designate the succession laws of a third state, these laws also embrace its private international laws as far as these rules make a renvoi to the law of an EU Member State or to the law of another third state that would apply its own law.7