Einde inhoudsopgave
Taxation of cross-border inheritances and donations (FM nr. 165) 2021/3.2.1.3
3.2.1.3 Why states do not often conclude inheritance and gift tax treaties
Dr. V. Dafnomilis Adv. LL.M., datum 01-02-2021
- Datum
01-02-2021
- Auteur
Dr. V. Dafnomilis Adv. LL.M.
- JCDI
JCDI:ADS263203:1
- Vakgebied(en)
Internationaal belastingrecht / Voorkoming van dubbele belasting
Schenk- en erfbelasting / Algemeen
Voetnoten
Voetnoten
See Inge van Vijfeijken, “One Inheritance, One Tax,” EC Tax Review 26, no. 4 (2017): 216; “[…] Member States are busy with other, more prominent international issues, such as the OECD action plan on base erosion and profit shifting (BEPS). So on a macro level there is no urgent problem”. See also J.F. Avery Jones, “A Comparative Study of Inheritance and Gift Taxes,” European Taxation 34 (October/November 1994): 335.
J.F. Avery Jones, “A Comparative Study of Inheritance and Gift Taxes,” European Taxation 34 (October/November 1994): 337.
J.F. Avery Jones, “A Comparative Study of Inheritance and Gift Taxes,” European Taxation 34 (October/November 1994): 337.
Inge van Vijfeijken, “One Inheritance, One Tax,” EC Tax Review 26, no. 4 (2017): 216; “[…] income tax is imposed annually. In that case, double taxation is an annually reoccurring event, which makes it an annually reoccurring problem. On average each taxpayer receives an inheritance only once in thirty year.”
Guglielmo Maisto, “General Report: Death as a Taxable Event and its International Ramifications,” in Cahier de droit fiscal international 95b, ed. IFA (The Hague: Sdu Uitgevers, 2010), 45.
Copenhagen Economics Institute, Study on inheritance taxes in the EU Member States and possible mechanisms to resolve problems of double inheritance taxation in the EU (2010), 60. The study concludes that the effective tax rate has been decreased to around 3% in 2009.
According to the OECD revenue statistics, tax revenue from inheritance and estate taxes represented on average in 2018 0,4% of the total tax revenue earned in each OECD member country (OECD – average). See OECD revenue statistics, accessed January 29, 2020, https://stats.oecd.org/Index.aspx?DataSetCode=REV.
Copenhagen Economics Institute, Study on inheritance taxes in the EU Member States and possible mechanisms to resolve problems of double inheritance taxation in the EU (2010), 12. The study estimates the number of cross-border successions in 2011 at between 290,000 and 370,000.
Guglielmo Maisto, “General Report: Death as a Taxable Event and its International Ramifications,” in Cahier de droit fiscal international 95b, ed. IFA (The Hague: Sdu Uitgevers, 2010), 44.
As previously mentioned, the OECD IHTMTC was first adopted in 1966 and subsequently updated in 1082. However, the model and its Commentary have not been updated since 1982. Furthermore, the current number of the inheritance and gift treaties is considerably low and there are OECD member countries that do not plan to conclude new inheritance and gift tax treaties with other countries. Such a policy decision may be based on different reasons, for example:
the clear focus of the OECD and the OECD member countries on cross-border income and capital tax problems,1
the clear focus of states on conclusion of income tax treaties with major trading states,2
the divergent legislation giving rise to difficulties in negotiating inheritance and gift tax treaties,3
the abolition of death and gift taxation in some states (which arguably mitigates the risk of double taxation in a cross-border setting),
the incidental imposition of death and gift taxes4 and the priority given by tax administrations to periodic taxes,5
the low effective tax rate of inheritances,6
the need for additional national negotiators specialised in death and gift taxes,
the low contribution of death and gift taxes to the revenue inflow,7
the small number of cross-border inheritances and donations,8 and
the unilateral mechanisms for the avoidance of double taxation of inheritances and donations (which arguably make the need for concluding tax treaties in this area less demanding).9
Irrespective of the above reasons, the OECD IHTMTC serves as the first point of reference of this study. As I will discuss in the next chapter, the model includes provisions aiming at addressing the problems of cross-border inheritances and donations, thereby confirming their existence in the event of a cross-border inheritance and donation.