EU Asks Germany To Amend IHT Rules
The European Commission has asked the German Government to amend its inheritance tax (IHT) law after finding that current rules discriminate against those who are not resident in Germany for tax purposes in certain situations.
Under German IHT law, a special maintenance allowance is granted to surviving spouses or registered partners of a deceased individual only if either one or both of them are tax residents in Germany. The allowance is not available to surviving spouses or registered partners when they inherit an estate or an investment that is located in Germany but the deceased and the heir are tax resident in another member state.
According to the European Commission, these rules constitute “an unjustified restriction on the free movement of capital” under the European Treaty as the value of the inheritance is reduced in cases where these tax residence criteria are not fulfilled. The Commission also said that current law may deter other EU nationals from investing their capital in German properties and investments.
The Commission has issued Germany with a reasoned opinion, giving the German Government two months to respond to its request. The Commission said it may refer Germany to the European Court of Justice “in the absence of a satisfactory response.”
