According to a report being examined by the European Commission, there are huge issues surrounding the double taxation of cross-borders within Europe, which member states should be dealing with as a matter of urgency rather than ignoring it.
The report contained evidence that estate taxes arising in cross-border scenarios can be unfair even on ordinary people with small assets. At the moment when a trust or will is established, tax may be requested by the state where the deceased lived, and as well where the beneficiary currently resides or holds citizenship, resulting in a double tax problem within Europe.
A series of disputes on the matter have reached the ECJ (the European Court of Justice) highlighting that double or multiple inheritance taxes were being charged across a number of member states in the EU.
The number of EU residents with property situated in two or more countries had been increasing exponentially for a number of years now. As of January 2014 the figure had reached 14 million. A number of proposals to change the directive have been rejected previously due to the difficulties being regarded as “not severe enough.”
What is the solution?
A group of private sector officials have come forward with a solution identifying one tax system with one succession. Which essentially means that once it is decided that a specific jurisdiction’s legislation has already been applied, then no further jurisdiction is able to request tax from the estate.
This tactic does not take over the power of member states while determining the nature of the tax system they impose. Tax officials have commented that this method removes liability from individuals who would use it to evade taxation in Europe using businesses or otherwise.