The European Commission has adopted a comprehensive package on inheritance tax to allow member states to avoid double taxation under inheritance tax laws and discriminatory rate of tax.

Divergent national rules, a shortage of inheritance tax conventions and inadequate double tax relief by national laws result in citizens being taxed twice or more on the same inheritance.

The Commission is not proposing any harmonisation of inheritance tax rule in the Member states but a broader and more flexible application of national double tax relief measures. The package sets out solutions for situations where several states may have the right to tax the same inheritance. The second problem to be looked at is the imposition by states of discriminatory rates; for example, some states may impose a higher rate on the deceased’s assets depending on whether the heir is inside or outside the country. The Working Paper sets out the principles to be applied for non-discriminatory inheritance and gift tax using case studies to illustrate their proposals. See www.ec.europa.eu/taxation_customs/taxation/personal_tax/inheritance/index_en.htm.