New EU Inheritance Laws for Spain (But Leaves Out the Tax)
As if the UE-legislative machinery had no more pressing legislation to pass, a recently enacted Regulation (EU) No 650/2012 has been earmarked to come into force soon, as soon as the 17th August…2015.
The piece is not particularly layman-friendly read and it is advisable that you have a good night’s sleep before embarking on the mission of fully understanding what it really encapsulates, bearing in mind too that its entry into force is yet some time away. Or alternatively try to understand this passage: “…this Regulation should provide for the adaptation of an unknown right in rem to the closest equivalent right in rem under the law of that other Member State.
As tax planning expert Richard Frimston says, Regulation (EU) No 650/2012 includes nine and a half initial pages of 83 separate recitals. Some of the recitals are somewhat Proustian and do not always add to clarity. They might, however, prevent tossing and turning in bed before falling asleep.
Point 9 seems the easiest of the text, indicating that “…the scope of this Regulation should include all civil-law aspects of succession to the estate of a deceased person, namely all forms of transfer of assets, rights and obligations by reason of death, whether by way of a voluntary transfer under a disposition of property upon death or a transfer through intestate succession.” It also marginally deals with gifts inasmuch as they may ultimately affect the shares of the beneficiaries.
It also conveys clearly that taxes will be left out of it by indicating that “...This Regulation should not apply to revenue matters or to administrative matters of a public-law nature. 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.
In a nutshell if at all possible, and provided my understanding of this legislative labyrinth is correct, the Regulation stipulates the following:
Applicable laws:
- In principle, the law of the EU country of the deceased’s habitual residency at the time of death will rule on the succession.
- If however the deceased was manifestly more closely connected to a country different than the one above, in the light of the circumstances of the case, then those laws would apply.
- A person can choose to as the law to decide on the inheritance that of his nationality be it either when making the choice or at the time of death. This has to be done in a will.
Applicable jurisdiction:
- In principle, inheritance matters will come under the jurisdiction of the EU country of the deceased’s habitual residency at the time of death.
- Where the deceased chose a different Member state law to that of residency, the parties concerned (designated inheritors) may agree that the court of the Member state of the choice of law are to have exclusive residency.
- At the request of one of the parties to the proceedings, the court may decline jurisdiction if it considers that the courts of the Member state of the chosen law by the deceased are better placed to rule on the succession, taking into the practical circumstances of the succession, such as where the assets are based or the habitual residency of the parties.
As an example, 3 inheritors of a British person resident in Alicante that chose, as applicable laws, those of England and Wales, will ventilate any succession matters through the Courts of Alicante. They can also submit the matter to UK Courts if the 3 agree or in case of discrepancy, any of them can request that UK Courts deal with the case if they are all residents there or the assets are all based in say Manchester.
The regulation makes further provisions in relation to other aspects of the succession but, as far as this post is concerned, I feel I have now beaten insomnia!
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