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Brussels, 29 January 2009

Direct taxation: The European Commission requests the United Kingdom to end discriminatory provisions in the area of inheritance tax

The European Commission has formally requested the United Kingdom to amend its legislation which provides for discriminatory inheritance tax relief. The requests take the form of reasoned opinions (second step of the infringement procedure of Article 226 of the EC Treaty). If no satisfactory reaction to these reasoned opinions is received within two months, the Commission may decide to refer the matter to the Court of Justice of the European Communities.

The reasoned opinions adopted by the Commission concern inheritance tax reliefs which are granted for agricultural and forestry property, respectively. The inherited agricultural property must be in the UK, the Channel Islands or the Isle of Man and the inherited forestry property must be in the UK in order for the taxpayers to be entitled to the relief. The tax relief is not available when the inherited agricultural and forestry property is situated elsewhere in the EU or EEA.

The limited scope of the relief may dissuade taxpayers from investing in agricultural and forestry property outside the UK. Consequently, the Commission considers that the United Kingdom's legislation, in its current state, is not compatible with the free movement of capital provided by Article 56 EC Treaty and Article 40 of the EEA Agreement.

The Commission is of the opinion that the UK should allow inheritance relief for all agricultural and forestry property situated in other EU and EEA Member States, as is it does for similar property in the UK.

The Commission's reference numbers for the cases at issue are 2007/2433 (agricultural property relief) and 2008/2244 (forestry property relief).

For the press releases issued on infringement procedures in the taxation or customs area see:

For the latest general information on infringement measures against Member States see:

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