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Brussels, 24 June 2010

Direct taxation: the Commission asks the Grand Duchy of Luxembourg to amend certain discriminatory provisions on inheritance tax

The European Commission has officially asked Luxembourg to amend its legislation on inheritance tax. This legislation stipulates additional conditions for non-resident heirs and, in particular, freezes their entire estates until they provide 'an additional guarantee'. This freeze rule does not apply to resident heirs and therefore constitutes a discriminatory practice. The Commission takes the view that this discriminatory arrangement is disproportionate, if not unjustified, and that it is contrary to the provisions of the Treaty on the Functioning of the European Union concerning the free movement of capital (Article 63).

When a resident dies, the government of Luxembourg is owed a debt equivalent to the amount payable in inheritance tax by the heir. In order to recover this debt, the government of Luxembourg can avail itself of certain guarantees: a privileged lien on all the movable property and/or a legal mortgage on all the immovable property located in Luxembourg bequeathed in the inheritance.

A non-resident heir has to provide an additional guarantee for the payment of the amount due before being able to take possession of the inheritance. The amount of the guarantee is set by the judge. If the heir is not able to provide such a guarantee, the inherited assets are frozen until the guarantee has been put in place.

Luxembourg's legislation therefore institutes differential treatment depending on whether the heir is resident or non-resident. Unlike resident heirs, non-resident heirs must always provide a guarantee before taking possession of the assets that they inherit. As long as this guarantee has not been provided, the non-resident heir cannot be granted his or her inheritance.

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

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

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