To quote Benjamin Franklin from 1789: “In this world nothing can be said to be certain, except death and taxes.” Little has changed, you may think.
But global mobility means that the certainties surrounding death, and the tax rules imposed around it, have become much more onerous as we may be dealing with taxmen in different jurisdictions.
Contrasting laws between jurisdictions, for example, have led to cases where a deceased’s wishes can be overridden because of forced heirship rules. When working across jurisdictions administration procedures are inherently complex because of the compliance requirements. As a consequence, significant delays often occur in the administration process.
Issues such as these have put the spotlight on cross-border estate succession enough for European legislators to devise new rules. In the spirit of free movement, the European Union has adopted new cross-border succession rules through EU regulation number 650/2012. These rules have become known as ‘Brussels IV’.
Rules of empowerment
Brussels IV, which came into effect on 17 August 2015, empowers an individual to clarify whether they wish their estate to be administered in accordance with the jurisdiction of their habitual residence at death or, in the alternative scenario, as per the jurisdiction of their nationality.
The upshot of these rules means that the majority of individuals (Article 10) resident in, or with assets in EU signatory states will have certainty with regard to their estate succession following their death.
This certainty will exist even when the deceased fails to invoke Brussels IV. Authority in that circumstance will remain with the jurisdiction of habitual residence.
Some states, however, such as the UK, are not signatories. To invoke the new rules an individual must expressly confirm their jurisdiction of choice in a declaration of a disposition of property, such as a will.
It must be made clear that while Brussels IV applies to the administration of an estate, it does not affect the taxation of that estate. But even without affecting taxation, Brussels IV and its potential benefits to individuals and their survivors are significant.
For example, a UK citizen living in France who elects the UK as their jurisdiction of choice would thereafter not be bound, at death, by French forced heirship rules – instead, the process would follow the UK system.
