Cross-Border Inheritance and the EU Succession Regulation
An increasing number of inheritance cases have an international dimension, for example, when the deceased has German citizenship but has relocated to Spain after retirement. Such situations can affect inheritance law, which varies between EU countries. In cases involving foreign elements, the question arises: which inheritance law should apply?
Spending winter in sunny Spain instead of cold and damp Germany, or enjoying spring in Tuscany rather than waiting for the first warm rays of sunshine in Germany—many German nationals have fulfilled such dreams. Especially in retirement, they spend several weeks or months abroad and may even have purchased property in another EU country. However, it is often overlooked that this can have consequences for inheritance, and German inheritance law may not necessarily apply. Within the European Union, the EU Succession Regulation governs which national inheritance law is applicable in cross-border inheritance cases, explains the law firm MTR Legal Rechtsanwälte, which also advises on inheritance law.
Cross-Border Inheritance Cases on the Rise
Cross-border inheritance cases within the EU have increased. Reasons for this include that heirs and the deceased live in different countries, or the deceased owns property both in their home country and abroad within the EU. According to the EU Succession Regulation, in such cases, the national inheritance law of the country where the deceased had their last habitual residence applies. If the residence was in Germany, German inheritance law applies. However, if the deceased had a property in Spain and chose to spend the winter months there, Spanish inheritance law may apply if the deceased passed away there.
The application of a different inheritance law can have consequences for both heirs and the deceased. For example, even within Spain, different rules may apply. The so-called “Berlin Will,” popular among spouses in Germany, is permitted in some regions of Spain but not in others. Italy, for instance, does not recognize the Berlin Will at all. This means that the provisions made in such a will may become invalid, and the surviving spouse would not automatically inherit everything from their deceased partner. This has significant implications, as the statutory succession would then apply, and the laws of some countries differ from those in Germany.
Different Statutory Succession
While in Germany, the spouse and children typically inherit 50% each, in countries like Italy or Spain, the spouse may receive a significantly smaller share, while the position of children as heirs is considerably stronger.
Additionally, national inheritance laws may exhibit further significant differences. Aside from statutory succession and inheritance shares, there may also be substantial deviations in compulsory shares, gifts, or usufruct rights.
These and other consequences should be considered by the deceased early on, as they can influence which national inheritance law will apply. It is possible to stipulate that the inheritance law of the country of the deceased’s nationality should apply. For instance, a German citizen residing abroad in the EU can declare in their will that German inheritance law is to be applied.
Avoiding Double Taxation
It should also be considered that the EU Succession Regulation and the application of another country’s inheritance law offer opportunities that can be utilized. For example, there may be differences in inheritance tax.
In principle, if residing abroad, it is important to ensure that double taxation does not occur. If the deceased, as a German citizen, had not lived abroad for more than five years, their entire estate would be subject to taxation in Germany, and not all countries have agreements in place to avoid double taxation.
MTR Legal Rechtsanwälte has extensive experience in international inheritance law and also advises on all other aspects of inheritance law.
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