Europe without borders - which law applies in the case of inheritance? The European Court of Justice is setting the course
Unnoticed for many in Germany since 17 August 2015, a new legal regime for cross-border inheritance cases applies: The European regulation on the applicable succession law determines which national law governs the succession in the assets of a deceased. Questions such as the right of inheritance of a spouse, forced heirship/ compulsory portion, etc., are no longer automatically governed by German law when a German citizen dies. The same is true, of course, for non-German EU-citizens. If the deceased resided abroad for some time before his or her death, foreign law may be applicable.
The significance of this system change is unaware to most. In addition, many legal issues of the new legal regime are not yet clear. The European Court of Justice has now issued its first rulings.
On 1 March 2018 (C-558/16, Mahnkopf) the ECJ decided that the consequences from the statutory community of accrued gains (common for German spouses) in the event of death is also subject to – sometimes foreign – inheritance law (and thus might be dispensed altogether). By contrast, the established national case-law up to that point assumed that this part of the spouses’ succession strictly qualifies under the matrimonial regime (and thus – under German law – was subject to German law). In individual cases considerable legal uncertainty and family disputes may arise from this.
On 21 June 2018, a decision of the ECJ (C-20/17, Oberle) on the European Certificate of Succession followed. In many cases with foreign reference, this European Certificate will replace the German certificate of inheritance. What is – in the words of the ECJ – supposed to serve the speedy and efficient processing of succession matters is new territory before the national probate courts. For the time being, it will be prone to error.
A contemporary and unified European approach to succession matters is highly welcomed. To our experience, however, the topic is little known. In addition, settlement under a specific national law does not prevent different states from claiming tax on the estate. With regard to inheritance tax, double taxation in cases with a foreign reference is the rule, not the exception. Appropriate estate planning is required in all cross-border cases.