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Money Matters and Legal / In Law

European Union regulations on real estate inheritance as of August 17th 2015

European Union Regulations on Real Estate

Today, 21 million citizens of non-European Union (EU) countries live in a member state of the EU. Growing cross-border mobility and property ownership mean that beating a path through the jungle of inheritance law is becoming ever more necessary.

EU regulations introduced in 2012 aim to simplify the framework for people who own property in at least two countries. The rules apply to inheritance vehicles created as of August 17th 2015. This gap allows property-owners to assess their situation, decide on the best course of action and complete the necessary formalities.

Current systems of inheritance

At present, two different models of inheritance exist within the EU:

  • Divided (applicable in France, for example): for goods and financial assets, the law of the country that was the last primary residence of the deceased applies. For real estate, the law of the country where the property is located applies.
  • Unified (applicable in other EU countries such as Germany, Denmark, Spain, Italy, and Portugal): the notary (official who deals with wills, marriage contracts and property sales) who handles the succession applies either the law of the deceased’s country of nationality or that of the country of his/her last primary residence.

Revised regulations applicable as of August 17th 2015

The EU ruling allows individuals to choose which law they wish to apply at the time of succession. Three options are possible:

  • To apply the law of the state where the deceased’s primary residence is located, even if it is a non-EU state. The totality of the inheritance is subject to the same law.
  • To choose the law of a state of which the person has nationality.
  • In exceptional circumstances, if the deceased had demonstrably closer links with another state, to apply the inheritance laws of that state.

The ruling applies to all administrative aspects of the inheritance, e.g. where the will is written, division of property, settlement, etc. It explicitly excludes elements such as gifts, life insurance contracts and matrimonial property regimes.

The rules regarding taxation won’t change. The countries where the deceased or their heirs live, as well as each country where a part of the inheritance is located, retain the right to tax the legacy. Agreements, between France and the US for example, avoid the need to pay double taxation.

The European Commission will also simplify the procedures for claiming inheritance. Heirs will be able to assert their rights by means of a European Certificate of Succession (ECS), recognized in all EU member states.

Inheritance planning well in advance with expert advice makes good sense. The EU regulations provide the opportunity to review your status and optimize inheritance to your Paris real estate.

 

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