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Inheritance tax on overseas property

The European Court of Justice recently decided a case, Theodor Jager v Finanzamt Kusel-Landstuhl, regarding tax reliefs on inheritance tax. The Court held that making such relief was made subject to the condition that the asset acquired by inheritance be situated in the national territory constituted a restriction on the free movement of capital contrary to EU law.

This may well have an impact on the UK’s inheritance tax framework. The fact that agricultural property relief only applies to land in the UK, the Channel Islands and the Isle of Man is almost certainly now contrary to European law.

Whilst everyone hopes the government amends the law to ensure that relief applies to land anywhere in the European Free Trade Area, this is obviously not guaranteed. In the meantime, anyone faced with this situation should probably be advised to complete the relevant IHT forms on the basis that relief should be due.



Date: 31st January, 2008
Author: Cathy Corns


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