A family whose members and assets are spread across several countries faces, at the worst possible moment, one of the most tangled problems in private law: whose rules govern who inherits what, and which countries tax it. Succession is hard enough within one legal system. Across several, with real estate in one country, a family in another and a business in a third, it becomes a problem that is far cheaper to plan than to resolve, and one that is almost always left unplanned until it is too late.
Two separate questions
Cross-border succession splits into two questions that are frequently confused. The first is civil: which country’s law decides who is entitled to inherit, in what shares, and whether the deceased could freely dispose of their estate. The second is fiscal: which countries tax the inheritance, and at what rates. These are governed by different rules, can point to different countries, and have to be planned together, because a plan that optimizes one while ignoring the other solves half the problem and worsens the other half.
The civil question has a common answer; the fiscal one has none. It is Regulation (EU) No 650/2012 on jurisdiction and applicable law in matters of succession, whose Article 1 covers succession to the estates of deceased persons and excludes revenue, customs and administrative matters. Recital 10 leaves to national law how succession-related tax is calculated and paid, and whether release of the property to the beneficiaries may be made conditional on payment.
The EU succession framework and choice of law
Within most of the European Union, a single framework determines which country’s law governs a cross-border succession, with the default being the law of the country where the deceased was habitually resident at death. Crucially, it allows a person to choose, in their will, the law of their nationality to govern their whole succession instead. That choice is one of the most powerful and underused planning tools available, because it lets someone with a connection to a jurisdiction of free testamentary disposition escape the forced heirship of another.
The single most valuable sentence in many cross-border wills is the one that chooses which country’s law will govern. Most wills never contain it.
Article 21 applies the law of the State of habitual residence at death to the whole succession, unless the deceased was manifestly more closely connected with another State, and Article 23 gives it a wide reach, down to the reserved shares. Article 22 allows a choice of the law of a State whose nationality the person holds when choosing or at death, declared expressly in a disposition of property upon death. Recital 23 makes habitual residence an overall assessment of the years before death, weighing the duration and the reasons for the presence: it is proved, not declared.
Where the framework stops
The framework is not the whole European Union. Recital 82 records that the United Kingdom and Ireland did not take part in adopting the Regulation and are not bound by it; recital 83 says the same of Denmark. Ireland and Denmark apply their own conflict rules, and the United Kingdom, which took the same position and has since left the Union, is a third State with its own approach to inheritance tax and long term residence.
Inside the participating States it covers less than families assume. Article 1(2) excludes matrimonial property regimes, gifts, pension and insurance arrangements, trusts, the nature of rights in rem and any recording in a register. Point (h) excludes questions governed by company law, expressly including clauses in the articles of association determining what happens to the shares on the death of a member. Article 35 lets an authority disapply the designated law only where it is manifestly incompatible with the public policy of the forum.
Forced heirship, and how it surprises people
Many continental European systems impose forced heirship: a portion of the estate must pass to certain heirs, typically children, regardless of the deceased’s wishes. Someone from a system of free disposition, who assumes they can leave their estate as they choose, can find that the law of their country of residence overrides their intentions entirely. The choice-of-law option is precisely what allows this to be managed, but only if it is exercised in a valid will before death, not discovered by the heirs afterwards.
In the Spanish Código Civil, article 806 defines the legítima as the part the testator cannot dispose of, article 807 names children and descendants first, and article 808 fixes their share at two thirds of the estate, one of which may be applied as a mejora among them, leaving a single third freely disposable. The Código Civil does not govern the whole country: the territories with their own civil law set a different share, and article 451-5 of the Catalan civil code fixes it at a quarter of the base amount. That is the forced-heirship surprise waiting for the owner of a Spanish villa.
Inheritance tax follows different lines
The tax question does not track the civil one. A country may tax an inheritance because the deceased was resident there, because an heir is resident there, or because an asset is located there, and more than one country can tax the same estate, with relief for double taxation being patchy and treaty coverage for inheritance tax far thinner than for income tax. Real estate is almost always taxed where it sits. A family with assets and members in several countries can face inheritance tax in several at once, and the interaction has to be modelled rather than assumed.
The Netherlands works from the deceased. Article 1 of the Successiewet 1956 charges erfbelasting on everything acquired on the death of a person who resided in the Netherlands, wherever the assets are, and article 3 deems a Dutch national who dies within ten years of leaving to have resided there. Unilateral relief is narrow: article 47 of the Besluit voorkoming dubbele belasting 2001 credits foreign tax only on foreign business assets and foreign immovable property, and does not apply to the deemed resident, who falls under article 48.
Germany works from either end. Under paragraph 2 of the Erbschaftsteuer- und Schenkungsteuergesetz, unlimited liability arises on the entire acquisition if the deceased at death or the acquirer when the tax arises is an Inländer, and German nationals stay Inländer until they have been abroad more than five years. That is what makes German inheritance tax on shares in a Dutch BV a live question once one heir lives there. Spain works from the heir and from the asset: under Ley 29/1987 the heir is the taxpayer, article 6 charges an heir resident in Spain on everything acquired wherever situated, and article 7 charges everyone else on assets situated or exercisable in Spanish territory.
The certificate, the register and the bank
Article 62 establishes the European Certificate of Succession, neither mandatory nor a replacement for national documents, and Article 64 gives competence to the State whose courts have jurisdiction, normally that of habitual residence at death. Obtaining it is a file, not a form: under Article 66 the issuing authority verifies the evidence, makes its own enquiries and hears the beneficiaries, and Article 67 forbids issue where the certified elements are challenged.
Under Article 69 the certificate takes effect in all Member States without further formality, the person named is presumed to hold the stated status and powers, and a bank that pays that person is protected unless it knew the contents were wrong or was grossly negligent. It is a valid document for recording the property in a register, although registration requirements stay national. Article 70 sets the trap: certified copies expire after six months, which matters to anyone who has just inherited a company in another country.
The tax clocks do not all run from the same event. Article 67 of the Spanish Reglamento del Impuesto sobre Sucesiones y Donaciones gives six months from the day of death to file, extendable by the same again only if asked within the first five. Paragraph 30 of the German Erbschaftsteuergesetz requires the acquirer to notify the Finanzamt within three months of learning of the acquisition, and the exemption from that duty falls away where the estate includes real property, business assets, shares or foreign assets. Article 45 of the Successiewet obliges the Dutch inspector to set a filing period not expiring earlier than twenty months after death.
Structures that bring order
This is where a holding structure earns its place in a family’s affairs. Consolidating assets under a holding, with governance and succession rules written in advance, can convert an unpredictable multi-country succession into a planned transfer of shares governed by a coherent framework, as we describe in our notes on how family offices use Dutch BVs and stichtingen and on Latin American family wealth and succession. The structure does not remove the underlying rules, but it organizes the estate so that they apply to something coherent rather than to a scattered collection of assets in different systems.
The company law exclusion keeps transfer restrictions, offer obligations and board powers applying to whoever inherits, which is why governance design in a Dutch holding, covering boards, control and succession decides whether an inheritance of shares is orderly or a deadlock. It does not move a taxing right, but it can change the number through domestic business relief: article 35b of the Successiewet 1956 grants, on the acquirer’s request, a conditional exemption of 100 per cent of the business assets up to 1,543,500 euros and 75 per cent of the excess, subject to its continuation conditions.
Plan it while it is abstract
The defining feature of succession planning is that it must be done while the subject is alive and the question feels remote, because everything useful, the choice of law, the will, the structure, the lifetime steps, requires the person to act. A family that treats succession as something to deal with later deals with it under the worst conditions: grief, deadlines, and rules discovered rather than chosen. The families who come through a cross-border succession well are the ones who treated it as a design problem years before it became an event.
The work is finite. Document where the person is habitually resident and why, so Article 21 gives the intended answer, not an argued one. Decide on the Article 22 choice and record it expressly in a will that works where the assets sit. Reconcile it with the articles of association, any shareholders’ agreement and the matrimonial property regime, all left to other law. Then check what the relief in each country actually covers before assuming nothing is taxed twice.
Montclare builds and operates European structures with the substance and documentation that these rules require. Our services are set out on our services page.
This article is informational and does not constitute tax or legal advice. Rules of this kind evolve and their application depends on the facts of each structure. Each engagement is subject to scope and applicable regulation.