Whilst article 1 of Regulation 650/2012 states clearly that
:
"1. This Regulation shall apply to succession to the estates of
deceased persons. It shall not apply to revenue, customs or
administrative matters "
it would be frankly negligent for a will writer or other,
non-legal, professional to assume that it does not have an effect
on succession duty or Inheritance Tax when drafting wills under the
Nationality option available to British citizens domiciled in the
United Kingdom, or for that matter EU citizens domiciled here.
Firstly, there is no doubt that the English Probate Court simply
has no jurisdiction to issue grants over foreign property. It never
has had, and never will do simply on the basis that no court wishes
to issue any judgement that is of no effect outside its
jurisdiction. The jurisdictional limitations imposed by Parliament
before and after the Administration of Estates Act 1925 are clear.
That Act only applies to England and Wales not abroad.
Also, given that the Regulation is not applicable within
the United Kingdom means that there is no extension of that
statutory jurisdiction possible under a direct effect argument.
However that does not mean that the concept of direct effect
does not apply in other areas as a result of the Regulation.
Why? because the legal basis of the Regulation was to address
the internal market. That implies that it also has effect within
the areas covered by the Internal Market such as the freedom of
movement of capital, in matters of succession. That engenders
directly effective rights under EU law, and always has done in
relation to the taxation of cross border successions within the EU,
of which the United Kingdom is a part. Insofar as the
Regulation produces direct effects for British citizens, which it
does within the Member States applying the Regulation, the rights
to plan a succession with certainty under considerants 37 and 38 of
the Regulation ensure that when a foreign property right is left
under a will, that HMRC cannot change it into something else, such
as a settlement under article 43 (2) ITA 1984 or reinvent it in any
other legal form. Neither can they legally issue doctrinal
pamphlets dissuading people from so doing in the form of
Newsletters, which is what they have been doing in flagrant
contradiction of the CJEU's ruling in Case n°
C‑35/08.
In short, rather than create problems by ill advised or
ill-informed assumptions, advice on the legal, not deemed
treatment of foreign property rights left under an English law will
over foreign property needs to be addressed, and it is best to
consider separate wills.
Peter Harris is available for advising those in England and
Wales with either French property, or with the assistance of a
Spanish abogado or notary, in Spain.
Please also see our Resources page for more details on one issue
related to this.
Please feel free to instruct us, as we are one of the few
Chambers able to assist fairly and squarely in foreign legal
concepts and their treatment in this expanding area.