ATHENS: Greece will face the European Court of Justice for raising the country’s inheritance tax (IHT) laws. Under the Greece law a preferential IHT rate of 0.5 percent is automatically available to certain Greece non-profit entities, whereas similar entities established in other EU/EEA states can only benefit from the preferential rate if legacies to Greece non-profit entities also have access to a preferential treatment in the given EU/EEA state. If this reciprocity condition is not met, the applicable tax rate varies between 20 and 40 percent, depending on the taxable value of the property.
The case referred by the Commission involves the IHT treatment of bequests to non-profit organizations in another European Union (EU) member state or European Economic Area (EEA) state. Under Greece law, The Commission said that, as the legislation has the effect of reducing the value of the property bequeathed to foreign non-profit entities, it restricts the free movement of capital, contrary to Article 63 of the Treaty on the Functioning of the European Union and Article 40 of the EEA Agreement.
Greece has also been referred to the ECJ over an IHT exemption for primary residences, which is applicable only to EU nationals permanently residing in Greece. The Commission said that Greek legislation favors exclusively those taxpayers (heirs) who already live in Greece and are typically Greece nationals. By contrast, it penalizes those who inherit a property in Greece but do not live in the country.
