International Tax Disputes Are A Growing Issue

Whether it’s called an impostos (Portuguese), a belasten (Dutch) or a tassare (Italian), taxes are an issue all over the world.

“The global recession has increased the focus on inheritance and wealth taxes in recent years,” according to the Ernst and Young International Estate and Inheritance Tax Guide for 2013. “As governments endeavor to restore public finances to health, they are doing all they can to raise tax revenues and individual taxpayers have remained firmly in their sights. Around the world we have seen an increase in the personal tax burden. For those countries experiencing deeper levels of austerity and distress, there has also been a propensity for tax policymakers to popularize those taxes that appear to target wealthy individuals and those benefiting from increased property values.

“Whether in crisis or not, many countries are rapidly increasing the tax burden in these areas in an attempt to reduce their deficits.”

This is the case, the guide’s authors note, in countries that do not have high levels of public debt and even in some emerging nations.

“At the same time, as people and capital become increasing mobile, the number of international inheritance tax disputes is on the rise,” the guide states. “When any tax issue crosses borders it inevitably becomes more complex. Conversely, bilateral treaties preventing double taxation often do not cover estates or inheritances and the risks of international successions being taxed more heavily are therefore on the rise.

“Many jurisdictions have far-reaching laws that give them tax rights when people inherit property from another country or where the deceased or the heir are resident, domiciled or hold nationality in another jurisdiction. Frequently, two or more countries may apply inheritance tax on the assets involved. Cross-border inheritance tax problems do not just affect individuals either; businesses can often face transfer difficulties upon the death of their owners.”