The European Commission has asked Germany to amend inheritance tax legislation that it says results in the discriminatory taxation of legacies to foreign charities.

Domestic charities are granted an exemption from inheritance tax. Charities established in other European Union and European Economic Area states may only enjoy this exemption if their state of residence grants an equivalent or reciprocal exemption to comparable German charities. As a result, legacies from German citizens to foreign charities are frequently more heavily taxed than legacies to German charities.

The Commission said that this provision is discriminatory and constitutes an unjustified restriction on the free movement of capital.

If Germany does not comply with the request, which takes the form of a Reasoned Opinion, the Commission may refer it to the European Court of Justice.

Source: www.tax-news.com