The Spanish Supreme Court opens the door to inheritance tax refund claims by non-EU residents

1. Judgment of the Court of Justice of the European Union of 3 September 2014 (Case C-127/12) and measures adopted by the Spanish legislature.
 
The Judgment of the Court of Justice of the European Union (CJEU) of3 September 2014 in Case C-127/12 concluded that the unequal treatment of resident and non-resident taxpayers of Spanish Inheritance and Gift Tax was incompatible with the free movement of capital. Such inequality, insofar as residents could benefit from the rebates provided for inheritance and gift tax by the different Autonomous Communities (‘connecting factors’) whereas non-residents could only apply the State’s legislation, meant very different tax outcomes. For example, in the Autonomous Community of the Balearic Islands, the applicable tax rates used to be 7% for gifts and 1% for ‘mortis causa’ acquisitions is 1%, while the state law tax rate could reach 34%…