In the Netherlands, corporate funds have been partly exempt from inheritance tax since the 'Successiewet' of 1956. Over the years, the exemption increased for 30% initially to the present situation of 100% on the first €1,006,000 and 83% thereafter. The provision is meant to prevent liquidity problems associated with company inheritance.

But an exemption of more than 75% is discriminatory in comparison to other sources of inherited funds. An aggrieved heir demanded equal treatment at the court of Breda, and the judge agreed. Every heir has a right to a similar 100% exemption. Naturally the tax authorities dispute this and will seek a ruling of a higher court in the Netherlands.

By the looks of it, this case could go all the way to the European Court of Human Rights. Experts agree that an exemption of 75% or more does violate article 26 of the International Covenant on Civil and Political Rights (ICCPR) as well as article 14 of the European Convention on Human Rights (ECHR) which condemns such discrimination. The inheritance tax exemption must apply to everybody equally.

Should the court of Breda ruling stand all the way to the European Court of Human Rights, it could cost the Dutch government many millions. Although likely they will make rapid amendments in the inheritance laws to prevent this scenario. If not, relatives of recently deceased will be entitled to some monetary comforts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.