To establish which EU jurisdiction will be applicable to some legal matters, such as dealing with estates of those deceased, jurisdictions will look to elements such as “domicile”, “habitual residence” and “nationality”.
Common law countries, such as Ireland, will examine the domicile of the deceased to determine the succession of moveable property. For immoveable property, the law of the country in which the property is situate (“lex situs”) is examined. Other civil law countries will look at either the habitual residence, or the nationality of the deceased, to determine the succession of moveable property. In many countries this element also determines the succession of immoveable property.
It is important to note that tax legislation will more often than not, differ again as to what criteria it will examine to determine what tax laws will apply. The below elements of “domicile”, “habitual residence” and “nationality” are explained only in the general context of succession legislation.
Domicile is generally determined by reference to a person’s intention to permanently or indefinitely reside in a country. Often the person will physically have a presence there.
Domicile is a legal concept and its rules have been established by way of case law as opposed to by statutory definition. There are three types of domicile:
Domicile Of Origin: The domicile of origin, is usually acquired from that of the father; otherwise it is that of his/her mother.
Domicile Of Choice: A person may acquire a domicile of choice by actually residing in a country and having the intention to remain there permanently or indefinitely. Where a domicile of choice is given up and a new domicile of choice is not acquired, the domicile of origin is automatically re-acquired, even if the person does not show any intention of returning to the domicile of origin and may never set foot in that country of origin.
Domicile Of Dependency: This is the domicile a minor holds if the parent’s domicile changes while he/she is still a minor. When the minor reaches 18 they then hold a domicile of choice.
Habitual residence is considered in an objective manner and is determined by which country the individual habitually resides in, as opposed to domicile, which takes account of the subjective element of a person’s intentions.
The EU test for habitual residence is based on an individual’s interests rather than by a particular duration of residence. A new EU Succession law, effective from 17 August 2015 will introduce a uniform definition of habitual residence for all member states in determining the forum that applies to Succession law. It should be noted that Ireland, the UK and Denmark are not signatories. A practical guide on the 'Habitual Residence Test' was published by the European Commission in January 2014 to assist member states apply EU rules on the coordination of social security, for EU citizens, that have moved to another member state.
Nationality is given to a person on birth or origin or by naturalisation. Many civil law countries have moved away from applying the concept of domicile to the concept of nationality. Where an individual has dual nationality, legislation will be required to deal with the succession of assets.
Most countries of central and eastern Europe use the term “citizenship”, which has the same meaning as the term “nationality” used in the European Convention on Nationality and by most western European states.
For estate planning purposes, domicile, habitual residence and nationality should be considered carefully and the legislation of the relevant countries examined. Although the new EU Succession law will no doubt assist with conflicts of law in Europe, for those with foreign estates in countries which are not signatories to the law, it is important that specialised legal and tax advice is obtained when dealing with their estate.