Tax distinction between marital children and unrecognized biological children of testator constitutes discrimination

Source: Via Juridica

Unlike the Arnhem-Leeuwarden Court of Appeal, the Supreme Court ruled that a child must be related to its parent under family law in order for the child exemption and the low rate under the Inheritance Tax Act to apply. The legislator did not wish to assign a different meaning to the concept of blood relative in Section 2(3)(i) AWR than in civil law. This means that a biological, non-recognized, child (K) of a testator (E) does not qualify as a child, because there is no family law

Because 'family life' exists between K and E and the levying of inheritance tax affects K's net acquisition, this issue falls within the scope of art. 8 ECHR. This allows the Supreme Court to also test this regulation against the prohibition of discrimination (art. 14 ECHR). The Supreme Court rules that this elaboration of the Inheritance Act constitutes a prohibited distinction (art. 14 ECHR) between marital and non-marital children. According to the Supreme Court, the practical and legislative systematic reasons for aligning with civil-law standards and the desire to apply a higher rate the lesser the relationship between testator and transferee (outsider principle) are not “very weighty grounds” that can justify such a distinction.

Eliminating this distinction, however, requires choices that, in the Supreme Court's view, go beyond the lawmaking task. Given other related topics such as multiple parenthood, multiple parenthood and surrogate motherhood, the Supreme Court chooses not to pre-empt the tax legislature. As a result, the Supreme Court does not move to reduce the inheritance tax assessment.