Cross-border Succession

Uniform Rules for Inheritance in the EU? The Foundation is the Brussels IV Regulation

The Main Rule: Where Was Your "Habitual Residence"?

The fundamental principle of the regulation is that the court of the state where the deceased had their habitual residence (habitual residence) at the time of death has jurisdiction over the succession proceedings and will apply the law of that state. This principle creates a so-called single succession status, meaning that one law applies to all property—movable and immovable—regardless of where it is located.

However, the term "habitual residence" is not defined by a precise permanent address. It is a factual concept assessed based on where your "centre of life" or "centre of vital interests" was located. Factors such as the duration and regularity of your stay, family and social ties, language skills, or the location of your main assets are taken into account.

This flexibility, intended to reflect modern mobile lifestyles, however, introduces significant legal uncertainty. In practice, complex cases have arisen, for example, with seniors moving to care homes abroad, where courts in different states refused to assume jurisdiction because it was not clear where the deceased's centre of interests was located.

An unclearly determined habitual residence can lead to paralyzing disputes over jurisdiction, which will increase the cost of the entire proceedings and block them for several years. It is precisely this uncertainty that must be eliminated through proactive planning, with which we at ARROWS can assist you.

How to Take Control: Choice of Law and the European Certificate of Succession

The uncertainty associated with determining habitual residence is not insurmountable. The Brussels IV Regulation offers two key tools that allow you to take firm control of your assets' fate.

Active Choice of Law (Professio Iuris)

The most powerful tool for planning an international estate is the choice of law, technically known as professio iuris. The Regulation allows you to explicitly choose in your will or other disposition of property upon death that your succession will be governed by the law of the state of your nationality.

This choice completely replaces the uncertain criterion of habitual residence. You will thus gain complete predictability and certainty that the succession will be governed by a legal system you know and trust. The choice must be made explicitly and in the form of a disposition of property upon death.

European Certificate of Succession (ECS)

The European Certificate of Succession (ECS) is a practical "passport for your assets" within the EU. It is a standardized document that proves your status as an heir, administrator of the estate, or legatee in all Member States (except Denmark and Ireland) without the need for any further recognition procedure.

With an ECS, you can easily transfer ownership of real estate in a foreign land registry, gain access to bank accounts, or transfer a business share in a company in another Member State. In the Czech Republic, it is issued upon request by a notary acting as a court commissioner. Its validity is limited to 6 months, but it can be extended.

Although the ECS is designed for simplicity, practice shows that its effectiveness depends on precise preparation. Some foreign authorities may reject a generally formulated certificate and require specific details about the assets. The lawyers at ARROWS will prepare an ECS tailored to the requirements of the specific country to ensure the transfer of assets is truly smooth. Thanks to our ARROWS International network, we have detailed knowledge of local requirements.

Forced Heirs: Who is Entitled to a Compulsory Share and How Does it Differ Between Countries?

Your freedom to dispose of your property in a will is not absolute. Most European legal systems protect the closest relatives through the institution of a so-called compulsory share. These protected heirs, known in the Czech Republic as forced heirs (nepominutelní dědicové), cannot be completely overlooked.

Under Czech legislation, only descendants are forced heirs. A minor descendant must receive at least three-quarters of their statutory share, while an adult descendant must receive at least one-quarter. However, the rules differ fundamentally from country to country.

• Germany and Austria (Pflichtteil): Here, it is not a right to a share of the property, but a monetary claim against the heirs. The entitled parties are descendants and the spouse/partner. In Germany, parents are also entitled if the deceased had no descendants. The amount of the claim is half the value of the statutory share.

• Poland (Zachowek): The system is very similar to the German one. It is a monetary claim for descendants, the spouse, and parents who would otherwise inherit by law. The amount is half of the statutory share, or two-thirds for minors and permanently incapacitated persons.

• Spain (Legítima): The Spanish system is different. The estate is divided into three notional thirds. One third (legítima estricta) must be divided equally among the children. The testator can use the second third (mejora) to improve the share of one of the children or descendants. Only the last third (libre disposición) is fully at the testator's disposal.

The difference between the Germanic/Slavic concept (monetary compensation) and the Romanesque system in Spain (structural limitation of the estate) is fundamental. For property in Germany, Austria, or Poland, liquidity planning is key so that heirs have the funds to pay out the compulsory shares. In Spain, on the other hand, it is necessary to structure the will to respect the mandatory division of the property.

Inheritance Taxation in Europe: An Overview of Rates and Reliefs in the Czech Republic and Selected States

Tax obligations are often the biggest fear for heirs. In the Czech Republic, the situation is favorable—inheritance between direct relatives and spouses is exempt from income tax. Abroad, however, the situation is more complex.

• Germany: A progressive tax is applied, divided into three tax classes based on the family relationship. However, high tax-free allowances (Freibetrag) apply to the immediate family: €500,000 for spouses and €400,000 for children. Tax is only paid on the amount exceeding this limit.

• Austria: The general inheritance tax has been abolished. Be careful, this does not mean that the transfer of property is tax-free. When inheriting real estate, a real estate transfer tax (Grunderwerbsteuer) is payable, with rates from 0.5% to 3.5% depending on the value of the property.

• Poland: The immediate family (the so-called "zero group") is completely exempt from tax, provided they report the acquisition of property to the tax office within 6 months. For others, there are three tax groups with different rates and tax-free amounts.

• Spain: The tax system is extremely complex because the rules are set by the individual autonomous communities. The differences are vast. For example, Madrid provides immediate relatives with a 99% tax credit, while Andalusia offers an exemption of up to €1 million.

In the field of inheritance, it is often advisable to consult not only with a lawyer but also with a notary. ARROWS collaborates in this area with several trusted notaries, such as notary Silvií Dohnalovou from Notářství Bruntál or with Mgr. Tomáš Ostrožlík, as well as with other notary offices. ARROWS clients can choose from a list of collaborating notaries based on the location where they operate or where they need notary services. For more significant cases and important client meetings, the participation of a notary directly at the meeting on the premises of the ARROWS law firm can also be arranged by prior agreement.

The huge differences in tax regimes, especially within Spain, elevate estate planning from a purely legal act to a strategic financial decision. A correctly established habitual residence and asset structure can save your family millions of euros. At ARROWS, we will provide you with advice focused on tax optimization and the protection of your assets.

Have You Inherited a Share in a Company? Legal Specifics for s.r.o. and a.s. in the Czech Republic

For business owners, the key issue is business continuity. Czech law distinguishes between inheriting a share in a limited liability company (s.r.o.) and in a joint-stock company (a.s.).

According to the Business Corporations Act (ZOK), the general rule is that a share in a corporation is subject to inheritance. The heir becomes a shareholder on the day of the testator's death. However, the way this rule can be handled differs.

• Limited liability company (s.r.o.): Here, the articles of association are key. They can restrict or even completely exclude the inheritance of a share. If inheritance is excluded, the share does not pass to the heir, who is then entitled only to financial compensation—a so-called settlement share.

• Joint-stock company (a.s.): The situation is different for a joint-stock company. The company's statutes cannot restrict or exclude the inheritance of shares. The heir always becomes a shareholder. However, the statutes can restrict the transferability of registered shares (so-called vinkulace), which can complicate the sale of inherited shares for the heir.

This different regulation means that succession planning for s.r.o. owners is primarily about the precise setup of the articles of association. For a.s. shareholders, financial and structural planning (e.g., through shareholder agreements) is key, as heirs cannot be prevented from participating.

ARROWS: Your Partner for Comprehensive International Inheritance Solutions

As you can see, managing assets across borders is a complex discipline full of legal, tax, and administrative pitfalls. Uncertainty about the applicable law, conflicts with forced heirs, unexpected tax liabilities, and the specifics of corporate succession require expert guidance.

The ARROWS law firm is your single partner for solving all these challenges. Thanks to our international network, ARROWS International, we provide top-tier legal and tax services in more than 70 countries worldwide. Our experience from long-term care for a portfolio of more than 150 joint-stock companies and 250 limited liability companies guarantees a deep knowledge of corporate issues.

For our clients, we provide:

• Preparation of international wills with a choice of law, which will ensure your legal certainty.

• Obtaining a European Certificate of Succession tailored to foreign authorities.

• Representation in inheritance proceedings in the Czech Republic and abroad.

• Tax optimization of your estate to protect your assets.

• Succession planning in companies, including revision of articles of association and preparation of shareholder agreements.

We are more than just lawyers; we are your strategic partners. We enjoy connecting our clients with interesting business opportunities and listening to their business visions.

Resolve the future of your international assets with professionals. Connect with us at consultation@arws.cz and arrange an initial consultation.