Human rights—Inheritance tax—Discrimination

European Court of Human Rights (Grand Chamber)
Judge Costa (president), Judges Bratza, Zupancic, Tulkens, Turmen, Birsan, Vajic, Tsatsa-Nikolovska, Baka, Ugrekhelidze, Kovler, Steiner, Borrego Borrego, Myjer, Bbjorgvinsson, Ziemele and Berro-Lefevre, and Mr V Berger (registrar)

29 April 2008

The fact that cohabiting siblings do not qualify for the exemption from inheritance tax available for married couples or those in civil partnerships does not violate Art 1 of the First Protocol to, and Art 14 of, the European Convention on Human Rights (the Convention).

The applicants were unmarried sisters in their 80s who had lived together all their lives. Each made a will leaving all her property to the other. They became concerned that the value of their jointly-owned property had increased to the point that each half share was worth significantly more than the current exemption threshold for inheritance tax.

By the Civil Partnership Act 2004 (CPA 2004), same-sex couples were provided with a formal mechanism for recognising and giving legal effect to their relationships, and to confer upon them the same rights and obligations as entailed by marriage. A couple were eligible to form a civil partnership if they were (i) of the same sex; (ii) not already married or in a civil partnership; (iii) over the age of 16; and (iv) not within the prohibited degrees of relationship.

Prohibited relationships included siblings. The applicants complained to the European Court of Human Rights, under Art 1 of the First Protocol to the Convention in conjunction with Art 14, that when one of them died, the survivor would face a significant liability to inheritance tax, which would not be faced by the survivor of a marriage or a civil partnership. The fourth chamber of the court held by majority that there had been no violation of the Convention. The case was referred to the Grand Chamber.
 

The Grand Chamber of the European Court of Human Rights:
 

The court dealt first with a preliminary objection as to whether the applicants could be said to be victims. It held that given the applicants’ ages, the wills they had made and the value of the property each owned, they had established that there was a real risk that, in the not too distant future, one of them would be required to pay substantial inheritance tax on the property inherited from her sister. In those circumstances, the applicants were directly affected by the legislation and could claim to be victims of the alleged discriminatory treatment.

The applicants claimed to be in a relevantly similar or analogous position to co-habiting married and CPA 2004 couples for the purposes of inheritance tax. The government, however, argued that there was no true analogy because the applicants were connected by birth rather than by a decision to enter into a formal relationship recognised by law.

The relationship between siblings was qualitatively of a different nature to that between married couples and homosexual civil partners under CPA 2004. The very essence of the connection between siblings was consanguinity, whereas one of the defining characteristics of a marriage or Civil Partnership Act union was that it was forbidden to close family members. The fact that the applicants had chosen to live together all their adult lives, as did many married and Civil Partnership Act couples, did not alter that essential difference between the two types of relationship.
Moreover, the Grand Chamber had already held that marriage conferred a special status on those who entered into it. The exercise of the right to marry was protected by Art 12 of the Convention and gave rise to social, personal and legal consequences (B and L v United Kingdom (App No 36536/02)[2006] 1 FLR 35). In Shackell v the United Kingdom (Dec) (App no 45851/99), 27 April 2000, the court found that the situations of married and unmarried heterosexual cohabiting couples were not analogous for the purposes of survivors’ benefits, since “marriage remains an institution which is widely accepted as conferring a particular status on those who enter it”. The Grand Chamber considered that that view still held true.
 

Legal relationship

Since the coming into force of CPA 2004 in the UK, a homosexual couple now also had the choice to enter into a legal relationship designed by Parliament to correspond as far as possible to marriage.

As with marriage, the Grand Chamber considered that the legal consequences of civil partnership under CPA 2004, which couples expressly and deliberately decided to incur, set those types of relationship apart from other forms of co-habitation. Rather than the length or the supportive nature of the relationship, what was determinative was the existence of a public undertaking, carrying with it a body of rights and obligations of a contractual nature. Just as there could be no analogy between married and Civil Partnership Act couples, on one hand, and heterosexual or homosexual couples who chose to live together but not to become husband and wife or civil partners, on the other hand, the absence of such a legally binding agreement between the applicants rendered their relationship of co-habitation, despite its long duration, fundamentally different to that of a married or civil partnership couple. That view was unaffected by the fact that member states had adopted a variety of different rules of succession as between survivors of a marriage, civil partnership and those in a close family relationship and had similarly adopted different policies as regards the grant of inheritance tax exemptions to the various categories of survivor; states, in principle, remaining free to devise different rules in the field of taxation policy.
It followed that the applicants, as co-habiting sisters, could not be compared for the purposes of Art 14 to a married or Civil Partnership Act couple. There had accordingly been no discrimination and, therefore, no violation of the
Convention.