Field Fisher Waterhouse wins landmark case for Great Ormond Street Hospital children’s charity
07 October 2009
European law firm Field Fisher Waterhouse has won a landmark tax
and European law case for Great Ormond Street Hospital with major
implications for cross-border philanthropy across Europe. The
decision in the Brussels Appeal Court will see the hospital awarded
over €1.5 million including interest and may be expected to have an
impact on inheritance tax laws in other EU countries.
In 1996, Raymond Ditmar, a Belgian citizen died leaving his
entire estate to the hospital. The Belgian authorities hit the
charity with almost 80% in inheritance tax compared with 8.8% for
domestic requests, leaving the hospital with a considerably
diminished donation.
Field Fisher Waterhouse adopted a two-pronged attack by
complaining to the European Commission and seeking remedies in the
national court. The complaint to the European Commission
alleged that Belgian law was contrary to the EC Treaty and in
particular to Article 12 which prohibits discrimination on the
grounds of nationality and Article 56 which enshrines the principle
of free movement of capital. In 2007, the European Commission took
up the complaint and commenced an action against the Belgian State.
This resulted in a change in Belgian law in the provinces
concerned, bringing in the 8.8% rate of inheritance tax for
non-domestic charities.
At the same time, Field Fisher Waterhouse brought proceedings in
the Belgian national courts requesting the correct application of
EU law and the recovery of the excess tax paid.
The case went to appeal and judgment by the Brussels Appeal
Court, upholding all the hospital’s submissions, was handed down on
10th September 2009. The hospital was awarded €1.5 million
including interest. This should enable citizens of one EU
country to make charitable bequests to charities in other member
states without discriminatory tax implications.
Another landmark was that it was the first time the action
brought by a UK trust (not on behalf of its members but on behalf
of the trust itself) was clearly deemed admissible before a Belgian
court. Most continental legal systems do not provide for trust or
fiduciary structures and the recognition by the Brussels Court of
Appeals of the right of action of a foreign charitable trust being
a “legal entity” (not a formal legal personality) is an important
step, even beyond Belgium, the legal system of which is very
similar to others, particularly the French one.
Charles Whiddington, partner and head
of the Competition and EU Regulatory
Group at Field Fisher Waterhouse, has been advising Great
Ormond Street on this matter for over ten years. He led on the
case, assisted by associates Marianne
Lasserre and Penny Wotton as well as
the Brussels team.
Charles Whiddington said: “We are delighted to have won this
case after a ten year battle to convince the European Commission
and the Belgian Courts to uphold the principle of free movement of
capital in the area such that non-domestic bequests should not
receive differential tax treatment. The case is the first in which
an important court has expressly ruled that an English charity
should have the same status as a charity established under a
Continental system. Donors have a growing interest in causes that
go beyond national boundaries and we expect the decision to
embolden the Commission to challenge Member States which continue
to tax cross-border bequests differently, giving charities the
opportunity to seek donations from across the EU.”
For further press information, please
contact:
Louise Eckersley, PR
Manager, on +44 (0)20 7861 4120.