I do think that mistake rather than conspiracy theory is more usually a valid explanation in this complex and confusing world. No one actually foresaw the full consequences of the Maastricht Treaty and that the freedom of movement of people, goods, capital and services would have such increasingly far reaching effects.

The borders of Luxembourg are now in Finland and Malta. The only way to control that, is to agree on issues of immigration and police powers across Europe.

Taxation, however, is always seen as an element of national sovereignty. The EU was thought to have no competence over direct taxation, only over VAT. However, when tax rules conflict with the free movement of people or capital who wins?

The European Court of Justice (ECJ) decision of Margarete Block C-67/08 in February 2009 was an example of the court deciding that member states could tax the same capital twice and that this did not conflict with free movement of capital.

By contrast, its recent decision in April 2010 in Vera Mattner v Finanzamt Velbert C-510/08 was that German gift tax rules that only gave an exemption to a German resident, did conflict with the free movement of capital by reducing the value of a gift which includes German property. The case is worth looking at to consider the distinctions between liability for tax in a particular state limited to assets in that state or worldwide and unlimited liability.

Would the UK limited spouse exemption of GBP55,000 withstand the scrutiny of the ECJ? This is less clear, since the UK distinguishes between spouses of different domiciles rather than of different nationalities or residencies.

The Directorate General for Taxation and Customs Union has been consulting on issues of Double Tax Conventions and the Internal Market in its consultation paper 2010 04 and more recently is consulting specifically in relation to inheritance tax in its paper 2010 06 (http://ec.europa.eu/taxation_customs/common/consultations/tax/2010_06_inheritance_en.htm)

‘It appears that cross-border inheritance tax issues are becoming one of growing concern to EU citizens. It is possible that EU Member States’ inheritance tax rules as applied in cross-border situations are hindering EU citizens from benefiting fully from their right to move and operate freely across borders within the Internal Market. These rules may also be creating difficulties for the transfer of small businesses on the death of owners.

‘The Commission is currently working on several different fronts to obtain more evidence of the extent of any cross-border inheritance tax problems within the EU and to find solutions to any problems identified. The Commission is launching the present public consultation to obtain views from all interested stakeholders and individuals on the extent of the problem and ideas on possible solutions.’

The days of member states being able to negotiate their own Hague Conventions are passing. Will double tax agreements be next in the firing line?

How long can national sovereignty protect its right to control all aspects of direct taxation? Do EU citizens value their area of freedom, security and justice above the rights of their state governments?

What is discussed in Brussels in the morning is often considered at the Organisation for Economic Cooperation and Development (OECD) or the Financial Action Task Force (FATF) in the afternoon.

These are some of the reasons that Brussels is a growing focus of attention. STEP has decided to concentrate more efforts in making its voice heard there and I am glad to help in that task through the new STEP EU Committee, reporting through Public Policy Committee to STEP Council.

Freedom, Security and Justice here we come.