Inheritance Tax
Reviewed by A tax levied on the transfer of assets from a deceased person to their heirs, whose existence and level depend on the country and the relationship between the parties.
Inheritance tax is a tax levied when assets pass from a deceased person to their heirs. Some countries tax the estate as a whole, others tax each heir's share, many exempt close relatives, and a number of countries have no such tax at all.
For cross-border families and those who relocate, liability usually turns on where the deceased was resident or domiciled and where the assets are located, rather than on nationality alone. Instruments such as trusts and foundations are sometimes used in succession planning.
Because rules and reliefs vary widely from one country to another, and there is no universal rate, inheritance planning requires analysis of the specific jurisdictions involved.
FAQ
Does taking a second citizenship create inheritance tax exposure?
Citizenship alone usually does not: in most countries liability follows the deceased person's residence or domicile and the location of the assets. It is the tax status, not the passport, that has to be examined.
How is property bought under an investment program treated?
Normally under the rules of the country where the property is situated, regardless of the owner's residence. That is why real estate held abroad is generally planned separately from the rest of an estate.
Can the same asset be taxed in two countries?
Yes, that can happen when the deceased and the assets are connected to different jurisdictions. Treaties and credit mechanisms relieve part of the burden, but inheritance-specific treaties are far from universal.
Will relocating and changing tax residency remove the liability?
Not automatically. Some countries retain a claim for a period after departure, or rely on domicile, which is harder to shift than residence.
Do trusts or holding structures solve inheritance tax?
They are used in succession planning, but the outcome depends on the jurisdictions involved and on rules covering controlled structures. The effect should be assessed with a tax adviser for the specific case.