Inheritance /Estate tax
Inheritance tax
- What it is
- A tax on the transfer of assets to heirs
- Two models
- A tax on the estate as a whole or on each heir’s share
- What it depends on
- The domicile and residence of the deceased and the heirs, and where the assets are located
- The key risk
- Real estate is almost always taxed in the country where it is located
- What helps
- Planning ahead: a will, the ownership structure, insurance
In plain words
Inheritance tax is a charge that arises when assets pass from the deceased to the heirs. Models vary: in some places the tax is levied on the whole estate before it is divided, in others on each heir’s share, and the rate often depends on the degree of kinship — reliefs for close relatives, higher rates for distant ones.
The main difficulty in an international context is the connecting factor. Taxation may depend on the domicile and tax residence of the deceased, the residence of the heirs and the location of the assets themselves. One rule applies almost always: real estate is taxed where it is physically located, regardless of where the owner lived.
Hence a typical situation for our clients: a person lives in one country, owns real estate in another, and the heirs live in a third. Each of the countries may assert its own rights. This needs to be planned in advance — through a will, a well-thought-out ownership structure and sometimes insurance. Once the event has occurred, planning tools are no longer available.
When this needs to be thought through
What affects taxation
- Domicile
- Tax residence
- Citizenship in some countries
- Real estate — where it is located
- Accounts and securities
- Shareholdings in companies
- Their residence
- Degree of kinship
- Available reliefs
- Will
- Ownership structure
- Insurance and trusts
How to approach planning
- 01Map out the assets and countries
- 02Establish domicile and residence
- 03Check the rules of each country
- 04Choose planning tools
- 05Put the documents in place
What you need to know
- Real estate is almost always taxed where it is located
- Domicile may differ from tax residence
- Rates often depend on the degree of kinship
- Some countries have no such tax at all
- Succession law in the country of residence may differ from what you are used to
Common mistakes
- Putting planning off to an indefinite future
- Making a will without taking into account the law of every country
- Assuming that a passport settles the question of inheritance
- Not taking into account forced heirship shares under local law
- Leaving heirs a structure they do not understand
What this means for a BRIDGES client
When relocating, we raise the question of inheritance together with taxes: a change of country of residence also changes the succession law applicable to your assets. It is an unpleasant subject, but it needs to be dealt with in advance — afterwards there are no tools left.
Frequently asked questions
01 /What is inheritance tax?
A tax that arises when assets pass from the deceased to the heirs. Models and rates differ greatly between countries.
02 /What determines where it is paid?
The domicile and residence of the deceased, the residence of the heirs and the location of the assets. Real estate is almost always taxed where it is located.
03 /Does every country have this tax?
No. Some countries do not have it, or provide significant reliefs for close relatives.
04 /Does a second passport help?
In itself, usually not. The key role is played by domicile, residence and the location of the assets, not citizenship.
05 /What is a forced heirship share?
A rule in a number of countries guaranteeing certain relatives a part of the estate regardless of the will. It limits freedom of disposition.
06 /When should planning start?
Before the move and before buying major assets. Once the event has occurred, planning tools are no longer available.
See also
Read next
This material has undergone editorial review by BRIDGES.
Assets in several countries?
We will work out how the move will affect inheritance and advise on what is worth putting in place in advance.