Updated
GL-I-04
01 / In 30 seconds
The short answer
- 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
02 / In plain words
What Inheritance / Estate tax means
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.
A case from practice
A client had assets in three countries and heirs in two others. Each jurisdiction viewed the situation in its own way. A review before the move made it possible to structure ownership so that the heirs would not have to sort this out on their own.
When this needs to be thought through
- Moving to another country
- Buying property abroad
- Heirs living in different countries
- Owning a business and shareholdings
- Making a will
- Planning the transfer of capital to children
03 / What it covers
What affects taxation
The deceased
- Domicile
- Tax residence
- Citizenship in some countries
Assets
- Real estate — where it is located
- Accounts and securities
- Shareholdings in companies
The heirs
- Their residence
- Degree of kinship
- Available reliefs
Tools
- Will
- Ownership structure
- Insurance and trusts
04 / How it works
How to approach planning
Map out the assets and countries
Which assets, in which countries, and where the heirs live.
Establish domicile and residence
Where your domicile and tax residence are.
Check the rules of each country
Rates, reliefs and forced heirship shares in each country.
Choose planning tools
A will, an ownership structure, sometimes insurance.
Put the documents in place
Wills and documents are drawn up under the law of the relevant countries.
05 / Key facts
What you need to know
01What is taxed
Property passing to heirs
Some countries tax the whole estate, others each heir's share. The rate often depends on the family relationship.
02Real estate
Taxed where it is located
Almost always the country where the property is located taxes it, wherever the owner lived.
03Connecting factors
Domicile and residence
What counts is the deceased's domicile and residence, the heirs' residence and where the assets are.
04Where there is none
In some countries
Some countries levy no such tax or give large reliefs to close relatives.
Common mistakes
Putting planning off
Plan before moving and before buying major assets: after death the tools are gone.
Writing a will under one country's law
Check the will against the law of every country with assets or heirs.
Expecting a passport to solve it
Look at domicile, residence and where the assets are: citizenship plays almost no role.
Ignoring forced heirship
Check who local law guarantees a share of the estate regardless of the will.
06 / Expert advice
How to prepare in advance
Draw up a map: what assets there are, in which countries, who the heirs are and where they live. Then check the rules of each jurisdiction — including forced heirship rules, which may limit freedom of testamentary disposition. And leave the heirs clear instructions: where everything is, who the advisers are, how to gain access.
What we do for you. 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.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
A tax that arises when assets pass from the deceased to the heirs. Models and rates differ greatly between countries.
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.
No. Some countries do not have it, or provide significant reliefs for close relatives.
In itself, usually not. The key role is played by domicile, residence and the location of the assets, not citizenship.
A rule in a number of countries guaranteeing certain relatives a part of the estate regardless of the will. It limits freedom of disposition.
Before the move and before buying major assets. Once the event has occurred, planning tools are no longer available.
INITIAL ASSESSMENT
Tell us what outcome your family needs
We will design a solution for your case, choose the country and the right status, and take the whole process through to the result.
