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Estate and Inheritance Tax Transfer Rules for U.S. Expats

Nancy Metzger, JD, CFP®

Director of Financial Education

Last Updated
June 03, 2022

A Quick-Reference Guide Based on Country of Residence

If you receive an inheritance as an American citizen living overseas, you’ll need to navigate any estate or inheritance taxes imposed by your country of residence. The following table provides insight to help you understand your potential tax liabilities.

U.S. Citizen Beneficiary's* Country of ResidenceIs there an inheritance tax on U.S. assets bequeathed by the U.S. decedent to me in the country where I live?How long does it take before I am subject to inheritance tax in my country of residence** abroad? Is there a bilateral U.S. estate tax or estate & gift tax treaty in place?Is there an exemption or tax credit available by treaty or by other legal source?
AustraliaNoneN/A Estate & GiftYes, by Estate & Gift Treaty; by tax code
AustriaNone, but gift tax regime applies, requiring notice filingSubject to notice filing requirement after 6 months residencyEstate & GiftYes, by Estate and Gift Treaty
CanadaNone, but possible capital gains tax via deemed dispositionN/ANoneYes, by U.S.-Canada Income Taxation Treaty
China P.R.C.NoneN/ANoneN/A
FranceNone, by treaty. Decedent’s domicile is determining factorN/AEstate & GiftYes, by Estate & Gift Tax Treaty
GermanyYesEarlier of domiciled in Germany or deemed domiciled (e.g 10 years residency) for inheritance tax purposesEstate & GiftYes, by Estate & Gift Treaty
Hong KongNoneN/ANoneN/A
IrelandNone, due to categorization as U.S. situs assetsN/A Estate OnlyYes, by U.S.- Ireland Double Income Taxation Treaty (Capital Acquisitions Tax Exemption)
ItalyNone. Situs of assets and decedent’s domicile are determining factorsN/A Estate & GiftYes, by Estate and Inheritance Tax Treaty
JapanYesIf one has jusho1 in Japan or 10 years or more in JapanEstate & GiftYes, by Estate & Gift Treaty
The NetherlandsNone. Rules focus on domicile of decedent as determinativeN/AEstate OnlyYes, by Estate Treaty
SingaporeNoneN/ANoneN/A
SwitzerlandMaybe. Depends on regional canton, degree of lineal proximity; does trigger wealth taxWhen one has habitual residence (presumably after 90 days)EstateYes, by U.S.-Switzerland Income Tax Treaty and by Swiss tax code
South KoreaNone, but gift tax may apply if bringing assets into countryMore than 5 years as resident in South KoreaNoneYes, by federal tax code and foreign tax credit regime
SpainYes, federal or regional inheritance tax appliesN/ANoneNo
SwedenNoneN/ANoneN/A
United KingdomNoneN/AEstate & GiftYes, by Estate & Gift Treaty

1. Jusho means “principal place of residence” (i.e., domicile by habitual residence)

* The table assumes that the heir beneficiary is a U.S. citizen and not also a citizen of his/her country of residence.

** Transfer tax residence is not the same as income tax residency; although, some countries use the income tax residency rules to determine if an heir is subject to death transfer taxes.

If you’re a U.S. expat navigating the challenges of a recent inheritance, Creative Planning International is here to help. We work with Americans abroad and cross-border families to help maximize their inheritance and avoid costly mistakes. We understand the complex interaction of multi-jurisdiction tax and regulatory regimes and take into account a wide range of country-specific factors as we help you maximize your inheritance and minimize the taxes you owe. For more information, request a meeting with a member of our team.

 

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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