Is tax charged on death or on gifts by individuals and, if so, which factors cause the tax to apply, when must a tax return be submitted, and at what rate, by whom and when must the tax be paid?

Private Client (2nd edition)

Israel Small Flag Israel

There is no inheritance tax or gift tax regime in Israel. With respect to a transfer of an asset as a gift, the transfer may be considered as a taxable sale generating capital gain in certain circumstances.

Ireland Small Flag Ireland

Yes, Capital Acquisitions Tax (“CAT”) is charged on the receipt of gifts and inheritances.

The charge to CAT is governed by the Capital Acquisitions Tax Consolidation Act 2003 (“CATCA”).

A charge to CAT will generally arise where:

  • The donor / disponer is resident in Ireland at the date of the gift / inheritance;
  • The recipient is resident in Ireland at the date of the gift / inheritance;
  • The property comprised in the gift / inheritance is Irish situate property.

The recipient of a gift / inheritance will be subject to CAT where the value of the gift / inheritance exceeds his / her applicable CAT-free threshold amount.

The deadline for payment of CAT and filing returns will depend on the valuation date. The valuation date is also relevant when considering whether the recipient can avail of certain exemptions / reliefs from CAT.

The valuation date of a taxable gift is the date of a gift. The valuation date of an inheritance will vary depending on the nature of the assets comprised in the inheritance and the length of time it takes to administer the deceased’s estate.

An individual who is domiciled outside Ireland will not be resident or ordinarily resident for CAT purposes unless he is resident in Ireland in the year of the gift / inheritance and has been resident in Ireland in each of the preceding five tax years.

Payment of CAT is made by way of self-assessment. Where 80 per cent of the CAT-free threshold, which is appropriate to a benefit, has been exceeded, the person who is primarily accountable for paying the CAT is obliged to deliver a return and pay the tax due.

Where the valuation date falls within the period 1 September to 31 August the following year, the filing and payment date is 31 October of the following year.

Belgium Small Flag Belgium

A. Competence of the Regions

Gift and inheritance tax fall under the competence of the three Regions: the Flemish Region, the Brussels Capital Region and the Walloon Region. As a consequence, different gift and inheritance tax rules apply in the three regions. The most relevant differences relate to the categories of gift and inheritance tax rates and the criteria to be considered as partners (spouses and cohabiting persons).

In each region the categories of gift and inheritance tax rates depend on the degree of kinship between the donor or deceased and the beneficiary, the value of the gift or inheritance and the nature of the donated or inherited goods.

B. Relevant factors

The relevant factor that causes Belgian gift tax to apply is the registration of the donation with the Belgian tax authorities. Such registration is mandatory for each donation that is done before a Belgian notary. The registration of a donation of tangible movable property is not mandatory if not done before a Belgian notary; such donation is not subject to gift tax unless it is voluntarily registered with the Belgian tax authorities.

Belgian inheritance tax is due if the deceased was a resident of Belgium, i.e. if he had his domicile or his ‘seat of wealth’ in Belgium. These criteria should be interpreted in the same way as for income taxes (cf. question 1).

For Belgian residents, the region where the donor or deceased has his place of residence will in principle determine which rules will in principle apply (Flemish, Brussels or Walloon).

For non-residents, gift and inheritance tax is due on the donation or inheritance of Belgian immovable property, according to the rules that apply in the region where the immovable property is located. Gift tax on movable property is only due if the donation is registered with the tax authorities. Upon the death of a non-resident, no inheritance tax is due on his Belgian movable property.

C. Inheritance tax

When a Belgian resident passes away, inheritance tax is due on the net value of his worldwide estate. Subject to certain conditions and within certain limits, foreign inheritance tax on foreign immovable property can be offset against the Belgian inheritance tax on the foreign immovable property.

For non-residents, inheritance tax is only due on their Belgian immovable property. If the deceased was a resident of the EEA, inheritance tax is due on the net value, while for non-EEA-residents inheritance tax is due on the gross value.

An inheritance tax return must be filed within four, five or six months from the deceased’s death, depending on the physical location where the deceased was at the time he passed away (in Belgium/EEA/outside EEA). In the Flemish Region, the tax is due within two months upon receipt of the tax bill. In the Brussels and Walloon Region, tax is due within two months from the last day of the filing period.

In the Flemish Region, inheritance tax is due as follows:

  • In direct line and between partners: movable and immovable property are taxed separately at rates of 3% to 27% (27% as from EUR 250.000). The calculation is made on the net share per beneficiary.
  • Between brothers and sisters: no split between movable and immovable property. On 1 September 2018, tax rates were lowered and now go from 25% - 55% (55% as from EUR 75.000). The calculation is made on the net share per beneficiary.
  • Between all other beneficiaries: no split between movable and immovable property. On 1 September 2018, tax rates were lowered and now go from 25% - 55% (55% as from EUR 75.000). The calculation is made on the total net shares of these persons, then divided amongst them according to their share in the inheritance.

In the Brussels Capital Region, inheritance tax is due as follows:

  • In direct line and between partners: tax rates go from 3% to 30% (30% as from EUR 500.000). The calculation is made on the net share per beneficiary.
  • Between brothers and sisters: tax rates go from 20% - 65% (65% as from EUR 250.000). The calculation is made on the net share per beneficiary.
  • Between uncles/aunts and nephews/nieces: tax rates go from 35% - 70% (70% as from EUR 175.000). The calculation is made on the total net shares of these persons, then divided amongst them according to their share in the inheritance.
  • Between all other beneficiaries: tax rates go from 40% - 80% (80% as from EUR 175.000). The calculation is made on the total net shares of these persons, then divided amongst them according to their share in the inheritance.

In the Walloon Region, inheritance tax is due as follows:

  • In direct line and between partners: tax rates go from 3% to 30% (30% as from EUR 500.000). The calculation is made on the net share per beneficiary.
  • Between brothers and sisters: tax rates go from 20% - 65% (65% as from EUR 175.000). The calculation is made on the net share per beneficiary.
  • Between uncles/aunts and nephews/nieces: tax rates go from 25% - 70% (70% as from EUR 175.000). The calculation is made on the net share per beneficiary.
  • Between all other beneficiaries: tax rates go from 30% - 80% (80% as from EUR 75.000). The calculation is made on the net share per beneficiary.

D. Gift tax

A donation of movable property that is registered, will be taxed at flat rates:

  • in the Flemish Region and the Brussels Capital Region: 3% in direct line and between partners, and 7% between all other persons;
  • in the Walloon Region: 3,3% in direct line and between partners, and 5,5% between all other persons.

Immovable assets are taxed at progressive rates. Since 3 September 2018 they are the same in all three regions. The rates go from 3% up to 27% in direct line and between partners (27% as from EUR 450.000). For other persons, the applicable rates are higher, and go from 10% up till 40% as from EUR 450.000.

United States Small Flag United States

The US transfer tax system is three pronged: a gift tax applies to certain transfers made during lifetime; an estate tax applies to certain transfers taking effect at death; and a generation-skipping transfer tax (GST tax) is imposed on certain transfers made during lifetime or at death (or at the time of distribution in the case of a transfer from a trust) to a person (a skip person) more than one generation below the transferor. Some, but not all, states within the US also impose estate or inheritance taxes.

The US imposes a gift tax on donative transfers from a US citizen or domiciliary to donees other than a US citizen spouse or charity, except with respect to certain transfers for a donee’s education or healthcare. US gift tax is imposed on a flat 40% rate on cumulative taxable gifts (other than annual exclusion gifts) in excess of the basic exclusion (gift tax exemption) amount of $10,000,000, as adjusted annually for inflation from 2010 ($11,400,000 in 2019). Annual exclusion gifts are gifts of a present interest from a US citizen or domiciliary to a donee other than a US citizen spouse or charity that do not exceed $15,000 (for 2019) per donee (or $30,000 per donee (for 2019) if made by a married donor whose spouse consents on a US gift tax return to having such gifts treated as having come one-half from him or her). Gifts to a spouse who is not a US citizen that do not exceed $155,000 (for 2019) qualify for the annual gift tax exclusion. Outright gifts are considered gifts of a present interest. Gifts made in trust may be gifts of a present interest if certain withdrawal powers or termination provisions are present in the trust; the absence of such entitlements will cause a gift made in trust to not qualify as an annual exclusion gift. Reporting of taxable gifts and the payment of any US gift tax due thereon must be made by April 15 of the year following the year in which the taxable gift was made (with extensions available upon request).

The US imposes an estate tax on the taxable estate of a US citizen or domiciliary. A US citizen’s or domiciliary’s taxable estate consists of his or her worldwide gross estate, valued as of date of death (or the earlier of the date of disposal of the assets or the date that is six months after the date of death, if the effect of choosing this ‘alternate valuation date’ will be a lowering of the estate tax due), reduced by various deductions (such as debts, administration expenses, qualified distributions made to or for the benefit of a surviving US citizen spouse or charity) and credits. US estate tax is imposed at a flat 40% rate on a taxable estate above the basic exclusion (estate tax exemption) amount of $10,000,000, as adjusted annually for inflation from 2010 ($11,400,000 in 2019), after reduction therefrom of taxable gifts made during lifetime. Nonresidents are also subject to US estate tax on US-situs property owned at death. US-situs property of a nonresident includes real or tangible personal property with a physical location within the US, shares of stock of a US corporation, certain debt obligations, deferred compensation of a US Person, and annuity contracts of a US obligor. Bank deposits and life insurance are not considered US-situs property of a nonresident. The taxable estate of a nonresident is taxed at a progressive estate tax rate capped at 40%, but the estate is allowed an estate tax exemption of only $60,000. US estate tax is due 9 months from date of death, although an extension of time to pay may be granted for reasonable cause. Likewise, for gross estates that exceed the estate tax exemption amount, a US estate tax return is due 9 months from date of death; an automatic 6-month extension of time to file is available. No further extension is available beyond 15 months from date of death. Under the concept of portability, for a married decedent who has not exhausted his or her available estate tax exemption, the filing of an estate tax return allows the porting of the deceased spouse’s unused exemption to the surviving spouse to avoid wastage of the predeceased spouse’s estate tax exemption. Portability is not available with respect to unused GST exemption.

The US imposes a GST tax on (1) outright transfers to skip persons (including trusts where all of the beneficiaries are skip persons), (2) distributions from certain trusts to skip person, and (3) on the assets of a trust where all of the remaining beneficiaries are skip persons upon the death of the last beneficiary who is not a skip person (GST transfers). In addition to any US estate tax or gift tax applicable to the transfer, US GST tax is imposed at a flat 40% rate on cumulative GST transfers above the basic exclusion (GST exemption) amount of $10,000,000, as adjusted annually for inflation from 2010 ($11,400,000 in 2019). US GST tax is due by April 15 of the year following the year in which the GST transfer was made or, in the case of GST transfers taking effect upon the donor’s death, on the due date of the US estate tax return in respect of the donor’s estate.

Property included in a decedent’s estate will qualify for a basis adjustment (commonly referred to a basis step-up, although the adjustment can be downward) to the property’s date of death (or alternate valuation date) value, for subsequent capital gains tax purposes.

Cyprus Small Flag Cyprus

There are no succession taxes in Cyprus, and no taxes on lifetime transfers.

Austria Small Flag Austria

Austria does not levy a gift tax or an inheritance tax. Nevertheless, in case of specific gifts exceeding special thresholds, a notification obligation exists. Non-compliance with such notification obligations triggers fines under the Austrian Fiscal Criminal Tax Act.

In case of gifts made to a private foundation, a foundation entry tax generally falls due.

Bulgaria Small Flag Bulgaria

Gift tax is levied on all properties acquired by a gift or otherwise gratuitously, as well as on liabilities extinguished on the basis of debt forgiveness.

The acquirer is liable to pay the tax unless otherwise agreed by the parties. The alienator is liable to pay the tax where the acquirer is abroad. The tax base is the value of the property as determined at the time of the transfer. The tax rate depends on the relationship between the alienator and the acquirer and is determined by the municipal authorities within the limits set forth in the law:

  • Gifts between spouses and lineal relatives are exempt. Other exemptions include donations to medical-treatment facilities, public-financed educational, cultural and scientific research organizations, non-profit legal entities, as well as customary gifts;
  • Gifts to siblings and their children are taxed at a rate from 0.4% to 0.8%;
  • In all other cases, the tax rate is from 3.3% to 6.6%.

The person liable to tax must submit a tax return to the municipal authorities and pay the tax within 2 months of the acquisition. As of 1 January 2019 the tax will be payable upon acquisition of the property.

Inheritance tax is levied on the estate of a decedent. The persons liable to tax are the legal or testamentary heirs and the legatees. Inheritance tax is paid on all Bulgarian and overseas properties of deceased Bulgarian nationals, as well as on the Bulgarian properties of deceased foreign nationals.

The tax base is the value of the share of the inheritance as determined at the opening of the inheritance:

  • Inheritance shares below BGN 250 000 are exempt.
  • Ordinary household furnishings, small farm implements, libraries and musical instruments are also exempt from tax if the estate devolves to lineal descendants, spouses and siblings.

The tax rate depends on the heir’s relationship to the deceased:

  • Inheritance received by the surviving spouse (civil partner excluded) and lineal descendants is exempt.
  • Inheritance received by siblings and their children is taxed at a rate from 0.4% to 0.8%.
  • In all other cases the applicable tax rate is from 3.3% to 6.6 %.

Within 6 months of the opening of the inheritance, the persons liable to tax are required to submit a tax return at the municipality of the last residence of the deceased. The amount of the tax due is then determined by the municipality officials and the tax liable persons are notified accordingly. The tax has to be paid within 2 months of the notification.

Argentina Small Flag Argentina

In Argentina, and for the moment, there is neither federal gift nor inheritance/estate tax. A gift tax/estate tax (Impuesto a la Transmisión Gratuita de Bienes, hereinafter “ITGB”) is only applicable within Buenos Aires Province (Entre Ríos has abrogated this tax on December 22nd 2018).

ITGB is assessed on any increase in an individual’s wealth due to the receipt of a gratuitous transfer of assets from acts including inheritances, legacies and gifts. According to the law, the following are deemed to be taxpayers:

  • Natural persons and legal entities domiciled within the province, which benefited from the gratuitous transfer. In this case, the tax applies to the total sum of the assets received by that person or entity.
  • Natural persons and legal entities domiciled outside the province when the increase in their wealth comes from a gratuitous transfer of assets located within the province (hereinafter “PBA situs assets”). In this case, the tax applies only to the amount of the increase derived from the transfer. Controversially, Buenos Aires Province Tax Code considers that the shares and equity interests of a Company registered outside Buenos Aires Province is a PBA situs asset in the proportion of those assets held by the Company which are situated in Buenos Aires Province (Example: Company incorporated and registered in the Autonomous City of Buenos Aires having real property in Buenos Aires Province). For tax assessment purposes, the shares will be valued by the net asset value of the latest closed financial statements.

The tax-free allowance and the tax rates have both been modified on 2018 as follows:

  • The tax-free allowance (mínimo no imponible) has been increased to ARS1,120,000 when the receiving party is the spouse, child or parent of the transferor. In any other case, the tax-free allowance is ARS269,000.
  • The applicable tax rates have been recently reduced. Currently, the applicable tax rate varies from 1.60% to 8.78% depending upon the value of the property transferred and the relationship between the transferor and the transferee of the property, and is assessed on the assessment value or the market value, whichever is higher. The tax must be determined by applying a flat tax amount and another variable depending on the applicable tax rate according to the scale (see table below).

Taxable Base($)

Father, son and spouse

Other ascendants and descendants

Collateral of 2nd degree

Collaterals of 3rd and 4th degree and other relatives and strangers (including entities)

Above

Up to (Upper Limit)

Flat Tax amount ($)

Tax Rate on amount exceeding the upper limit (%)

Flat Tax amount ($)

Tax Rate on amount exceeding the upper limit (%)

Flat Tax amount ($)

Tax Rate on amount exceeding the upper limit (%)

Flat Tax amount (%)

Tax Rate on amount exceeding (%)

0

430.564

0

1,6026%

0

2,4038%

0

3,2051%

0

4,0064%

430.564

861.127

6.900

1,6326%

10.350

2,4339%

13.800

3,2351%

17.250

4,0364%

861.127

1.722.255

13.929

1,6927%

20.829

2,494%

27.729

3,2952%

34.629

4,0965%

1.722.255

3.444.509

28.506

1,8129%

42.306

2,6142%

56.106

3,4154%

69.906

4,2167%

3.444.509

6.889.019

59.728

2,0533%

87.328

2,8545%

114.928

3,6558%

142.528

4,457%

6.889.019

13.778.037

130.453

2,534%

185.653

3,3353%

240.853

4,1366%

296.053

4,9379%

13.778.037

27.556.074

305.023

3,4956%

415.423

4,2968%

525.823

5,0981%

636.223

5,8994%

27.556.074

55.112.149

786.643

5,4186%

1.007.443

6,2199%

1.228.243

7,0212%

1.449.043

7,8224%

55.112.149

onwards

2.279.803

6,3802%

2.721.403

7,1814%

3.163.003

7,9827%

3.604.603

8,7840%

The tax return must be filed and paid by the beneficiary (donee, heirs, legatees, etc.), as follows:

  • In case of gifts: until expired fifteen days from the acceptance of the gift by the Donee;
  • In transmissions produced by cause of death: up to fifteen days of the judicial request for registration or delivery of the transmitted asset, release of funds, or act of a similar nature, or until twenty-four (24) months from the decedent's death, whichever comes first.

In addition, there is a Court Tax (Tasa de Justicia) applicable upon the judicial recognition of the transfer of the relevant estate The applicable tax rate will depend on where the succession process takes place (1,5% in the Autonomous City of Buenos Aires and 2,2% in Buenos Aires Province).

Monaco Small Flag Monaco

Tax on lifetime gifts only applies to assets that are situated in Monaco, regardless of the domicile, residence or nationality of the donor.

Gift tax is applicable to lifetime gifts evidenced in writing and/or by notarised deed. Gifts that can be made by a physical transfer of property (which does not require a written deed, such as a gift of a chattel) are not subject to tax. Gift tax is in principle paid by the donee but can be paid by the donor if intended so. Gift tax is paid when a triggering event of gift tax occurs (notary act for example).

Inheritance tax only applies to assets that are situated in Monaco, regardless of the domicile, residence or nationality of the deceased.

Inheritance or succession tax is payable at the same rate as lifetime gift tax. The rates are of:

  • 0 per cent between spouses and in direct line;
  • 8 per cent between brothers and sisters;
  • 10 per cent between uncles or aunts, nephews or nieces;
  • 13 per cent between other collateral relatives; and 16 per cent between unrelated persons.

Inheritance tax is paid by the heirs when the declaration of succession is filed with the Monegasque notary.

Italy Small Flag Italy

Transfers upon death and gifts are subject to inheritance and gift tax at the following rates and with the following exempt amounts:

(a) 4 per cent, if the transfer is made to spouses and direct descendants or ancestors; here, the transfer is subject to tax on the value exceeding Euro 1 million (this exempt amount applies to each beneficiary);

(b) 6 per cent, if the transfer is made to brothers and sisters; here, the transfer is subject to tax on the value exceeding Euro 100,000 (this exempt amount applies to each beneficiary);

(c) 6 per cent, if the transfer is made to relatives up to the fourth degree, to persons related by direct affinity as well as to persons related by collateral affinity up to the third degree; and

(d) 8 per cent, in all other cases.

Lifetime gifts, executed by the deceased to the beneficiary, erode the amount that is exempt from inheritance gift tax. According to two recent judgments of the Supreme Court (No. 24940 of 6 December 2016 and No. 26050 of 16 December 2016), the exempt amounts available on death are not eroded by lifetime transfers (it is fair to say that the position of the Supreme Court does not seem to be shared by the tax authorities).

Inheritance and gift tax is levied on worldwide assets if the deceased or donor had his or her habitual abode in Italy on the date of demise or gift, otherwise it applies only to Italian-situs assets.

The law sets forth non-refutable presumptions whereby certain assets are deemed to be situated in Italy. For example, the following assets are in any event deemed to be situated in Italy: assets enrolled in the public registers of Italy (such as real estate, ships and aircrafts, trademarks and patents) and connected rights of enjoyment in rem; shares and quotas of companies with either the legal seat or the seat of management or the main object in Italy; bonds and other securities in series, other than shares, issued by Italy or by the aforementioned companies; receivables and cheques if the debtor or the issuer is a resident of Italy (irrespective of the location of the security, if any); receivables secured by property situated within Italy up to the value of the property, irrespective of the residence of the debtor.

The inheritance tax return must be filed within 1 year from the date of demise by either of the individuals called to succeed and the legatees, their legal representatives, the administrators or the persons managing the estate. In the event of a gift executed in form of a donation in front of an Italian public notary, the notary is bound to report the gift to the Italian tax authorities. The tax is assessed by the tax authorities following the filing of the inheritance tax return or the reporting of the gift. Specific rules apply to gifts other than formal donations.

It is common to gift the bare ownership of assets to future generations by reserving the right of usufruct. This triggers the levy of gift tax on the value of the sole bare ownership, whilst the expansion of bare ownership to full ownership, upon the death of the usufruct holder, is not subject to inheritance tax.

Bermuda Small Flag Bermuda

There is no inheritance tax in Bermuda. The only relevant tax payable is stamp duty, which is payable on the value of the deceased’s Bermudian property (that is real property situated in Bermuda, Bermudian dollars and shares in Bermudian companies).

On death, the rates vary between 0% for Bermudian assets below BM$100,000 to 20% for Bermudian assets over BM$2 million. The rate is applied to the market value of the assets, and secured debt on real property in Bermuda will reduce the amount of stamp duty payable.

Lifetime gifts of Bermudian property (other than cash) are subject to a lower rate of stamp duty, at a maximum of 7% for gifts with a value of over BM$1.5 million.

Exemptions from stamp duty apply to:

  • the value of any interest in an estate that passes to a spouse;
  • gifts to charities registered in Bermuda (or international charities that the Minister of Finance deems to be charitable); and
  • the value of a principal family home (this only applies for persons who hold “Bermuda Status”, as defined in the Bermuda Immigration and Protection Act 1956).

United Kingdom Small Flag United Kingdom

5.1 The principal tax on gifts and transfers on death is inheritance tax, which is a charge on transfers of value (§5.2).

5.2 A transfer of value is a disposition by which the value of the individual's estate (§5.3) is reduced. On death, an individual is deemed to have made a transfer of value equal to the value of his estate immediately before his death.

5.3 Generally, the estate of an individual includes all the property to which he is beneficially entitled, property which he has given away (including by transfer into trust) but from which he continues to benefit, and (in some circumstances) trust property in which he has a life interest (§19.2). However, the estate of an individual who is neither domiciled (§1.9) nor deemed domiciled for inheritance tax purposes (§5.9) in the UK excludes property situated outside the UK so that, for such an individual, inheritance tax is only relevant to the extent that assets are situated in the UK. Non-UK property representing the value of UK residential property is for this purpose generally treated as if situated in the UK.

5.4 A transfer of value (§5.2) by way of a lifetime gift to an individual made seven years or more before the death of the donor is not charged to inheritance tax on the donor's death, provided the donor does not continue (after making the gift) to benefit from the property included in the gift. Transfers of value by way of lifetime gifts made during the last seven years of the donor's life are brought into account on the donor's death and added to the deemed transfer of value which takes place on the death itself (§5.2). The total of these transfers of value is then charged to inheritance tax (except to the extent that a relief or exemption applies), with an amount equal to the individual's available nil-rate band (§5.8) being charged at a nil rate and the balance being charged at 40%, subject to a reduction in the rate payable in respect of gifts made to individuals more than three years before the death.

5.5 Inheritance tax which is charged on the death of an individual is normally a liability of his personal representatives (§17.1). The tax must normally be paid no later than six months after the end of the month in which the death occurred, but may in some circumstances be paid in 10 equal annual instalments (together with interest on the unpaid instalments) if it is charged on land, certain kinds of shares or securities, or a business. Inheritance tax due on a death must be paid before a grant of probate (§17.1) can be issued to the personal representatives. Subject to exceptions for low value and simple estates, an inheritance tax return must be submitted to HMRC with details of the assets and liabilities of the estate. In practice, the personal representatives will file this return with HMRC in advance of the date on which the tax itself falls due, although the deadline for filing the return falls 12 months after the end of the month in which the death occurred.

5.6 Where a lifetime gift is charged to inheritance tax because the donor dies within seven years of making the gift, the tax liability falls on the donee, with a secondary liability falling on the personal representatives (§17.1) if the tax remains unpaid 12 months after the end of the month in which the death occurred.

5.7 Where an individual makes a transfer of value (§5.2) during his lifetime to the trustees of a trust (other than a bare trust or certain favoured kinds of trust), there is an immediate charge to inheritance tax at 20% to the extent that the individual's available nil-rate band (§5.8) is exceeded, with further tax being charged if the individual dies within seven years of making the transfer of value.

5.8 The full nil-rate band is normally £325,000, but is reduced by the value of chargeable transfers made by the individual in the previous seven years, and may be increased where the individual has been predeceased by a spouse or civil partner who did not use (or completely use) his or her nil-rate band. Where a home is left on death to a descendant or descendants and is within the scope of inheritance tax, the deceased's nil-rate band is increased by an amount called the residence nil-rate band (RNRB). The RNRB is £125,000 for a death in the tax year (§2.13) ending 5 April 2019, £150,000 for a death in the tax year ending 5 April 2020, and £175,000 for a death in the tax year ending 5 April 2021, and can be increased where the deceased was predeceased by a spouse or civil partner who did not use (or completely use) his or her RNRB, and is progressively reduced where the value of the deceased's estate (§5.3) exceeds a limit which currently stands at £2,000,000.

5.9 An individual is deemed domiciled for inheritance tax purposes in the UK in a particular tax year (§2.13) if he has been UK-resident (§1.5-1.7) for at least 15 of the 20 tax years immediately preceding the relevant tax year and for at least one of the four tax years ending with the relevant tax year. An individual is also deemed domiciled for inheritance tax purposes (and known as a "formerly domiciled resident") in a particular tax year if he was born in the UK with a domicile of origin in the UK (§1.9), is UK-resident for the relevant tax year, and was UK-resident for at least one of the two tax years immediately preceding the relevant tax year. Finally, an individual is deemed domiciled for inheritance tax purposes in the UK at any time if he was domiciled in the UK within the three years immediately preceding that time.

5.10 A gift made during the donor's lifetime is a disposal (§2.8) for the purposes of capital gains tax (§2.6), and is normally deemed for those purposes to have been made for a consideration equal to its market value at the date of the gift (but see §6.2). An asset passing on death is rebased to its market value (as at the date of the death) for the purposes of capital gains tax, with no capital gains tax arising on the death itself, so that an individual inheriting the asset takes it at a base cost which, for the purposes of capital gains tax on a subsequent disposal, is equal to its market value at the date of the death.

Colombia Small Flag Colombia

Inheritances, gifts and donations are subject to capital gains tax in Colombia. The transfer of any real estate involved will also trigger registry tax.

Once an estate has covered all obligations, the inheritance is distributed among all heirs. Such distribution is subject to capital gains tax at a 10%. However, in some cases part of the inheritance may be considered as exempted income.

Inheritances, gifts and donations are subject to capital gains tax regardless of the location of the assets if the individual is a Colombian tax resident. If the individual is not considered as a tax resident, only inheritances gifts and donations of Colombian source are subject to taxation in Colombia.

Cayman Islands Small Flag Cayman Islands

There is no inheritance tax, gift tax or estate tax in the Cayman Islands.

Germany Small Flag Germany

Transfers of worldwide assets on death or on gifts are subject to German inheritance or gift tax if at least one of the individuals (transferor or transferee) is resident in Germany. If none of them is a German resident, German inheritance or gift tax may apply to the extent as certain assets located in Germany are transferred (e.g. German real estate, business property which belongs to a permanent establishment in Germany, shares in German companies). A tax treaty may provide shelter from German taxation in certain cases. The applicable tax rate ranges between 7-50 % depending on the value of the assets received and the relationship between the parties involved. Notice on a taxable transfer must be given to the competent authority within 3 months after the transfer. A tax return will then have to be filed within a term to be determined by the authority and the tax will usually become due 30 days after the tax has been assessed by the authority. In general, the tax is to be paid by the transferee.

Singapore Small Flag Singapore

Singapore does not impose any estate tax or gift tax.

Portugal Small Flag Portugal

Portugal levies Stamp Tax on inheritances or gifts if the underlying assets are deemed as located in Portugal (such as real estate located in Portugal or money deposited in Portuguese bank accounts).

France Small Flag France

In France, gift tax is due by the donee on lifetime gifts (see § 5.1.) and inheritance tax is due by the heir/legatee on death of the deceased (5.2.).

The same territorial principles apply to gift tax and inheritance tax. When the donor or deceased is or was a French tax-resident, gift or inheritance tax are due on all movables and real property situated in or outside France. When the donor or deceased is not or was not French tax-resident the following distinction has to be made:

  • When the beneficiary is French tax-resident at the transfer date or has been domiciled there for at least six of the previous ten years, gift or inheritance tax is due on movables and real property situated in or outside France;
  • When the beneficiary is not a French tax-resident, gift or inheritance tax is due only on the received assets located in France.

The main assets which are considered as located in France for gift tax, inheritance tax and ISF (see §4.1.) purposes are the following:

  • real estate properties located in France
  • movable assets (i.e. furniture, pieces of art) located in France
  • shares of companies registered in France
  • debts when the debtor is resident of France
  • shares of companies (French or foreign) owning real estate properties located in France having a market value exceeding those of their other French movable assets (“société à prépondérance immobilière”).
  • shares of companies (French or foreign) owning real estate properties located in France directly or indirectly held for more than 50% by the same family members (only for the fraction of their market price which represent the market value of real estate properties located in France).

Transfers for no consideration of the above mentioned French assets between non-resident individuals are subject to either French gift tax or French inheritance tax.

5.1. Gift tax

Gift tax is due by the donee but can be paid by the donor. When this is the case the gift tax paid by the donor is not treated as additional gift.

Various allowances, for each fifteen-year period may apply depending on the donor’s relationship with the donee:

  • parent and children in direct line: 100,000 €
  • brothers and sisters: 15,932 €
  • nephews and nieces: 7,967 €
  • spouses or partners: 80,724 €
  • grandchildren: 31,865 €
  • great-grandchildren: 5,310 €
  • disabled people: 159,325 €
  • other beneficiaries: 1,594 €

Cash gifts benefiting to children, grandchildren, great grandchildren (nieces and nephews in the absence of direct descendants) are exempted from gift tax up to 31,865 € assuming the donor is under 80 years old and beneficiaries are over 18 years old or emancipated for each fifteen-year period.

The rates of gift tax are also different depending on the donor’s relationship with the donee.

Lifetime gifts to spouse or civil partners do not benefit from the exemption which applies to inheritance tax (see below). They are subject to the following progressive scale rates:

  • up to 8,072 € 5 %
  • from 8,072 € to 15,932 € 10 %
  • from 15,932 € to 31,865 € 15 %
  • from 31,865 € to 552,324 € 20 %
  • from 552,324 € to 902,838 € 30 %
  • from 902,838 € to 1,805,677 € 40 %
  • more than 1,805,677 € 45 %

Lifetime gifts between parents and children in direct line are subject to the same progressive scale rates from 5 % to 45% than those which applies between spouses or civil partners (see above).

Lifetime gifts between brothers and sisters are subject to the same progressive scale rates from 35% to 45% than those applying for inheritance tax (see § 5.2.).

Lifetime gifts between relatives up to the fourth degree, including nephews, nieces, grandnephews and grandnieces, aunts and uncles, grandaunts and granduncles, first cousins are subject to a 55% gift tax.

Other gifts are subject to a 60% gift tax.

Gift tax should be paid within 30 days after the lifetime gift or after its disclosure to the French tax authorities (for manual gifts).

5.2. Inheritance tax

Inheritance tax is due by the heirs.

Allowances described in § 5.1. apply to inheritance tax if they were not already used on gifts made during the fifteen-year period preceding the death.

The rates of inheritance tax are also different depending on the deceased’s relationship with the heir.

A total exemption of inheritance tax applies between spouses and civil partners.

The progressive Inheritance tax scale rates between parents and children is as follows:

  • up to 8,072 € 5 %
  • from 8,072 € to 12,109 € 10 %
  • from 12,109 € to 15,932 € 15 %
  • from 15,932 € to 552,324 € 20 %
  • from 552,324 € to 902,828 € 30 %
  • from 902,838 € to 1,805,677 € 40 %
  • more than 1,805,677 € 45 %

The progressive scale inheritance tax rates applying between brothers and sisters is as follows:

  • up to 24,430 € 35 %
  • more than 24,430 € 45 %

The inheritance tax rate applying between relatives up to the fourth degree is 55%.

The inheritance tax rate applicable for more distant relatives and unrelated persons is 60%.

Inheritance tax should be paid within six months following the death if the deceased was resident of France upon his/her death and within one year if he/she was non-resident.

Liechtenstein Small Flag Liechtenstein

No inheritance and gift tax exists in Liechtenstein.

Mexico Small Flag Mexico

According to article 93, section XXII of the Mexican Income Tax Law, income derived from death is exempted for income tax purposes.

Nevertheless, it is important to mention that individuals that during a tax year have obtained income that exceeds the amount of $500,000 Mexican pesos are obliged to declare all their income in their tax return, including income deriving from successions.

If an individual fails to comply with such obligation, Mexican law establishes a presumption that does not admit evidence to the contrary, by virtue of which the tax authorities will consider that all undeclared income constitutes cumulative income for income tax purposes, regardless of whether the income was originally exempt.

Also, it is important to consider that death might generate other taxes, such as Real Estate Acquisition Tax, which is a local tax that shall be paid by the individual that is inheriting a real state.

In Mexico City, this tax has a progressive rate that goes from 3.163% to 4.565% on the total value of the property, and shall be paid by the person who is inheriting the real state by means of a withholding made by the notary public at the time the acquisition takes place.

Regarding gifts, article 93, section XXIII of the Mexican Income Tax Law states that gifts received by individuals are exempt from paying income tax in the following cases:

  • Gifts between spouses or those who receive the descendants of their ascendants in a straight line, whatever the amount.
  • Those who receive the ascendants of their descendants in a straight line, provided that the goods received are not disposed of or donated by the ascendant to another offspring in a straight line without limitation of degree.
  • All other gifts, provided that the total value of those received in a calendar year does not exceed three times the general minimum salary of the taxpayer's geographical area raised per year . For the surplus, tax will be paid in the terms of the Mexican Income Tax Law.

Regardless of whether the donation is taxed or not, it is important to mention that individuals residing in Mexico are obliged to report, in their annual tax return, about the loans, donations and prizes obtained therein, provided that these, individually or as a whole, exceed $600,000.00 Mexican pesos.

Again, if an individual fails to comply with such obligation, Mexican law establishes a presumption that does not admit evidence to the contrary, by virtue of which the tax authorities will consider that all undeclared income constitutes cumulative income for income tax purposes, regardless of whether the income was originally exempt.

If the donation is not exempt for income tax purposes, the individual shall pay the corresponding tax, at the progressive rate that corresponds to him depending on the total amount of his income (as explained in question 2). Said tax must be paid through the annual tax return, no later than April 30 the following year.

Notwithstanding that, the individuals that obtain income from taxed donations shall cover, as an advance payment, the amount that results from applying the 20% rate on the income received, without any deduction. The advance payment shall be made through a tax return that shall be presented to the authorized offices within 15 days after obtaining the income.

Updated: March 25, 2019