Global Estate, Inheritance and Gift Tax Guide 2024 - Key Themes and Highlights

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The Expat Financial Blueprint analyses the "Worldwide Estate, Inheritance and Gift Tax Guide 2024" focusing on key themes and important facts regarding inheritance, gift, and real estate transfer taxes across various jurisdictions. To find the guide in full, please see the resources at the bottom of this blogpost.

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This global guide offers a comprehensive overview of the complex and diverse landscape of estate, inheritance, gift, and real estate transfer taxes worldwide. Understanding these regulations is crucial for individuals and families engaging in cross-border estate planning, wealth management, and wealth preservation. Consulting with tax professionals specializing in international taxation is essential for navigating these complex rules and optimising tax strategies.

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1. Global Variability in Estate and Inheritance Taxes:

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The guide highlights the diverse landscape of estate and inheritance tax regulations globally. While some countries, like Australia and Gibraltar, have no inheritance tax, others, such as Japan, France, and the UK, impose significant levies on inherited assets.

Example:

• Gibraltar: "There is no inheritance tax, estate duty, wealth tax or similar taxes in Gibraltar."
• Greece: "Greece levies inheritance tax on the transfer of assets located in Greece… On certain conditions Greece may provide a tax credit against the Greek IHT due (where applicable) for inheritance tax paid in another country on movables if applicable."

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2. Forced Heirship Provisions:

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Certain jurisdictions, including Portugal, Malta, Bulgaria, and the Philippines, enforce forced heirship rules, mandating a portion of the estate be allocated to specific heirs, typically close family members.

Example:

• Malta: "Under Maltese law, the reserved portion due to all children born in/out of wedlock or adopted shall be one-third of the estate if such children are not more than four in number or half of the value if they are more than five in number."
• Philippines: "The Philippines has, by law, institutionalized the concept of compulsory heirs and their legitime. Thus, regardless of the wishes and desires of a testator as provided in his or her will, the legitime of compulsory heirs must be respected."

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3. Gift Tax Implications:

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Many countries, including the Netherlands and Japan, impose gift taxes on the transfer of assets during a person's lifetime. The guide outlines the specific regulations, tax rates, and exemptions that apply in each jurisdiction.

Example:

• Netherlands: "Gifts may be shaped as revocable or irrevocable… These rules should be taken into account when calculating the gift tax due."
• Japan: "Japan levies gift tax on the transfer of property by gift from a donor who is domiciled in Japan."

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4. Real Estate Transfer Taxes and Stamp Duty:

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The transfer of real estate is often subject to specific taxes, including transfer taxes and stamp duties. The guide provides detailed information on the rates, calculation methods, and exemptions applicable in each country.

Example:

• Singapore: "Buyer’s Stamp Duty (BSD) is a tax on the purchase or acquisition of immovable properties in Singapore… Different BSD rates may apply to the period prior to 15 February 2023."
• Canada: "The Land Titles Act Nova Scotia… the province also imposes a 5% provincial deed transfer tax on residential property purchased by nonresidents of Nova Scotia, effective 1 April 2022."

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5. Residency and Domicile as Key Determinants:

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Tax liabilities for inheritance, gift, and real estate taxes are frequently determined by the individual's residency and domicile. The guide clarifies how these concepts are defined and applied in different jurisdictions.

Example:

• United States: "In contrast to income tax residence, the US transfer tax laws determine an individual’s residence with a subjective inquiry into the individual’s 'domicile' in a more subjective manner… Domicile depends on the facts and circumstances of each particular case."
• Portugal: "The ST Code defines domicile using the rules applicable for PIT purposes for assessing tax residency… Those who have remained for more than 183 days, consecutively or not, in any period of 12 months starting or ending in the concerned year…"

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6. Trusts and Foundations:

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The guide explains the legal framework and tax implications of trusts and foundations, outlining the specific regulations and tax treatments that apply in various countries.

Example:

• Netherlands: "As of 1 January 2010, irrevocable discretionary trusts and other entities of functional similarity, such as family foundations, are regulated in the areas of income tax, gift tax and inheritance tax."
• South Africa: "There are two types of trusts in South Africa: testamentary trusts and living trusts, also known as inter vivos trusts... All trusts need to register with the South African Revenue Service (SARS)."

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7. Intestacy Rules:

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In cases where individuals die without a valid will, the guide summarizes the intestacy rules that govern the distribution of assets in different countries.

Example:

• Australia: "If a person dies without making a will, his or her assets will be dealt with in accordance with the laws of intestacy in that state or territory. One of the relevant factors is whether the deceased has identifiable next of kin."
• Malta: "When there is no valid will… intestate succession takes place, wholly or in part. By law, inheritance passes down to descendants, ascendants, the wife or husband of the deceased person, collateral relatives (cousins, aunts, etc.) and to the government of Malta."

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