Three Ways the Heir’s Country Taxes a Bequest
Every country with a death tax picks a trigger. Find your heir’s before you decide what they inherit.
- No tax on receipt.
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India abolished its estate duty in 1985 and Russia its inheritance tax in 2006. Canada, Australia, China, Israel, Sweden, Austria, and Norway also charge nothing when an inheritance arrives. They all tax what the inheritance earns afterward, and some measure the heir’s later gain in a way that undoes the US step-up (section “What Each US Account Becomes in Foreign Hands”).
- Taxed by where the decedent lived.
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Italy, the Netherlands and, since April 2025, the United Kingdom tax a whole estate only when the person who died lived there; for the UK that now means ten of the previous twenty years. A US decedent who never did is taxed only on property located there, such as Italian or British real estate; the Dutch do not tax even that. They keep a claim instead on the estate of a Dutch national for ten years after emigration.
- Taxed by where the heir lives.
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Germany taxes the entire inheritance whenever either the decedent or the heir is resident (ErbStG §2). Spain does the same as soon as the heir is resident, Japan for an heir whose home is there, at rates up to 55%, and Ireland when the heir is resident or ordinarily resident, after a five-year wait for someone domiciled elsewhere. Your US exemption does nothing for that bill.
Read the treaty before the statute, because a treaty can switch the heir’s tax off. French law taxes an heir who has lived in France six of the last ten years on everything received, but article 8 of the US–France estate tax treaty lets France tax shares, accounts, and cash only when the decedent was French or lived in France (consolidated treaty). Your US brokerage account reaches a niece in Lyon untaxed by France, while a house you own in Provence does not. Germany negotiated the opposite: its treaty preserves the claim on a German-resident heir and only credits whatever US estate tax was paid.
| Where the niece lives | Tax on EUR 500,000 of US assets | How it is computed |
|---|---|---|
| India, Russia, Canada, Australia | None | No tax on receipt |
| Italy, the Netherlands, the UK | None | Tax reaches at most property located there |
| France, after six years there | None | French law would take EUR 270,600 (55% above a EUR 7,967 allowance); the treaty leaves a US decedent’s securities and cash to the US |
| Germany | EUR 120,000 | Class II: EUR 20,000 allowance, then 25% at this size on a 15–43% scale; the treaty preserves it |
| Ireland | EUR 151,800 | Group B: EUR 40,000 lifetime threshold, then 33% (2026) |
| Spain | Depends on the region | State scale of 7.65–34%, then regional reliefs and a multiplier for distant relatives; no US treaty |
Two things follow from that table. The heir’s tax is assessed in the heir’s country and paid out of the heir’s share whether or not your estate owed the IRS anything—and below the $15 million exemption it owed nothing, so there is no US tax for a treaty or a credit to offset. And residence moves. The niece in Milan who takes a job in Munich the year before you die turns a zero into six figures. Germany, Spain, and Ireland tax lifetime gifts under the same residence rule, so the lever is timing: if an heir lives in a no-tax country today and may not tomorrow, give now (section “Gift Taxes”).