Cross Border Inheritance Tax: How Multiple Countries Tax the Same Estate

Why Estates Get Taxed Twice

Every country decides independently who and what it can tax. Most follow one of two principles — or both simultaneously:

Domicile- and residence-based taxation. The US taxes the worldwide estate of US citizens and domiciliaries. For UK inheritance tax, the domicile-based rules were replaced by long-term UK residence rules for deaths on or after April 6, 2025. If the deceased was a US citizen or domiciliary, the IRS can tax their assets everywhere — the Manhattan apartment, the Swiss bank account, the villa in Portugal.

Situs-based taxation. Many countries also tax assets physically located within their borders regardless of the owner's domicile. The US taxes US-situs assets of non-resident non-citizens. France imposes succession tax on French property owned by anyone. Spain taxes Spanish real estate and bank accounts in Spanish institutions.

Double taxation can occur when two countries tax the same property under these different rules. Bilateral treaties and unilateral foreign-tax credits may reduce or eliminate the overlap; the result depends on the laws that apply to the estate.

How Different Countries Tax Inheritance

The tax treatment varies dramatically across major jurisdictions:

United States. Estate tax, not inheritance tax — the tax is on the estate itself, not the individual heirs. US citizens and domiciliaries face a 40% top rate with a $15 million basic exclusion for 2026 deaths. Non-resident non-citizens get only a $60,000 exemption on US-situs assets unless a treaty applies.

United Kingdom. Inheritance tax at a flat 40% on estates above £325,000 (with a residence nil-rate band adding up to £175,000 for qualifying estates). UK inheritance tax can cover UK-situs assets and, for deaths on or after April 6, 2025, may cover overseas assets when the deceased was a long-term UK resident.

France. Inheritance tax (droits de succession) applies to French property and to worldwide assets of French-domiciled decedents. Rates range from 5% to 45% for direct-line heirs, with much higher rates for non-relatives.

Germany. Inheritance tax (Erbschaftsteuer) applies on a sliding scale with rates from 7% to 50%, depending on the relationship to the deceased and the value of the inheritance. Germany taxes both German-domiciled estates and German-situs assets.

Australia, Canada, New Zealand. No inheritance or estate tax. But Canada imposes a deemed-disposition capital gains tax at death, which functions similarly in practice.

Relief Mechanisms

Three tools exist to prevent or reduce double taxation:

Bilateral estate tax treaties coordinate taxing rights between specific country pairs. The US has treaties with 16 countries that can dramatically increase the effective exemption through prorated unified credits and domicile tiebreaker rules. These must be actively claimed by filing the appropriate forms.

Unilateral foreign tax credits let one country's estate offset its tax by the amount already paid to the other country on the same assets. In the US, the foreign death tax credit (IRC Section 2014, reported on Schedule P of Form 706) allows this offset — but only up to the US tax attributable to those specific foreign-taxed assets.

The EU succession regulation does not directly address taxation (Brussels IV covers succession law, not tax law), but the European Certificate of Succession streamlines administration, which indirectly reduces the compliance burden and cost.

The Executor's Tax Compliance Burden

In a two-country estate, the executor typically faces:

• Estate or inheritance tax filings in each country where taxable assets exist
• Foreign tax credit calculations to claim relief from double taxation
• Treaty benefit elections (requiring full disclosure of worldwide assets)
• Tax clearance certificates from each jurisdiction before assets can be released or transferred

The sequencing matters. Some countries will not release assets until tax is fully paid. The US freezes estate accounts until it issues a Transfer Certificate. India requires Chartered Accountant-certified tax clearance forms before any international wire transfer. Failing to coordinate these parallel obligations can delay the entire estate settlement by months.

The Filing Deadlines Executors Miss

Each country imposes its own filing deadline, and they do not coordinate with each other:

• US: 9 months from death (extendable by 6 months with Form 4768)
• UK: 6 months from the end of the month of death for initial IHT payment, 12 months for the full account
• France: 6 months from the date of death if the death occurred in France, or 12 months in other cases; special rules apply in some overseas situations
• Germany: No fixed deadline, but interest accrues after the tax authority issues an assessment

Missing any of these triggers penalties and interest. The executor's personal liability exposure makes timely filing essential.

If you are managing an estate with assets across multiple tax jurisdictions, the International Estate toolkit maps every country's filing requirements, deadlines, and relief mechanisms to keep you compliant across all jurisdictions simultaneously.