Fund Your Utopia Without Me.™

27 October 1998

A Look At Inheritance Taxes Around The World ... You Might Just Be Surprised ... If You Are A Prog, You Might Just Die From Shock!

1. BELGIUM: Droits de succession or successierechten (Inheritance tax). Collected at the federal level, but distributed to the regional level.

INHERITANCE TAX: BRUSSELS REGION

 

If the deceased was resident in the Brussels region, the spouse, direct descendants and direct ascendants are entitled to a tax-free allowance of €15,000 each. For children below 21 years of age, the allowance is increased by €2,500 for each year below the age of 21. For other beneficiaries, inheritances not exceeding €1,250 are not taxable.

  
TAX BASE(€) TAX RATE
Up to €50,000 3%
€50,000 - €100,000 8%
€100,000 - €175,000 9%
€175,000 - €250,000 18%
€250,000 - €500,000 24%
Over €500,000 30%
Source: Global Property Guide

 
The rates for brothers and sisters vary between 20% and 65%, where the minimum rate applies to inheritances up to €12,500 and the maximum rate applies to inheritances exceeding €250,000.

The inheritance rates vary between 25% and 70% for uncles, aunts, cousins, nieces and nephews. For all other individuals, the tax is levied between 40% and 80%. The minimum rate applies to inheritances up to €50,000 and the maximum rate applies to inheritances exceeding €175,000.

INHERITANCE TAX: FLEMISH REGION

 

The inheritance is split into immovable and movable parts, which are then taxed at progressive rates. A maximum reduction of €500 is granted if the taxable share does not exceed €50,000.


TAX BASE(€) TAX RATE
Up to €50,000 3%
€50,000 - €250,000 9%
Over €250,000 27%
Source: Global Property Guide


The rates for brothers and sisters vary between 30% and 65%. For all other individuals, the tax is levied between 45% and 65%. In all these cases, the minimum rate applies to inheritances up to €75,000 and the maximum rate applies to inheritances exceeding €175,000.

INHERITANCE TAX: WALLOON REGION


If the deceased was resident in the Walloon region, the spouse, direct descendants and direct ascendants are entitled to a tax-free allowance of €12,500 each. The allowance is increased to €25,000, if the inheritance does not exceed €125,000. For children below 21 years of age, the allowance is increased by €2,500 for each year below the age of 21. For other beneficiaries, inheritances not exceeding €620 are tax-exempt.
 

TAX BASE (€) TAX RATE
Up to €12,500 3%
€12,500 - €25,000 4%
€25,000 - €50,000 5%
€50,000 - €100,000 7%
€100,000 - €150,000 10%
€150,000 - €200,000 14%
€200,000 - €250,000 18%
€250,000 - €500,000 24%
Over €500,000 30%
Source: Global Property Guide 



The rates for brothers and sisters vary between 20% and 65%. The rates vary between 25% and 70% for uncles, aunts, cousins, nieces and nephews. For all other individuals, the tax is levied between 30% and 80%. In all these cases, the minimum rate applies to inheritances up to €12,500 and the maximum rate applies to inheritances exceeding €175,000.


2.  CZECH REPUBLIC: Dan dědická (Inheritance tax)

For purpose of calculation of the inheritance tax, persons are divided into three categories depending on relationship of the decedent and the acquirer. The categories / relationships are as follows:

I. Category: Direct relatives (in the direct line) and spouses.

II. Category: (i) Other relatives (in the collateral line), namely siblings, nephews, nieces, uncles and aunts, (ii) children’s spouses (sons-in-law and daughters-in-law), husband’s children, husband’s parents, and (iii) individuals living with the acquirer in a common household for at least a year prior to the decedent’s death, and who for that reason took care of the common household or who were dependent on the acquirer or decedent for their support (maintenance).
 
III. Category: Other individuals and legal entities not falling into the I. and/or II. category.

In the case of most tax exemptions, the obligation to file the inheritance tax return does not arise; however, certain tax exemptions must be claimed within the inheritance tax return.

$1 = 17.4620 Czech Republic Koruna

Tax base Tax rate from tax base exceeding over CZK to CZK the amount of CZK - 

1,000,000 3.5%

1,000,000 2,000,000 CZK 35,000 + 4.5% 1,000,000
2,000,000 5,000,000 CZK 80,000 + 6.0% 2,000,000
5,000,000 7,000,000 CZK 260,000 + 7.5% 5,000,000
7,000,000 10,000,000 CZK 410,000 + 9.0% 7,000,000
10,000,000 20,000,000 CZK 680,000 + 10.5% 10,000,000
20,000,000 30,000,000 CZK 1,730,000 + 12.5% 20,000,000
30,000,000 40,000,000 CZK 2,980,000 + 15.0% 30,000,000
40,000,000 50,000,000 CZK 4,480,000 + 17.5% 40,000,000
50,000,000 - CZK 6,230,000 + 20.0% 50,000,000

*As acquisition of property by inheritance between PERSONS OF THE CATEGORY I AND CATEGORY II ARE TAX EXEMPT REGARDLESS OF THE AMOUNT OF THE ESTATE, we indicate only tax rates applicable to persons of the III category.


3. FINLAND:  Perintövero
 
Beneficiaries are divided into two categories, depending on their relationship with the deceased.

  • Category I – close relative of the deceased/donor such as the spouse (including a cohabiting partner if the partners have a common child or if they have previously been married to each other), any lineal descendant or ascendant (including adoptive child relation) of the decedent and any lineal descendant of the decedent´s spouse
  • Category II – all other beneficiaries
The spouse may deduct €60,000 from his inheritance as personal allowance. Any lineal descendant under 18 years of age may deduct €40,000 if he is the closest beneficiary of the deceased.

INHERITANCE TAX









TAX RATES
TAX BASE, €






I







II
Up to €20,400






0%







0%
€20,000 – 40,000






10%







20%
€40,000 – €60,000






13%







26%
Over €60,000






16%







32%
Source: Global Property Guide

 

INHERITANCE TAX









TAX RATES
TAX BASE, €






I







II
Up to €4,000 






0%







0%
€4,000 – 17,000






7%







20%
€17,000 - €50,000






10%







26%
Over €50,000






13%







32%
Source: Global Property Guide


4. SWEDEN:  Arvskatt (Swedish) (Inheritance tax) was ABOLISHED IN 2005.

5. FRANCE:  Droits de succession (Inheritance tax)

There is (since 22 August 2007) no succession tax on inheritances between spouses and PACS partners, but tax is still due on life-time gifts over the available allowance (see below). This inheritance tax exemption extends to sisters and brothers who are single, widowed or divorced providing that at the time of succession they are aged more than 50 or are suffering from an illness which prevents them from working, and they were living with the deceased during the five years preceding the death.

Succession tax rates for 2010

Taxable inheritance to spouses and PACS partners (gifts only):


Taxable inheritance To spouses and PACS partners: (gifts only) Tax on band (€) Cumulative Tax (€)
Less than €7,953 5% 398 398
€7,953 to €15,697 10% 774 1,172
€15,697 to €31,395 15% 2,345 3,527
€31,395 to €544,173 20% 102,556 106,083
€544,173 to €889,514 30% 103,602 209,685
€889,514 to €1,779,029 35% 311,330 521,015
Above €1,779,029 40%



Taxable inheritance in the direct line, including adopted children but not step-children unless adopted:


Taxable inheritance In the direct line Tax on band  (€) Cumulative Tax  (€)
Less than €7,953 5% 398 398
€7,953 to €11,930 10% 398 796
€11,930 to €15,697 15% 565 1,361
€15,697 to €544,173 20% 105,695 107,056
€544,173 to €889,514 30% 103,602 210,658
€889,514 to €1,779,029 35% 311,330 531,988
Above €1,779,029 40%



Taxable inheritance: siblings and other relatives and non-relatives:


Taxable inheritance Brothers & Sisters Other relatives to the 4th degree More remote and non-relatives
Less than €24,069 35% 55% 60%
Above €24,069 45% 55% 60%
Allowances for 2010

  • Spouses - gifts (inheritances exempt): €79,533
  • Partners under PACS - gifts (inheritances exempt): €79,533
  • To each natural or adopted child from each parent: €156,974
  • To each natural or adoptive parent: €156,974
  • To children on your divorce (up to age 18): €2,700 pa, per child
  • To a grandchild (gifts only): €31,395
  • To a great-grandchild (gifts only): €5,232
  • Cash gifts to a child, grandchild or possibly nephew/niece
    • subject to donor's/donee's ages
    • non-renewable: €31,395
  • To unmarried brother/sister
    • over 50 or invalid
    • who has lived with deceased for at least the last five years (gift only): €79,533
  • To a sibling not covered above €15,697
  • To a nephew/niece (gifts and inheritances) €7,849
  • To a nephew/niece by representation of a sibling €15,697
  • To any other person €1,570
  • To any disabled person - additional to above €156,974

The living representatives of a deceased descendant share that descendant's allowance between them in addition to their own allowances.


Unmarried couples are taxable as "strangers" and so have an allowance of only a €1,570 unless they have entered into a PACS agreement, the French version of a civil partnership, open to both same and opposite couples in France. If a PACS agreement is broken before the end of the year following the year it was entered into, for motives other than marriage of the couple or death of one of the partners, the allowance will be denied and the tax relief clawed back. PACS partners are entitled to a deduction of 30 percent from the value of the main residence in the same way as a married couple is.


The allowances (with the exception of the one-off cash gift allowance) all renew every six years for lifetime gifts. Gifts up to the available allowances can thus be made every six years tax-free.


6. GERMANY:  Erbschaftssteuer (Inheritance tax)


Inheritance tax is levied on transfers of property or assets after death. This duty is paid by the beneficiary. Applicable inheritance tax rates vary depending on the relationship of the beneficiary to the deceased. There are three relevant classes of relationship and exemptions applicable:



Transfers of property are subject to inheritance tax at graduated rates depending on the value of the property and the classes of family relationship.


Class I
Exemption Amount
Tax Rate





Spouse
€ 500,000
7%-30%
Children and step-children
€ 400,000
7%-30%
Grandchildren
€ 200,000
7%-30%
Parents, grandparents, Great-grandchildren
€ 100,000
7%-30%





Class II








Siblings and their children, step-parents, 



parents-in-law, brothers-in-law, sisters-in-law,



 divorced spouse
€ 20,000
15%-43%





Class III








All other individuals and organisations
€ 20,000
30%-50%


Source: Global Property Guide


The lower rates for each category apply to properties or assets up to a value of €75,000 while the higher rates apply to acquisitions exceeding €26 million.


7.  IRELAND:  Inheritance tax (Cáin Oidhreachta)

For a surviving spouse OR surviving civil partners taking an inheritance from a deceased spouse or civil partner, the inheritance is completely exempt and, no matter how valuable, will not be liable to inheritance tax.
 

For a child (and in some cases, a parent), called a "Group A" beneficiary, the first €332,084 is tax-free.  Any remainder is taxed at 25%.
For a parent, in most cases, brother, sister, niece, nephew or grandchild, called a "Group B" beneficiary, the first €33,208 is tax-free and the remainder is taxed at 25%.

For a heir other than a a Group A or Group B beneficiary, the first €16,604 is tax-free.  The remainder of the inheritance, if any, is taxed at 25%.

8. ITALY:  Tassa di successione (Inheritance tax).  Abolished in 2001 and reestablished in 2006.  There is a €1,000,000 exemption on a bequest to a spouse or child, and a maximum rate of 8%.  The new Italian inheritance tax is now levied at three different flat rates, on the whole or part of the estate, with reference to the legatees or devisees as follows:

At the rate of 4% where the Estate or part of the Estate devolves to the decedent's spouse or children, subject to an €1,000,000 exemption for EACH beneficiary.  In the case of a widow and three children, the so-called "Franchigia" would be worth $5,538,401 and, if a family business is involved - say something along the lines of a Gucci or an Agnelli - it could be worth hundred of millions or even billions of euros.

Where the Estate or part of the Estate devolves to one or more disabled children, the exempt amount is increased to 1,500,000.
 
Subject to an exempt amount of 100,000 each, inheritances are taxed at 6% where they devolve to brothers, sisters and to other relatives of the decedent up to the 4th degree.  After the 4th degree, beneficiaries are still taxed at 4%, but there is no "exempt amount."

Where the estate, in whole or in part, devolves to unrelated parties, inheritances are taxed at 8%.

In practice, this means that the small / medium estates in Italy are not subject to inheritance taxes and even very large estates can escape massive tax bills if a great bulk of the estate is invested in a business or substantial shareholding in a company, whatever its amount.  Finanziaria 2007 now states that where the estate includes a business or a substantial stake in an ongoing concern, whatever its value, said assets shall not be taxed; provided, they are passed onto the children of the decedent and the said children undertake to continue to carry on the business or control the company for at least 5 years.


To Be Continued....