International Estate and Inheritance Tax Guide 2013 - EY

1 International Estate and Inheritance Tax Guide 2013 Preface The International Estate and Inheritance Tax Guide 2013 (IEITG) is published by ernst & young s Personal Tax Services network, which comprises of professionals hailing from ernst & young member firms in over 40 countries around the IEITG summarizes the Estate tax planning systems and also describes wealth transfer planning considerations in 36 jurisdictions. It is relevant to the owners of family businesses and private companies or managers of private capital enterprises as well as the executives of multinational companies (MNCs) and other entrepreneurial and internationally mobile high net worth individuals (HNWIs).The content is based on information current as of 1 September 2012, unless otherwise indicated in the text of the chapter.

2 Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should contact their local ernst & young office to obtain updated information. SectionPrefaceiTax informationThe chapters in the IEITG provide at-a-glance information, as well as details on the types of Estate planning in each jurisdiction, including sections on who is liable, domicile, residence, types of transfer, rates, payment dates and filing procedures, Inheritance and gift taxes, sourcing of income, private purpose funds, exemptions and reliefs, gifts, pre-owned assets charges, valuations, trusts and foundations, settlements, succession, statutory and forced heirship, matrimonial regimes, testamentary documents and intestacy rules and Estate tax treaty partners.

3 For the reader s reference, a chapter listing the names and symbols of the foreign currencies mentioned in the Guide can be found at the end of the publication should not be regarded as offering a complete explanation of the tax matters referred to and is subject to changes in the law and other applicable rules. Local publications of a more detailed nature are frequently available. Additional reading materials are suggested at the end of most chapters, and readers are advised to consult their local ernst & young professionals for further & young also annually produces the Worldwide Corporate Tax Guide , which provides summaries of corporate tax regimes, corporate tax rules and treaty withholding tax rates in over 150 countries as well as the Worldwide Personal Tax Guide (formally the Global Executive), which provides summaries of personal tax and immigration systems for executives in more than 140 countries, and the Worldwide VAT, GST and Sales Tax Guide , which covers value-added tax, goods and services tax (GST)

4 And sales tax systems in more than 80 countries and the European Union (EU).DirectoryOffice addresses, telephone numbers and fax numbers, as well as names and email addresses of relevant tax contacts, are provided for the ernst & young member firm in each country. The listing for each tax contact includes an office telephone number, which is a direct-dial number, if International telephone country code is listed in each country heading. Telephone and fax numbers are presented with the city or area code and without the domestic prefix (1, 9 or 0) sometimes used within a siteFurther information concerning ernst & young may be found at We are pleased to present ernst & young s International Estate and Inheritance Tax Guide 2013, the second edition of this publication designed to enable internationally positioned individuals to quickly identify the Estate and Inheritance tax rules, practices and approaches that have been adopted by 36 jurisdictions.

5 Knowledge of these various approaches can assist individuals with their Estate and Inheritance tax planning, investment planning and tax compliance and reporting needs. The global recession has increased the focus on Inheritance and wealth taxes in recent years. As governments endeavor to restore public finances to health, they are doing all they can to raise tax revenues and individual taxpayers have remained firmly in their sights. Around the world we have seen an increase in the personal tax burden. For those countries experiencing deeper levels of austerity and distress, there has also been a propensity for tax policymakers to popularize those taxes that appear to target wealthy individuals and those benefiting from increased property values.

6 Whether in crisis or not, many countries are rapidly increasing the tax burden in these areas in an attempt to reduce their deficits. And while many of them are not suffering from the same high levels of public debt, many emerging economies demonstrate that they are not immune to adoption of such trends either. Countries such as India, China and Russia that have seen a dramatic rise in the number of high net worth Individuals (HNWIs) in recent years have started to consider levying new individual taxes, including those on estates or inheritances, for the first the same time, as people and capital become increasing mobile, the number of International Inheritance tax disputes is on the rise.

7 When any tax issue crosses borders it inevitably becomes more complex. Conversely, bilateral treaties preventing double taxation often do not cover estates or inheritances and the risks of International successions being taxed more heavily are therefore on the rise. SectionWelcomeiiMany jurisdictions have far-reaching laws that give them tax rights when people inherit property from another country or where the deceased or the heir are resident, domiciled or hold nationality in another jurisdiction. Frequently, two or more countries may apply Inheritance tax on the assets involved. Cross-border Inheritance tax problems do not just affect individuals either; businesses can often face transfer difficulties upon the death of their initiative to tackle cross-border Inheritance tax obstacles has been taken up by the European Commission (EC).

8 On 15 December 2011, the EC adopted a comprehensive package of measures to address cross-border Inheritance tax problems such as investees being required to pay Inheritance or gift tax in two or more Member States or being subject to different tax rules than those applied to local inheritances or gifts. The new rules aim to give more protection to citizens who receive foreign inheritances or gifts from facing these types of issues. The EC is due to evaluate progress at the end of 2014 to see how the situation has evolved, and to decide whether further measures are necessary at either the national or EU level. While this will not help those residing in countries outside the EU, it is a welcome start to eliminating discrimination in the field of International Inheritance and wealth taxation.

9 With these issues in mind we hope you find this publication useful and that you consider these insights in relation to your International Inheritance and Estate tax planning situation. Further information about ernst & young and its approach to a variety of business issues as well as a range of other global tax guides can be found at Van Rij Global Director Personal Tax ServicesDavid H. Helmer Global Director Business Tax ServicesiiiContentsInternational Estate and Inheritance Tax Guide | 2013ivSectionContentsiii 2 Australia 8 Austria 14 Belgium 34 Brazil 40 Canada 52 China 56 Cyprus 62 Czech Republic 68 Denmark 74 Finland 86 France110 Germany 122 India 128 Indonesia 132 Ireland 140 Italy 150 Japan160 Luxembourg170 Mexico184 The Netherlands194 New Zealand206 Norway216 The Philippines228 Poland236 Portugal244 Russia250 Singapore260 South Africa270 South Korea278 Spain288 Sweden 294

10 Switzerland302 Turkey310 Ukraine320 The United Kingdom 334 The United States348 Foreign currencies350 Index of personal tax services contacts 352 Index of individual jurisdiction contacts 1 Australia1. Types of tax Inheritance taxThere is no Inheritance tax in Gift taxThere is no gift tax in Real Estate transfer taxThere is no real Estate transfer tax in Endowment taxThere is no endowment tax in Transfer dutyIn all states and territories there is an exemption from stamp duty (or only nominal duty) regarding the vesting of dutiable property in the executor of a deceased person. This also applies to the transfer of assets to the beneficiary of a deceased Net wealth taxThere is no net wealth tax in OthersLimited circumstance arises upon death where an immediate tax liability is included when.