An inheritance tax is a
tax
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the
estate (money and property) of a person who has died.
International tax
International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries, or the international aspects of an individual country's tax laws as the case may be. Governments usually limit the ...
law distinguishes between an estate tax and an inheritance tax—an estate tax is assessed on the assets of the deceased, while an inheritance tax is assessed on the legacies received by the estate's beneficiaries. However, this distinction is not always observed; for example, the UK's "inheritance tax" is a tax on the assets of the deceased, and strictly speaking is therefore an estate tax.
For historical reasons, the term death duty is still used colloquially (though not legally) in the UK and some
Commonwealth
A commonwealth is a traditional English term for a political community founded for the common good. Historically, it has been synonymous with "republic". The noun "commonwealth", meaning "public welfare, general good or advantage", dates from the ...
countries. For political, statutory and other reasons, the term death tax is sometimes used to refer to
estate tax in the United States
The estate tax in the United States is a federal tax on the transfer of the estate of a person who dies. The tax applies to property that is transferred by will or, if the person has no will, according to state laws of intestacy. Other transfers ...
.
Varieties of inheritance and estate taxes
*
Belgium
Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to th ...
, droits de succession or erfbelasting (Inheritance tax). Collected at the federal level but distributed to the regional level.
*
Bermuda
)
, anthem = "God Save the King"
, song_type = National song
, song = " Hail to Bermuda"
, image_map =
, map_caption =
, image_map2 =
, mapsize2 =
, map_caption2 =
, subdivision_type = Sovereign state
, subdivision_name =
, e ...
:
stamp duty
Stamp duty is a tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions). A physical revenu ...
*
Brazil
Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...
: Imposto sobre Transmissão "Causa Mortis" e Doação de Quaisquer Bens ou Direitos (Tax on Causa Mortis Transmission and as Donation of any Property and Rights). Collected at the state level. Brazilian States can charge progressive rates for the ITCMD, increasing the rate according to the amount donated or inherited, however, the Brazilian Senate limited the maximum rate to 8%.
*
Czech Republic
The Czech Republic, or simply Czechia, is a landlocked country in Central Europe. Historically known as Bohemia, it is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the southeast. The ...
: daň dědická (Inheritance tax)
*
Denmark
)
, song = ( en, "King Christian stood by the lofty mast")
, song_type = National and royal anthem
, image_map = EU-Denmark.svg
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Danish Realm, Kingdom of Denmark
...
: Boafgift (estate duty). Collected at state level. Different rates depending on the relation to the deceased.
Spouse
A spouse is a significant other in a marriage. In certain contexts, it can also apply to a civil union or common-law marriage. Although a spouse is a form of significant other, the latter term also includes non-marital partners who play a social ...
: 0%. Children: 15%. Other relatives: 15% of the estate sum + additional 25% of the individual sum. The estate duty is calculated on the sum of the estate after deducting a free allowance on the estate (289,000 DKK in 2018).
*
Finland
Finland ( fi, Suomi ; sv, Finland ), officially the Republic of Finland (; ), is a Nordic country in Northern Europe. It shares land borders with Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of B ...
: ''perintövero'' (Finnish) or ''arvsskatt'' (Swedish) (Inheritance tax) is a state tax. Inheritance to the close family is tax free up to the worth of €20,000, and increasing from there via several steps (for instance, being 13% for €60,000 - €200,000 ) to the maximum of 19% that must be paid for the portion of the inheritance that exceeds one million euros. Taxation is more severe in case of remote relatives or those with no family connection at all (19-33%).
*
France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
: ''droits de succession'' (Inheritance tax). Inheritance to the close family is tax free up to the worth of €100,000, and increasing from there via several steps to the maximum of 45% that must be paid for the portion of the inheritance that exceeds 1.8 million euros. Taxation is more severe in case of remote relatives or those with no family connection at all (55-60%).
*
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
: ''Erbschaftsteuer'' (Inheritance tax). Smaller bequests are exempt, i.e€., 20,000 - €500,000 depending on the family relation between the deceased and the beneficiary. Bequests larger than these values are taxed from 7% to 50%, depending on the family relationship between the deceased and the beneficiary and the size of the taxable amount
*
Ghana
Ghana (; tw, Gaana, ee, Gana), officially the Republic of Ghana, is a country in West Africa. It abuts the Gulf of Guinea and the Atlantic Ocean to the south, sharing borders with Ivory Coast in the west, Burkina Faso in the north, and To ...
: Inheritance tax on intangible assets
*
Ireland
Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...
: Inheritance tax (''Cáin Oidhreachta'')
*
Italy
Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical re ...
: tassa di successione (Inheritance tax). Abolished in 2001 and reestablished in 2006. 1,000,000 exemption on a bequest to a spouse or child, and a maximum rate of 8%.
*
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
: souzokuzei 相続税 (Inheritance tax) paid as a national tax (between 10 and 55% after an exemption of ¥30 million + ¥6 million per heir is deducted from the estate)
*
Korea
Korea ( ko, 한국, or , ) is a peninsular region in East Asia. Since 1945, it has been divided at or near the 38th parallel, with North Korea (Democratic People's Republic of Korea) comprising its northern half and South Korea (Republic o ...
: sangsoksae (inheritance tax) paid as a national tax (between 10 and 50% taxes on inheritance when deceased, and gift taxes are also taxable on property and/or stock received by heir or child). After Samsung Group titan Lee Kun Hee chairman's death in year 2020, his heirs are facing a $10 billion inheritance tax bill. (50% taxable amount)
*
Latvia
Latvia ( or ; lv, Latvija ; ltg, Latveja; liv, Leţmō), officially the Republic of Latvia ( lv, Latvijas Republika, links=no, ltg, Latvejas Republika, links=no, liv, Leţmō Vabāmō, links=no), is a country in the Baltic region of ...
: inheritance tax (mantojuma nodoklis) for 2 people if 1) they are not related: 7.5% and additional 7.5% if it is an estate; 2) if they are related and they lived together: 0.25% and additional 0.25% if estate; 3) if they are related and they didn't live together: 0.5% and additional 0.5% if estate
*
Netherlands
)
, anthem = ( en, "William of Nassau")
, image_map =
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of the Netherlands
, established_title = Before independence
, established_date = Spanish Netherl ...
: Successierecht (Inheritance tax) NB. as per 1 January 2010 Successierecht has been abolished for the erfbelasting regime, and is replaced with Erfbelasting with rates from 10% to 40% for brackets by amounts and separation. Sizeable exemptions are given based on separation. As an example, in 2019, these exemptions roughly equalled EUR 651k for partners, EUR 20k for children, EUR 2k for grandchildren and 40k for parents.
*
Poland
Poland, officially the Republic of Poland, is a country in Central Europe. It is divided into 16 administrative provinces called voivodeships, covering an area of . Poland has a population of over 38 million and is the fifth-most populous ...
: inheritance and gift tax (state tax) applies to the estate, however, close family members can benefit from the inheritance tax exemption provided that the tax office is notified about the inheritance acquisition within a statutory deadline.
*
Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
has no national inheritance tax. Some
cantons impose estate taxes or inheritance taxes.
*
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
: see
inheritance tax (United Kingdom)
In the United Kingdom, Inheritance Tax is a transfer tax. It was introduced with effect from 18 March 1986, replacing Capital Transfer Tax.
History
Prior to the introduction of Estate Duty by the Finance Act 1894, there was a complex system o ...
(actually an estate tax)
*
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
: see
estate tax in the United States
The estate tax in the United States is a federal tax on the transfer of the estate of a person who dies. The tax applies to property that is transferred by will or, if the person has no will, according to state laws of intestacy. Other transfers ...
*
Spain
, image_flag = Bandera de España.svg
, image_coat = Escudo de España (mazonado).svg
, national_motto = ''Plus ultra'' (Latin)(English: "Further Beyond")
, national_anthem = (English: "Royal March")
, i ...
: Impuesto sobre Sucesiones (Inheritance Tax). The amendment of Spanish law has been put into practice, in compliance with the European Court ruling of September 3 of last year, and on December 31, 2014, Order HAP/2488/2014, of December 29, was published in the Official State Bulletin, which approves the Inheritance and Gift Tax self-assessment forms 650, 651, and establishes the place, form and term for its submission.
Some jurisdictions formerly had estate or inheritance taxes, but have abolished them:
*
Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
abolished the federal estate tax in 1979, and Australian State inheritance taxes (called death duties) were abolished between 1978 and 1982. In 1985,
capital gains tax
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, Bond (finance), bonds, precious metals, real estate, and property.
Not all count ...
was introduced to tax capital gains on disposal of all assets. But as death is not treated as a disposal, it is only if and when assets are sold after death that capital gains tax is payable. A significant exemption from capital gains tax is the family home, which is exempt from tax if sold within 2 years of death.
*
Austria
Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...
abolished the Erbschaftssteuer in 2008. This tax had some of the features of the
gift tax
In economics, a gift tax is the tax on money or property that one living person or corporate entity gives to another. A gift tax is a type of transfer tax that is imposed when someone gives something of value to someone else. The transfer must ...
, which was abolished at the same time
*
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
: abolished inheritance tax in 1972. However, capital gains are 50% taxable and added to all other income of the deceased on their final return.
*
Hong Kong
Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
: abolished estate duty in 2006 for all deaths occurring on or after 11 February 2006. (See
Estate Duty Ordinance Cap.111
The Estate Duty Ordinance is one of Hong Kong ordinances. It regulates the HK estate duty which was a tax imposed on capital asset - the net value of property situated in Hong Kong at the date of the taxpayer's death. It is chargeable irrespect ...
)
*
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
: had an estate tax from 1953 to 1985
*
Israel
Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
: abolished inheritance tax in 1981, but inherited assets are subject to a 20% to 45% capital gains tax upon their sale
*
Kenya
)
, national_anthem = "Ee Mungu Nguvu Yetu"()
, image_map =
, map_caption =
, image_map2 =
, capital = Nairobi
, coordinates =
, largest_city = Nairobi
, ...
: abolished estate duty tax by virtue of the Estate Duty (Abolition) Act No. 10 of 1982
*
Malaysia
Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Sea into two r ...
*
New Zealand
New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
abolished estate duty in 1992
*
Norway
Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and t ...
: abolished inheritance tax in 2014
*
Russia
Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
"abolished" "inheritance tax" in 2006, but have "fee" with rates of 0,3% but no more than 100 000 rubles and 0,6% but no more than 1 000 000 rubles.
*
Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
: abolished estate tax in 2008, for deaths occurring on or after 15 February 2008.
*
Sweden
Sweden, formally the Kingdom of Sweden,The United Nations Group of Experts on Geographical Names states that the country's formal name is the Kingdom of SwedenUNGEGN World Geographical Names, Sweden./ref> is a Nordic country located on ...
a unanimous riksdag abolished the inheritance tax in 2004 A
retroactive decision exempted deaths during late December 2004 from inheritance tax, due to the many Swedish casualties in the
2004 Indian Ocean earthquake
An earthquake and a tsunami, known as the Boxing Day Tsunami and, by the scientific community, the Sumatra–Andaman earthquake, occurred at 07:58:53 local time (UTC+7) on 26 December 2004, with an epicentre off the west coast of northern Suma ...
.
*
Luxembourg
Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small lan ...
*
Serbia
Serbia (, ; Serbian language, Serbian: , , ), officially the Republic of Serbia (Serbian language, Serbian: , , ), is a landlocked country in Southeast Europe, Southeastern and Central Europe, situated at the crossroads of the Pannonian Bas ...
*
Estonia
Estonia, formally the Republic of Estonia, is a country by the Baltic Sea in Northern Europe. It is bordered to the north by the Gulf of Finland across from Finland, to the west by the sea across from Sweden, to the south by Latvia, a ...
*
Mexico
Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...
*
Portugal
Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...
*
Slovak Republic
Slovakia (; sk, Slovensko ), officially the Slovak Republic ( sk, Slovenská republika, links=no ), is a landlocked country in Central Europe. It is bordered by Poland to the north, Ukraine to the east, Hungary to the south, Austria to the s ...
*
Hungary
Hungary ( hu, Magyarország ) is a landlocked country in Central Europe. Spanning of the Carpathian Basin, it is bordered by Slovakia to the north, Ukraine to the northeast, Romania to the east and southeast, Serbia to the south, Croatia a ...
*
Bahamas
The Bahamas (), officially the Commonwealth of The Bahamas, is an island country within the Lucayan Archipelago of the West Indies in the Atlantic Ocean, North Atlantic. It takes up 97% of the Lucayan Archipelago's land area and is home to ...
Some jurisdictions have never levied any form of tax in the event of death:
*
Cayman Islands
The Cayman Islands () is a self-governing British Overseas Territory—the largest by population in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac and Little Cayman, which are located to the ...
*
Jersey
Jersey ( , ; nrf, Jèrri, label=Jèrriais ), officially the Bailiwick of Jersey (french: Bailliage de Jersey, links=no; Jèrriais: ), is an island country and self-governing Crown Dependencies, Crown Dependency near the coast of north-west F ...
*
Jordan
Jordan ( ar, الأردن; tr. ' ), officially the Hashemite Kingdom of Jordan,; tr. ' is a country in Western Asia. It is situated at the crossroads of Asia, Africa, and Europe, within the Levant region, on the East Bank of the Jordan Rive ...
*
Guernsey
Guernsey (; Guernésiais: ''Guernési''; french: Guernesey) is an island in the English Channel off the coast of Normandy that is part of the Bailiwick of Guernsey, a British Crown Dependency.
It is the second largest of the Channel Islands ...
United Kingdom
Inheritance tax was introduced with effect from 18 March 1986.
History (succession duty)
Succession duty, in the
English
English usually refers to:
* English language
* English people
English may also refer to:
Peoples, culture, and language
* ''English'', an adjective for something of, from, or related to England
** English national ide ...
fiscal system, is "a
tax
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
placed on the gratuitous acquisition of property which passes on the death of any person, by means of a transfer from one person (called the predecessor) to another person (called the successor)". In order properly to understand the present state of the English law it is necessary to describe briefly the state of affairs prior to the Finance Act 1894 — an act which effected a considerable change in the duties payable and in the mode of assessment of those duties.
The
Succession Duty Act 1853
Succession is the act or process of following in order or sequence.
Governance and politics
*Order of succession, in politics, the ascension to power by one ruler, official, or monarch after the death, resignation, or removal from office of ...
was the principal act that first imposed a succession duty in England. By that act a duty varying from 1% to 10% according to the degree of
consanguinity
Consanguinity ("blood relation", from Latin '' consanguinitas'') is the characteristic of having a kinship with another person (being descended from a common ancestor).
Many jurisdictions have laws prohibiting people who are related by blood fr ...
between the predecessor and successor was imposed upon every succession which was defined as "every past or future disposition of property by reason whereof any person has or shall become beneficially entitled to any property, or the income thereof, upon the death of any person dying after the time appointed for the commencement of this act, either immediately or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation and every devolution by law of any beneficial interest in property, or the income thereof, upon the death of any person dying after the time appointed for the commencement of this act to any other person in possession or expectancy". The property which is liable to pay the duty is in realty or leasehold estate in the
UK and personalty—not subject to legacy duty—which the beneficiary claims by virtue of English, Scottish, or Irish law. Personalty in England bequeathed by a person domiciled abroad is not subject to succession duty. Successions of a husband or a wife, successions where the principal value is under £100, and individual successions under £20, are exempt from duty.
Leasehold
A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a l ...
property and personalty directed to be converted into real estate are liable to succession, not to legacy duty.
Special provision is made for the collection of duty in the cases of joint tenants and where the successor is also the predecessor. The duty is a first charge on property, but if the property be parted with before the duty is paid the liability of the successor is transferred to the alienee. It is, therefore, usual in requisitions on title before conveyance, to demand for the protection of the purchaser the production of receipts for succession duty, as such receipts are an effectual protection notwithstanding any suppression or misstatement in the account on the footing of which the duty was assessed or any insufficiency of such assessment. The duty is by this act directed to be assessed as follows: on personal property, if the successor takes a limited estate, the duty is assessed on the principal value of the
annuity
In investment, an annuity is a series of payments made at equal intervals.Kellison, Stephen G. (1970). ''The Theory of Interest''. Homewood, Illinois: Richard D. Irwin, Inc. p. 45 Examples of annuities are regular deposits to a savings account, mo ...
or yearly income estimated according to the period during which he is entitled to receive the annuity or yearly income, and the duty is payable in four yearly installments free from interest. If the successor takes absolutely he pays in a lump-sum duty on the principal value. On real property the duty is payable in eight half-yearly installments without interest on the capital value of an annuity equal to the annual value of the property. Various minor changes were made. The Customs and Inland Revenue Act 1881 exempted personal estates under 300. The
Customs and Inland Revenue Act 1888
Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. Traditionally, customs ...
charged an additional 1% on successions already paying 1% and an additional 11% on successions paying more than 1%. By the
Customs and Inland Revenue Act 1889
Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. Traditionally, customs ...
, an additional duty of 1% called an "estate duty" was payable on successions over 10,000.
The Finance Acts 1894 and 1909 effected large changes in the duties payable on death. As regards the succession duties they enacted that payment of the estate duties thereby created should include payment of the additional duties mentioned above. Estates under £1,000 (£2,000 in the case of widow or child of deceased) are exempted from payment of any succession duties. The succession duty payable under the Succession Duty Act 1853 was in all cases to be calculated according to the principal value of the property, i.e., its selling value, and though still payable by installments interest at 3% is chargeable. The additional succession duties are still payable in cases where the estate duty is not charged, but such cases are of small importance and in practice are not as a rule charged.
United States
The
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
imposed a succession duty by the
War Revenue Act of 1898
The War Revenue Act of 1898 was legislation signed into law in the United States on June 13, 1898, which created a wide range of taxes to raise revenue for the American prosecution of the Spanish–American War. The legislation established the pred ...
on all legacies or distributive shares of personal property exceeding (worth in 2020 dollars). This was a tax on the privilege of succession, and devises and land distributions of land were unaffected. The duty ran from 75 cents on the to on the , if the legacy or share in question did not exceed . On those over that value, the rate was multiplied 11 times on estates up to , twofold on those from to , 21 times on those from to a million, and threefold for those exceeding a million. This statute was upheld as constitutional by the
U.S. Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
.
Many of the states also impose succession duties, or
transfer tax
A transfer tax is a tax on the passing of title to property from one person (or entity) to another.
In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property from one entity to another. ...
es; generally, however, on
collateral
Collateral may refer to:
Business and finance
* Collateral (finance), a borrower's pledge of specific property to a lender, to secure repayment of a loan
* Marketing collateral, in marketing and sales
Arts, entertainment, and media
* ''Collate ...
and remote successions; sometimes progressive, according to the amount of the succession. The state duties generally touch real estate successions as well as those to personal property. If a citizen of state ''A'' owns registered bonds of a corporation chartered by state ''B'', which he has put for safe keeping in a deposit vault in state ''C'', his estate may thus have to pay four succession taxes, one to state ''A'', to which he belongs and which, by legal fiction, is the seat of all his personal property; one to state ''B'', for permitting the transfer of the bonds to the legatees on the books of the corporation; one to state ''C'', for allowing them to be removed from the deposit vault for that purpose; and one to the United States.
The different U.S. states all have other regulations regarding inheritance tax:
*
Louisiana
Louisiana , group=pronunciation (French: ''La Louisiane'') is a state in the Deep South and South Central regions of the United States. It is the 20th-smallest by area and the 25th most populous of the 50 U.S. states. Louisiana is borde ...
: abolished inheritance tax in 2008, for deaths occurring on or after 1 July 2004
*
New Hampshire
New Hampshire is a U.S. state, state in the New England region of the northeastern United States. It is bordered by Massachusetts to the south, Vermont to the west, Maine and the Gulf of Maine to the east, and the Canadian province of Quebec t ...
: abolished state inheritance tax in 2003; abolished surcharge on federal estate tax in 2005
*
Utah
Utah ( , ) is a state in the Mountain West subregion of the Western United States. Utah is a landlocked U.S. state bordered to its east by Colorado, to its northeast by Wyoming, to its north by Idaho, to its south by Arizona, and to it ...
: abolished inheritance tax in 2005
Some
U.S. states
In the United States, a state is a constituent political entity, of which there are 50. Bound together in a political union, each state holds governmental jurisdiction over a separate and defined geographic territory where it shares its sove ...
impose inheritance or estate taxes (see
inheritance tax at the state level):
*
Indiana
Indiana () is a U.S. state in the Midwestern United States. It is the 38th-largest by area and the 17th-most populous of the 50 States. Its capital and largest city is Indianapolis. Indiana was admitted to the United States as the 19th s ...
: abolished the state inheritance on December 31, 2012
*
Iowa
Iowa () is a state in the Midwestern region of the United States, bordered by the Mississippi River to the east and the Missouri River and Big Sioux River to the west. It is bordered by six states: Wisconsin to the northeast, Illinois to the ...
: Inheritance is exempt if passed to a surviving spouse, parents, or grandparents, or to children, grandchildren, or other "lineal" descendants. Other recipients are subject to inheritance tax, with rates varying depending on the relationship of the recipient to the deceased.
*
Kentucky
Kentucky ( , ), officially the Commonwealth of Kentucky, is a state in the Southeastern region of the United States and one of the states of the Upper South. It borders Illinois, Indiana, and Ohio to the north; West Virginia and Virginia to ...
: The inheritance tax is a tax on a beneficiary's right to receive property from a decedent's estate. It is imposed as a percentage of the amount transferred to the beneficiary:
** Transfers to "Class A" relatives (spouses, parents, children, grandchildren, and siblings) are exempt
** Transfers to "Class B" relatives (nieces, nephews, daughters-in-law, sons-in-law, aunts, uncles, and great-grandchildren) are taxable
** Transfers to "Class C" recipients (all other persons) are taxable at a higher rate.
Kentucky imposes an estate tax in addition to its inheritance tax.
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Maryland
Maryland ( ) is a state in the Mid-Atlantic region of the United States. It shares borders with Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware and the Atlantic Ocean to ...
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Nebraska
Nebraska () is a state in the Midwestern region of the United States. It is bordered by South Dakota to the north; Iowa to the east and Missouri to the southeast, both across the Missouri River; Kansas to the south; Colorado to the southwe ...
*
New Jersey
New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...
: New Jersey law puts inheritors into different groups, based on their family relationship to the deceased person:
** Class A beneficiaries are exempt from the inheritance tax. They includes the deceased person's spouse, domestic partner, or civil union partner parent, grandparent, child (biological, adopted, or mutually acknowledged), stepchild (but not stepgrandchild or great-stepgrandchild), grandchild or other lineal descendant of a child
** Class B was deleted when New Jersey law changed
** Class C includes the deceased person's: brother or sister, spouse or
civil union
A civil union (also known as a civil partnership) is a legally recognized arrangement similar to marriage, created primarily as a means to provide recognition in law for same-sex couples. Civil unions grant some or all of the rights of marriage ...
partner of the deceased person's child, surviving spouse or civil union partner of the deceased person's child. The first inherited by someone in Class C is not taxed. On amounts exceeding , the tax rates are: 11% on the next , 13% on the next , 14% on the next , and 16% for anything over
** Class D includes everyone else. There is no special exemption amount, and the applicable tax rates are: 15% on the first , and 16% on anything over
** Class E includes the State of New Jersey or any of its political subdivisions for public or charitable purposes, an educational institution, church, hospital, orphan asylum,
public library
A public library is a library that is accessible by the general public and is usually funded from public sources, such as taxes. It is operated by librarians and library paraprofessionals, who are also Civil service, civil servants.
There are ...
, and other nonprofits. These beneficiaries are exempt from inheritance tax.
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Oklahoma
Oklahoma (; Choctaw language, Choctaw: ; chr, ᎣᎧᎳᎰᎹ, ''Okalahoma'' ) is a U.S. state, state in the South Central United States, South Central region of the United States, bordered by Texas on the south and west, Kansas on the nor ...
*
Pennsylvania
Pennsylvania (; ( Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...
: Inheritance tax is a flat tax on the value of the decedent's taxable estate as of the date of death, less allowable funeral and administrative expenses and debts of the decedent. Pennsylvania does not allow the six-month-after-date-of-death alternate valuation method that is available at the federal level. Transfers to spouses are exempt; transfers to grandparents, parents, or lineal descendants are taxed at 4.5%. Transfers to siblings are taxed at 12%. Transfers to any other persons are taxed at 15%. Some assets are exempted, including
life insurance
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death ...
proceeds. The inheritance tax is imposed on both residents and nonresidents who owned real estate and tangible personal property in Pennsylvania at the time of their death. The Pennsylvania Inheritance Tax Return (Form Rev-1500) must be filed within nine months of the date of death.
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Tennessee
Tennessee ( , ), officially the State of Tennessee, is a landlocked state in the Southeastern region of the United States. Tennessee is the 36th-largest by area and the 15th-most populous of the 50 states. It is bordered by Kentucky to th ...
Inheritance tax in Spain
Impuesto de sucesiones, in Spain, is the inheritance tax “that you must pay for the transference of goods due to the decease of a person. When a person dies in Spain, the set of goods will pass to their successors (heirs or legatees), and is for this acquisition of goods, rights, and obligations for which this tax must be paid”. In Spain, the tax is regulated in Law 29/1987, of December 18, on Inheritance and Donation Tax by Royal Decree 1629/1991, of November 8, which approves the Tax Regulation on Inheritance and Donations.
It is a progressive tax, from 7.65% to 34% not including bonuses or reductions. However, rebates or reductions are common in most of the autonomous communities, with several of them reducing the tax rate to 1%, sometimes even to 0% if the tax base does not exceed a certain minimum. The applicable rate also depends on the proximity of the recipient or heir, being lower the greater its proximity to the deceased or donor (descendants, spouse...). It is usually summarized with the donation tax, as many parents transfer their goods inter vivos to their heirs.
From this tax, the Spanish state gets 2,360,932,000 euros (2019) which is a 17.3% of the total recollected by the autonomous communities.
This tax can be partially deduced according to the blood proximity of the person who will inherit the goods. The amount to deduce vary considerably depending on the autonomous community, and the reduction on the amount to pay has a descendant character, according to the membership group:
* Group I: Descendants, regardless of whether they are adopted or not, under 21 years.
* Group II: Descendants and adopted over 21 years and spouses.
* Group III: Siblings, uncles, and nephews.
* Group IV: Other people not included in the other groups. Cousins or not directly related people.
History of the tax
There's a consensus that this tax is a direct heir of the vicesimal heredatum, created during the Emperor Augustus age, taxing heirlooms and legacies. In Rome this tax was considered a donation and it depended on if the subject who passes their goods to their heir was alive (inter vivos) or deceased (mortis causa). This tax disappeared during the Middle Ages and was again restored temporally with Charles the IV in 1798, and finally consolidated on 1829 with two rates depending on consanguinity 2% for spouses and 12% for the intestate until IV grade
:.
This tax will be oscillating for almost two centuries between 1 and 15% depending on the proximity group until the 11th of June 1964, where acquisitions mortis causa will be drastically increased compared to the previous centuries.
* On spouses and legitimate descendants (offspring), we will see tax rates between 3% and 21%.
* On legitimate ascendants (parents) we will see tax rates between 5% and 26%.
* On descendants and ascendants by affinity from 23% until 55%.
* On collaterals of second degree (Brothers, grandparents, or grandsons) we see the tax rates ranging between 28% and 58%.
* For collaterals of third degree (great-grandparents, great-grandchildren, uncles and nephews) the tax will be between 40 and 69%.
* And the highest rates to non-directly related people will range between 58% and 84%.
It will then be eliminated temporarily in 1977 and restored in 1987 which will prevail until now. Here the reductions that you can make on the payment are specified according to the 4 Groups:
* Group I: 15,956.87 euros + 3,990.72 euros for each year under 21. This quantity can't exceed the 47,858,59 euros.
* Group II: 15,956.87
* Group III: 7,993.46
* Group IV: There will be no place for reduction.
It is also presented a reduction of 47,858.59 euros for people who present a legal condition of handicapped over 35%. This deduction can increase up to 150,253.03 in handicaps over 65%.
Decentralization on the Spanish autonomous communities
You can calculate the tax you must pay following the state law. However, in Spain the calculus of the amount you pay depends on the specific autonomous community where you have your tax residence. In this scenario you must pay a percentage of the amount you inherit plus a certain quantity according to the total quantity you inherit.
The only Autonomous community excluded are Navarra and the Basque Country because they have their own tax system, and they work independently from the other communities or the central state.
This tax is deducible in many ways related to the consanguinity of the person who inherits, to the handicap level, the number of properties, usage of this properties, possession of enterprises, condition of victim of gender violence or terrorism. There are a lot of causes that can reduce notably your amount to pay. Moreover, this amount and reductions vary enormously according to the Autonomous Community you reside. For example, in Galicia, direct relatives of the deceased person will be exempted to pay the inheritance tax until the amount to inherit doesn't arrive the million euros. While in Asturias if you inherit a 700,000 property, the person will pay around a 20% of the amount depending on the variables.
Other taxation applied to inheritance
In some
jurisdictions
Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels.
Jur ...
, when assets are transferred by inheritance, any unrealized increase in asset value is subject to
capital gains tax
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, Bond (finance), bonds, precious metals, real estate, and property.
Not all count ...
, payable immediately. This is the case in
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
, which
has no inheritance tax.
When a jurisdiction has both capital gains tax and inheritance tax, inheritances are generally exempt from capital gains tax.
In some jurisdictions, like Austria, death gives rise to the local equivalent of
gift tax
In economics, a gift tax is the tax on money or property that one living person or corporate entity gives to another. A gift tax is a type of transfer tax that is imposed when someone gives something of value to someone else. The transfer must ...
. This was the UK model before the Inheritance Tax in 1986 was introduced, when estates were charged to a form of gift tax called Capital Transfer Tax. Where a jurisdiction has both gift tax and inheritance tax, it is usual to exempt inheritances from gift tax. Also, it is common for inheritance taxes to share some features of gift taxes, by taxing some transfers which happen during the lifetime of the giver rather than on death. The UK, for example, subjects "lifetime chargeable transfers" (usually gifts to
trusts
A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settl ...
) to inheritance tax.
Historical
Ancient Rome
No inheritance tax was recorded for the
Roman Republic
The Roman Republic ( la, Res publica Romana ) was a form of government of Rome and the era of the classical Roman civilization when it was run through public representation of the Roman people. Beginning with the overthrow of the Roman Kin ...
, despite abundant evidence for
testamentary law. The ''
vicesima hereditatium
The ''Vicesima hereditatium'' was a Roman 5% tax on inheritance money.
History
No inheritance tax was recorded for the Roman Republic, despite abundant evidence for testamentary law. The ''vicesima hereditatium'' ("twentieth of inheritance") was ...
'' ("twentieth of inheritance") was levied by Rome's first emperor,
Augustus
Caesar Augustus (born Gaius Octavius; 23 September 63 BC – 19 August AD 14), also known as Octavian, was the first Roman emperor; he reigned from 27 BC until his death in AD 14. He is known for being the founder of the Roman Pri ...
, in the last decade of his reign. The 5% tax applied only to inheritances received through a will, and close relatives were exempt from paying it, including the deceased's grandparents, parents, children, grandchildren, and siblings. The question of whether a spouse was exempt was complicated—from the late Republic on, husbands and wives kept their own property scrupulously separate, since a
Roman woman remained part of her birth family and not under the legal control of her husband.
Roman social values on marital devotion probably exempted a spouse. Estates below a certain value were also exempt from the tax, according to one source, but other evidence indicates that this was only the case in the early years of
Trajan
Trajan ( ; la, Caesar Nerva Traianus; 18 September 539/11 August 117) was Roman emperor from 98 to 117. Officially declared ''optimus princeps'' ("best ruler") by the senate, Trajan is remembered as a successful soldier-emperor who presi ...
's reign.
Tax revenues went into a fund to pay military retirement benefits (''
aerarium militare
The ''aerarium militare'' was the military treasury of Imperial Rome. It was instituted by Augustus, the first Roman emperor, as a "permanent revenue source" for pensions ''(praemia)'' for veterans of the Imperial Roman army. The treasury derive ...
''), along with those from a new sales tax (''
centesima rerum venalium
''Centesima rerum venalium'' (literally hundredth of the value of everything sold) was a 1% tax on goods sold at auction. History
Tax revenues went into a fund to pay military retirement benefits (''aerarium militare''), along with those from a new ...
''), a 1% tax on goods sold at auction. The inheritance tax is extensively documented in sources pertaining to
Roman law
Roman law is the law, legal system of ancient Rome, including the legal developments spanning over a thousand years of jurisprudence, from the Twelve Tables (c. 449 BC), to the ''Corpus Juris Civilis'' (AD 529) ordered by Eastern Roman emperor J ...
,
inscriptions, and
papyri
Papyrus ( ) is a material similar to thick paper that was used in ancient times as a writing surface. It was made from the pith of the papyrus plant, ''Cyperus papyrus'', a wetland sedge. ''Papyrus'' (plural: ''papyri'') can also refer to a d ...
. It was one of three major
indirect tax
An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST), excise, consumption tax, tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays the i ...
es levied on Roman citizens in the
provinces
A province is almost always an administrative division within a country or state. The term derives from the ancient Roman ''provincia'', which was the major territorial and administrative unit of the Roman Empire's territorial possessions outsi ...
of the
Empire
An empire is a "political unit" made up of several territories and peoples, "usually created by conquest, and divided between a dominant center and subordinate peripheries". The center of the empire (sometimes referred to as the metropole) ex ...
.
[Burton, "Government and the Provinces," p. 428.]
See also
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Property tax
A property tax or millage rate is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or net wealth, taxes on the change of ownership of property through inheri ...
References
External links
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Tax inheritance iran
{{DEFAULTSORT:Inheritance Tax
Tax
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
Personal taxes
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