Inheritance tax
From Wikinvestor
Inheritance tax, estate tax and death duty are the names given to various taxes which arise on the death of an individual. In international tax law, there is a distinction between an estate tax and an inheritance tax: the former taxes the personal representatives of the deceased, while the latter taxes the beneficiaries of the estate. However this distinction is not always respected. For example, the "inheritance tax" in the UK is a tax on personal representatives, and is therefore, strictly speaking, an estate tax.
Various Jurisdiction
- In some jurisdictions, such taxes are known as inheritance tax:
- The Republic of Ireland (where it is a tax on beneficiaries).
- The United Kingdom: see Inheritance tax (United Kingdom).
- Some states of the United States: see |Inheritance tax at the state level:
- In some jurisdictions the term used is estate tax:
- The United States: see Estate tax in the United States.
- Some states of the United States: see Inheritance tax at the state level:
- In some jurisdictions the term used is death duty, and for historical reasons that term is used colloquially - although it is no longer correct legally - in the United Kingdom and some Commonwealth nations.
- In some jurisdictions the term is estate duty:
- Hong Kong. See Estate Duty Ordinance Cap.111. However the tax was abolished in its entirety in the Budget Speech in 2006.
- In some jurisdictions, death gives rise to a charge to stamp duty:
- Bermuda
- In some jurisdictions, death gives rise to a charge to capital gains tax:
- Canada. See Taxation in Canada.
- Where a jurisdiction has capital gains tax and inheritance tax (for example the United Kingdom) it is usual to exempt death from the capital gains tax.
- In some jurisdictions death gives rise to the local equivalent of gift tax (see Austria, below, for example). This was the model in the United Kingdom during the period before the introduction of Inheritance Tax in 1986, where estates were charged to a form of gift tax called Capital Transfer Tax. Where a jurisdiction has a gift tax and an estate tax (for example the United States at federal level) it is usual to exempt death from the gift tax. Also, it is common for inheritance taxes to share some features of gift taxes, by taxing some transfers which happen during lifetime rather than on death. The United Kingdom, for example, taxes "lifetime chargeable transfers" (usually gifts to trusts) to inheritance tax.
- Non-English speaking jurisdictions naturally use non-English terminology:
- Austria charges Erbschaftssteuer, which has some of the features of a gift tax.
- Belgium, a multilingual nation, uses the terms droits de succession ("rights of succession") and successierechten, taxes on beneficiaries which are collected at the federal level but distributed to the regional level.
- Czech Republic charges daň dědická, taxes on beneficiaries.
- Finland has perintövero (Finnish) or arvskatt (Swedish)
- France uses the term droits de succession ("rights of succession"), taxes on beneficiaries.
- Germany charges Erbschaftssteuer, a tax on beneficiaries.
- Italy initially abolished its tassa di successione in 2001, [1] then re-introduced it for large estates in 2006. The exempt amount in the case of spouse and children is Euro 1,000,000 each. Maximum rate is 8%. [2][3]
- The Netherlands charges successierecht, a tax on beneficiaries.
- Switzerland has no Erbschaftssteuer / impôt successoral / imposta di successione at national level. However in the various cantons, three possibilities (a tax on the estate, a tax on the beneficiaries, or no tax) exist.
- Some jurisdictions have never had estate or inheritance taxes, or have abolished them:
- Australia abolished the estate tax federally in 1979.[1]
- Turkey is planning to abolish inheritance tax in 2009
- Egypt abolished its inheritance tax in 1996.
- Israel abolished its estate tax in 1981.
- Sweden abolished its inheritance tax in 2005. [4]
- India enforced estate duty from 1953 to 1985. Estate Duty Act, 1953 came into existence w.e.f. 15 Oct 1953 till E.D.(Amendment) Act 1985 discontinued levy of estate duty on deaths occurring on or after 16 Mar 1985.
- British Virgin Islands
- Singapore abolished estate tax in 2008, for deaths occurring on or after 15 Feb 2008[5][6]
- Some states of the United States: see Inheritance tax at the state level:
- Vanuatu
