Inheritance & Estate Tax by Country (2026): Who Pays, Who's Exempt, and the Expat Traps

Estate tax vs inheritance tax: two different systems

People use “inheritance tax” loosely, but two genuinely different systems sit behind the phrase, and the difference changes who pays and how much.

An estate taxis charged on the deceased person's whole estate before anything is distributed — the estate pays, then heirs split what's left. The United States and the United Kingdom work this way. An inheritance tax (the continental European model — France, Germany, Italy, Spain) is charged on each beneficiary, with the rate and allowance depending on how closely related they were to the deceased. A spouse or child typically gets a large tax-free band; a distant relative or unrelated friend gets little or none and a much higher rate.

A third group has no inheritance or estate tax at all— but watch for substitutes: Canada triggers a “deemed disposition” (capital gains as if you sold everything at death), Australia can hit inherited assets with capital gains tax on a later sale, and Portugal and Malta levy a transfer stamp duty instead.

Countries with no inheritance tax

For many movers — especially retirees and those holding family wealth — the simplest win is a destination that doesn't tax inheritance at all. Of the 24 destinations we track, 13 fall into this group:

• Portugal: No inheritance tax. Close family inherit tax-free; other heirs pay a flat 10% stamp duty on Portuguese assets.
• Malta: No inheritance/estate/gift tax; only a 5% stamp duty on inherited Maltese property.
• Cyprus: No inheritance or estate tax — abolished in 2000.
• Sweden: No inheritance, estate or gift tax — abolished in 2004/2005.
• United Arab Emirates: No inheritance or estate tax; register a will (DIFC/ADGM) to override default Sharia succession.
• Singapore: No estate or inheritance tax — estate duty abolished in 2008.
• Malaysia: No inheritance or estate tax — estate duty abolished in 1991.
• Mexico: No federal inheritance tax (inheritances generally income-tax-exempt); watch a pending 2025 reform proposal.
• Panama: No inheritance, estate or gift tax — a popular feature of Panama's territorial system.
• Costa Rica: No inheritance or estate tax; only modest property-transfer and annual property taxes.
• Australia: No inheritance tax, but watch capital gains tax on later sale — foreign-resident heirs lose the home exemption.
• Canada: No estate or inheritance tax — instead, death triggers a 'deemed disposition' and capital gains on the final tax return.
• New Zealand: No estate, inheritance or gift tax — and no general capital gains tax either.

The catch: “no inheritance tax” is not always “nothing to pay.” Canada's deemed-disposition capital-gains bill at death can be substantial; Australia's CGT bites when a foreign-resident heir later sells inherited property; and Portugal's 10% stamp duty still applies to non-direct heirs on Portuguese assets (spouses and children are exempt).

Inheritance & estate tax: the countries that do charge it

Among the destinations that levy the tax, the headline rate a distant heir can face ranges from a flat 4% in Italy to 60% in France. But the top rate is rarely what a close family member actually pays — most systems give spouses and children generous allowances first. The table below shows the top marginal rate for a child and for an unrelated heir, plus how non-residents are treated.

Italy is the standout for families: a €1,000,000 allowance per child and a flat 4% above it, with 8% the most an unrelated heir ever pays. Germany (€400k per child, €500k spouse) and the Netherlands (~€800k partner exemption) are similarly generous to close family. France exempts spouses entirely but reaches 60% for unrelated heirs — the steepest in our set.

The expat traps worth knowing

The mistakes that cost real money are rarely about the headline rate — they're about which assets a country reaches and when you become exposed. These are the ones that catch movers out:

• United States: Non-US persons owning US real estate or US stocks face up to 40% US estate tax on anything above $60,000 of US-situs assets — a common, overlooked trap.
• United Kingdom: April 2025 reform: once you've been UK-resident 10 of the last 20 years, your WORLDWIDE estate is in scope — and it lingers after you leave.
• Portugal: A favourite for retirees: spouse and children inherit Portuguese assets with zero tax.
• Spain: Location is the whole game: regional rebates can take close-family bills near zero, while multiplier coefficients (up to 2.4×) can push a distant, wealthy heir's effective rate toward ~82%.
• Switzerland: There is no national rate — the canton of residence (or of the property) decides everything.
• United Arab Emirates: No tax, but without a registered will, assets are distributed under Sharia rules — expats should plan succession explicitly.
• Australia: Inheriting then selling Australian property as a foreign resident can trigger CGT with no main-residence relief.
• Canada: It's not an inheritance tax, but the deemed-disposition capital-gains bill at death can be substantial.

The two that surprise people most: the US $60,000 situs trap and the UK's 2025 residence rule. If you're not American but you own a Miami condo or hold US-listed ETFs in a brokerage account, the IRS can tax your estate up to 40% on everything above $60,000 of US-situs assets — a threshold unchanged for decades and unrelated to the multi-million-dollar exemption US citizens enjoy. And if you've lived in the UK long enough (10 of the last 20 years), Britain now taxes your worldwide estate, a reach that persists for years after you leave.

How non-residents are taxed: worldwide vs local assets

The single most important question for a mover is not the rate — it's the basis: does the country tax your worldwide estate, or only assets physically located there (“situs” assets)?

Most countries tax non-residents only on local-situs assets — a French apartment, a German bank account, Spanish property. That means you can often hold the bulk of your wealth elsewhere and limit exposure to the specific assets you keep in-country. The exceptions are the ones to plan around: the US reaches non-residents' US-situs assets aggressively (the $60k threshold), and the UK and several others switch to a worldwide basis once you cross a residency threshold. Tax treaties (for example the US–UK estate tax treaty) can raise exemptions or resolve double-taxation — another reason cross-border cases need professional review.

Inheritance tax is only one line in a relocation decision. If you want to see how a destination stacks up across cost of living, income tax, healthcare, safety, and visa access at the same time, start a free relocation case — WhereNext builds you a personalized roadmap, and you can model income tax separately with the tax comparison tool or browse the full income tax rates dataset.

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