How Foreigner Inheritance Tax in Europe Can Impact Your Investments

Understand inheritance tax basics

Inheritance taxes in Europe can catch you off guard, especially when you hold investments across borders. If you’re a foreigner living in Europe, foreigner inheritance tax europe rules will affect your wealth transfer and could reduce the value you pass on to heirs or beneficiaries. In this guide, you’ll learn how inheritance and estate taxes work, what reliefs exist to prevent double taxation, and practical steps to protect your stocks, ETFs, crypto, and real estate holdings.

Difference between estate and inheritance taxes

• Estate tax is paid by the deceased’s estate before distribution to heirs
• Inheritance tax is paid by heirs based on the value of assets they receive

Some countries levy both, which may lead to double taxation when different jurisdictions apply estate and inheritance levies on the same wealth [1].

How rates and thresholds vary

European rates and exemptions differ widely:

• Rates range from as low as 4% in Croatia to as high as 88% in certain Spanish regions
• Exemption thresholds can be around €16,000 in Belgium or exceed €1 million in Italy for close relatives
• Many EU countries exempt transfers under a specific threshold, protecting smaller estates from tax

Explore cross-border reliefs

When assets fall under two jurisdictions, you could face overlapping taxes. The EU and individual countries have mechanisms to prevent or relieve double taxation on inheritances.

EU mechanisms to prevent double tax

All EU Member States have rules to avoid taxing the same inheritance twice, safeguarding heirs with cross-border estates. You can review country-specific guidance on inheritance tax via the Europa.eu portal.

UK double taxation relief

From April 6, 2025, long-term UK residents may be deemed UK-domiciled for inheritance tax, affecting how reliefs apply. The UK offers:

• Bilateral double taxation conventions with countries such as France and Italy to prevent dual tax on the same assets
• Unilateral Relief when no convention exists, allowing a credit against UK inheritance tax for tax paid overseas
• Limitation of relief to the actual amount of foreign tax paid [2]

Choose your applicable law

EU rules let you pick which national law governs your inheritance. This choice impacts asset distribution freedom and tax treatment.

Last residence versus nationality

By default, the country where you last lived governs your estate. However, you can opt for the law of your country of nationality, even if you have multiple nationalities, by clearly stating it in your will or a separate declaration [3].

How to express your choice in a will

1. Draft a will or declaration specifying your chosen law
2. Reference your nationality and the explicit choice of law
3. Have it witnessed or notarized as required by local and home-country regulations

Assess investment impact

Inheritance tax doesn’t only hit family heirlooms. Your financial portfolio, stocks, ETFs, crypto, real estate—can all be taxed on transfer.

Stocks, ETFs, and crypto

• Even digital assets are subject to inheritance levies in most EU countries
• The tax base is the market value at the date of death
• If you hold ETFs via an expat investment account, check whether your platform reports to local tax authorities

Real estate holdings

Real property often triggers additional charges and valuation complexities:

• Local property taxes and inheritance levies may both apply
• If you rent out residential or commercial real estate, factor in expat property taxes europe
• High-value estates in regions like Spain can face rates up to 88% in some autonomous communities

Table: sample inheritance tax benchmarks

Plan to minimize liabilities

You can take proactive steps to reduce your inheritance tax exposure and protect your investments.

Gift strategies and exemptions

• In-life gifts can shift wealth outside your estate, often enjoying favorable rates or exemptions
• Many countries exempt small gifts up to an annual limit
• Be mindful of “clawback” periods, where gifts made shortly before death may be re-added to the estate

Trusts and estate planning

• Trusts can separate legal ownership from beneficial interest, potentially lowering taxable value
• In some jurisdictions trusts face specific levies—review local rules carefully
• Work with an expat wealth management europe advisor to structure plans that comply with both home-country and local law

Seek professional guidance

Inheritance tax rules are complex and vary from one country to another. A tailored plan ensures you maximize reliefs and avoid pitfalls.

Working with expat advisors

• Seek legal counsel familiar with cross-border estates
• Consult tax experts who understand local and international conventions
• Coordinate with your estate executor to align on reporting requirements

Useful resources and links

• Europa.eu inheritance portal for country specifics [3]
• GOV.UK guidance on double taxation relief [2]
• Expat financial planning and investment portfolio guides

Key takeaways

• Inheritance and estate taxes can erode your cross-border investment gains
• EU and UK reliefs exist to prevent double taxation, but you must claim them proactively
• Choosing the law of your nationality in your will can improve distribution flexibility
• Use gifts, trusts, and professional advice to reduce your estate’s taxable value

Investing in Europe as an expat comes with rewarding opportunities and unique tax considerations. By understanding foreigner inheritance tax europe rules and planning ahead, you’ll safeguard your assets and ensure your heirs receive the maximum benefit. Start by reviewing your estate plan today and consulting a qualified advisor to keep your investments growing and protected.

References

1. (Tax Foundation)
2. (GOV.UK)
3. (Europa.eu)