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Finance • Real Estate

How to Escape Estate Taxes: 16 Countries with No Death Tax

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In this world, nothing is certain except death and taxes,’ Benjamin Franklin, one of the most revered founding fathers of the United States, famously observed.

Far be it from the Nomad Capitalist team to pick a fight with the man who ‘tamed lightning’, but we respectfully disagree with at least part of his most famous truism – taxes.

Admittedly, there’s not much we can do about death, which remains inevitable. But the financial burdens that come with it – specifically estate or death taxes – don’t need to be as onerous.

After all, if you’ve worked tirelessly to amass wealth and plan for your family’s future inheritance, then it hardly seems fair that, after a lifetime of law-abiding hard work and success, the government can lay its grubby hands on a significant portion of your estate.

The problem is widespread, with many countries resolutely committed to the hefty estate taxes on their statute books. Fortunately, some nations provide robust legal protections for personal assets, ensuring that your wealth benefits your loved ones rather than filling government coffers.

At Nomad Capitalist, we specialise in directing our clients to jurisdictions that best respect their financial legacy. We can’t promise that, like Ben Franklin, we’ll tame lightning, but we do have an excellent track record of preventing over-eager tax collectors from pocketing your hard-earned wealth. So, do yourself and your heirs a favour by contacting us today.

Before considering how to escape death taxes, let’s examine the basic terms.

no estate taxes around the world
The United States has one of the highest federal estate taxes in the world.

What is a Death Tax?

For many young entrepreneurs, the idea of passing down what they’ve built doesn’t often top a list of priorities. But it should do because greedy governments are increasingly using death taxes as a way of raising more revenue, particularly from people with substantial wealth. Clearly, the thinking is that if they can’t take it from you when you’re alive, they’ll do it when you’re dead.

It’s important to note that, in the United States at least, death taxes are a colloquial way of referring to both estate tax and inheritance tax. But it’s also important to note that these two taxes are different, something we’ll dive into in greater detail below.

Both the US federal government and some state governments charge an estate tax based on the value of the property you own when you die. According to the US Internal Revenue Service (IRS), a death tax is ‘a tax on your right to transfer property at your death’. Not many people pay it, but those it targets – the wealthy – are hit hard.

In most US states (although not all), the taxes on an estate will be divided between federal and state taxes. These taxes apply to pretty much everyone who qualifies unless they’ve anticipated having to grapple with things like inheritance taxes and carefully prepared plans to dispose of their estate.

Let’s first outline the difference between estate tax, federal estate tax and inheritance tax.

Estate tax is imposed on the total value of a decedent’s estate at the time of their passing and it is the responsibility of the estate to fulfil this financial obligation with the tax authorities. The estate itself pays estate taxes and the executor is tasked with filing a single estate tax return and settling the tax from the estate’s funds.

Inheritance tax is imposed on the beneficiaries based on the assets they receive from the estate. It is the heirs who bear the tax burden and not the Estate itself. Inheritance tax is calculated according to the value of individual bequests received from the deceased’s estate and the beneficiaries are accountable for fulfilling all tax obligations. 

It’s important to note that the US does not levy an inheritance tax at the federal level. The Federal government only levies an estate tax. There are, however, six US States that do levy an inheritance tax and these are Iowa, Kentucky, Maryland, New Jersey, Pennsylvania and Nebraska.

In addition to Federal estate taxes, the residents of the following US States also have to endure estate taxes at the state level: 

1. Maryland 

2. New York 

3. Vermont 

4. Illinois 

5. Rhode Island 

6. Maine 

7. Massachusetts 

8. Minnesota 

9. Oregon 

10. Washington 

11. Hawaii 

12. District of Columbia 

13. Connecticut 

Each state in the US or, further afield, each country calculates estate tax values differently, but the general process is basically the same across the board and is pretty straightforward.

In the United States, your estate tax obligation is determined by adding up a fair market value of all assets you own or control. That ‘gross estate’ list can include cash, real estate, equities, trusts, businesses, cryptocurrencies, insurance policies, precious metals and whatever one-of-a-kind-signed Taylor Swift albums you bought.

From your gross or total estate, you can deduct mortgages, debts and certain administrative costs. However, you need to consider that assets such as real estate could have gone up substantially in value over the years, even though your enjoyment of that increase in value has not.

Then, the government applies tax at current estate tax rates, which are generally not progressive but usually only apply to larger estates. If you have an old car and some Hermes bags to your name, you generally won’t have to pay.

In the United States, you may pass on an unlimited amount of property to your spouse tax-free, so this is factored into the equation. Similarly, US citizens should be aware their citizenship status may have its own impact; for example, former US citizens or US citizens with non-US spouses have separate estate taxation rules.

In 2024, the US estate tax exemption threshold is US$13.61 million per person and US$27.22 million for a married couple. Estates that exceed this value will be subject to taxes ranging from 18% to 40%. 

A high rate of exemption means that usually, only a small number of Americans pay estate taxes. However, this exemption is scheduled to come to an end in 2025, leaving exemption amounts back at pre-2018 levels of approximately US$5 million (although the exact amount will vary depending on inflation). 

And these taxes can potentially hit non-US citizens as well. 

Non-citizens are not eligible for the exemption and are limited to exclude only US$60,000, though it’s important to note that not all non-citizens of the US who pay income taxes to the US are obligated to pay estate tax. Generally speaking, only green card holders who qualify as US domiciliaries could be subject to paying estate tax on the global value of their estate. 

It’s a complicated area because there’s no one-size-fits-all, which is why it’s best to plan ahead if you’re a citizen or a non-citizen US domiciliary.  Most US citizens won’t have to worry about estate taxes, but for high-net-worth individuals, they have the potential to add up to a significant amount.

While the US is still waiting upon the final ruling of Congress to see if the higher exemptions will remain, at Nomad Capitalist we’re left to wonder, why should you pay at all? There are places in the world where you won’t have to worry about the government laying claim to your wealth and taking it away from your descendants. 

That’s why we encourage you to start planning now. We can help minimise your liability, so contact us and get started on planning your future today. 

Estate Tax Rates Around the World

The United States has the fourth highest estate tax in the developed world, with rates reaching as high as 40%. Taxes apply to those whose estate exceeds the minimum amount of US$13.61 million in value.

It can be worse elsewhere: Japan has the world’s highest rate of 55%, and everyone pays it, including non-resident citizens and ex-pats who have resided in the country for ten years or more.

Other countries with high estate taxes are South Korea at 50% and France at 45%. The United Kingdom is tied with the United States with a top rate of 40%, while high-tax countries such as Spain, Belgium and Germany apply rates in the thirties.

On the other hand, fifteen OECD member countries apply no death tax when the property is passed on to close family members or lineal heirs. Keep in mind, though, that some countries have exceptions. 

Some European countries have ongoing wealth taxes, so it’s possible that you would pay income tax and wealth tax when alive and then a death tax when you die.

However, structuring your financial affairs properly while alive can prevent you from paying estate tax upon your demise. With some extra work and planning, you can save your wealth for your family’s descendants – you won’t even have to move to a far-flung country or set up complicated legal structures.

Many countries have seen estate tax revenues drop due to efficient estate planning and even expatriation. As a result, thirteen jurisdictions have repealed estate taxes since 2000.

On a positive note, more countries are reducing or eliminating their estate taxes as they look to stop unfairly targeting the wealthy. 

Before we explore the countries that don’t have an estate tax, please note that this article is not professional tax advice. This is simply our best advice to you, our readers, based on our knowledge of the subject. If you’re seeking precise accounting and tax advice for your needs, we recommend working with a professional tax expert.  

Countries with No Estate Taxes

estate taxes in australia
Australia abolished its inheritance tax long ago.

Australia

Australia hasn’t imposed inheritance taxation for over 40 years. The nation officially abolished the estate tax in 1985 when the Australian states voted to abolish it, a move which signalled a distinct change of approach from Australia’s usually strict tax policies. 

However, assets inherited as part of an Australian estate may be subject to capital gains tax if you choose to sell them.

Technically, Australia does not impose capital gains tax on inheritances, but you need to plan accordingly to ensure the government doesn’t try to claim taxes under special circumstances. One example of these circumstances is if you sell an asset that doesn’t qualify for the exemption.

It’s important to note also that Australian residents who inherit foreign assets may also be subject to other taxes. 

In short, despite the absence of estate taxes, it’s clear that Australia remains a high-tax country and not our first suggestion for those hoping to reduce their overall tax bill. 

New Zealand

While New Zealand requires the deceased’s estate to file a final tax return in their name, it does not impose a death tax or tax assets passed on to beneficiaries. However, those beneficiaries could be taxed on any inherited assets they choose to sell.

Each individual estate still requires a tax ID number to file its return. If you’re planning to move to New Zealand, recent changes in immigration law increased the investment required from NZ$5 million to NZ$15 million (approximately US$8.8 million) to become a resident and work toward naturalisation.

Canada

Unlike the US, Canada has no estate tax. In theory, that makes it an attractive place to live for wealthy US citizens who want to enjoy the same language, culture and geography without a hefty death tax bill when they pass away. 

The main positive takeaway is that if you’re an heir to a Canadian estate, you won’t have to include this inheritance on your tax return. However, in practice, things are a little more complicated.

That’s because the (Canada Revenue Agency) CRA treats the transfer of assets after death as a sale, though there are exceptions for assets passed on to a surviving spouse. 

Capital gains tax is charged on the increase in the value of your worldwide assets at death, which must be reported on the deceased’s final tax return or ‘terminal return.’ While a primary residence is generally exempt, other assets could trigger capital gains taxes at half the nominal rate.

Estonia

Estonia is a model for modern tax-friendly jurisdictions. They tax personal income at a flat 20%, corporate taxes are only charged at distribution and there is no estate tax. 

While Estonia doesn’t have death tax laws, there are certain taxes you should be aware of. For example, any gains from the transfer of property received as a gift or inheritance are subject to income tax. Gains from the sale of a primary residence are generally income tax-free, as are gains from the transfer of a holiday residence if it has been owned for more than two years. 

Aside from learning Estonian, becoming a resident of Estonia is relatively easy, provided you’re willing to pay a little tax. 

Mexico 3
Mexico estate tax laws

Mexico

As a civil law jurisdiction, Mexico’s estate tax law is rather complicated. Mexico technically does not recognise the concept of inheritance taxes, relying instead on a donation process that determines how assets flow from one party to another, including heirs. Mexican law allows for assets to flow to lineal descendants (spouses or children) without tax and to other parties on a more limited basis.

As in many jurisdictions, Mexico applies stamp duty to the transfer of property to descendants, although there is an exemption that’s calculated based on how much you earn. 

Hong Kong

Hong Kong abolished its inheritance tax in 2006 and today it has no wealth tax, gift tax or estate tax. Even before Hong Kong officially abolished its inheritance tax, foreigners rarely needed to worry about paying this tax on foreign estates because they were generally deemed exempt. Even so, just to be safe, many still choose to draft a will. 

Here at Nomad Capitalist, we’re big fans of Hong Kong. You can become a resident of Hong Kong by opening a company and progressing through the application process. However, you should keep in mind that by doing so, you largely void your potential offshore tax benefits. 

Also, keep in mind that Hong Kong has a very limited number of tax treaties. In layman’s terms, this means if you have a residence in Hong Kong and hold citizenship elsewhere, you could end up paying a lot of taxes.

Macau

Macau is not only the ‘Las Vegas of Asia’ and the highest-grossing gambling destination in the world, but it also has considerable tax benefits for residents. 

Living in Macau means you won’t have to worry about paying income tax on foreign-sourced income or gifts, capital gains and estate taxes.

The territory, a Special Administrative Region of China, eliminated estate taxes in 2001 to align its tax policies with those of mainland China. However, stamp duty may apply to real estate transfers.

Singapore

It has become harder to become a resident of Singapore – let alone a citizen – since 2013 unless you have a couple of million dollars to invest there long term.

But those who live in Singapore benefit from a generous exemption from estate tax. The Southeast Asian island city-state eliminated death taxes in 2008, making the tax process for inheritance easy. 

Luxembourg

There are ways to avoid estate taxes in Luxembourg, but it’s not exactly straightforward.  Laws in the European Union dictate that the deceased’s country of residence determines their estate tax jurisdiction. However, some assets can be taxed in your country of nationality. 

If you’re an expat living in Luxembourg, you may be able to take advantage of their more tax-friendly approach to estate taxes. However, it can get complicated if other countries – we’re looking at you, USA – decide they want to be involved.

If you are determined to have a Luxembourg estate, you can end up paying as little as 0%. Non-citizens generally pay a minimum rate of 2%, which is calculated using a complicated formula which we won’t wade into here. Surviving spouses can receive an inheritance subject to a 5% tax. 

These rates apply to inheritances passed on to direct heirs, but rates for non-related parties are higher. That said, Luxembourg has forced heirship rules that require surviving children to receive at least half of the deceased’s estate anyway.

Norway

While Norway is remote and beautiful, it is not known as a low-tax country.

In addition to sky-high income taxes, the country imposes an annual wealth tax. Perhaps the most shocking aspect of these high taxes is that Norwegians don’t seem to mind. 

The only upside to Norway’s high taxes is that the government actually saves and invests its budget surpluses rather than allowing itself to become mired in debt.

The upside is that as of 2014, Norway has no estate tax. Still, living there to avoid estate taxes probably wouldn’t make sense and dual citizenship is not allowed but, if you’re already Norwegian, you can take solace in this benefit.

estate taxes in portugal
Estate Taxes in Portugal

Portugal

Portugal, like many middle-income European nations, abolished its estate tax in 2004. That, in addition to its sunny climate, has made it an attractive place for ex-pats to relocate and put down roots. 

Spouses and children are exempt from stamp duty on any inherited assets transferred to them upon the death of a family member, which puts Portugal ahead of a number of other countries on this list. 

There is a 10% stamp duty for those who are not part of the deceased’s immediate family. If assets are sold right away, the issue of capital gains tax may also rear its ugly head. 

Those topics aside, Portugal offers pretty good tax benefits for those trying to avoid estate taxes and for anyone who wants to enjoy a nice, temperate climate near the sea. 

Serbia

Unlike most of the entries on this list, Serbia actually has an estate tax. But you can avoid it by and large because most beneficiaries are exempt – family members connected by one degree, such as parents, children and spouses, are allowed to receive tax-free inheritance. 

Agricultural real estate may be inherited tax-free with up to two degrees of separation, which is legal jargon that basically means your grandchildren can inherit farm property without fear of the tax man. Any other inheritances may be taxed at rates as low as 2.5%.

While Serbia may not offer all the benefits of more popular destinations, it does offer some perks in the form of a low cost of living and relatively low personal and corporate taxes. It’s also reasonably easy to immigrate to, with the Serbian government recently announcing new residence opportunities.

Slovakia

Tucked away in central-eastern Europe, Slovakia is rarely discussed as a low-tax destination. However, Slovakia has no dividend tax, wealth tax, gift tax or inheritance tax. Neither do they impose inheritance restrictions on lineal descendants like certain other countries.

As with many countries in the region, income tax rates are moderate – both personal and corporate income tax rates are fixed at 19%. All in all, moving to Slovakia is a smart move if you want to pass along your wealth to the next generation. 

Sweden 1
Sweden does not levy estate taxes

Sweden

When the US Congress voted to repeal its own estate tax by the 2020s, it was following in the footsteps of Sweden which voted to do the same in 2019. Like the US, Sweden’s estate tax rates were as high as 60% before settling at a flat 30% when they abolished estate tax.

Now, Swedes pay nothing in estate tax at death.

Sweden does, however, have forced heirship laws which means that anyone without estate planning will be forced to bequeath their money to their spouse and children.

There have always been loopholes in both the previous tax system and the forced heirship system, which is why wealthy Swedish business owners often establish foundations elsewhere in Europe.

Israel

Israel technically doesn’t have an estate tax but that doesn’t necessarily mean many Israelis get away without forking over large sums of their wealth when they pass away. Since many Israelis hold dual citizenship or are tax residents and domiciled in other jurisdictions they can still be exposed to estate taxes. 

Israel also imposes pretty hefty fees in the form of capital gains tax on goods sold. Needless to say, if you have your heart set on living in Israel, we recommend you plan accordingly. 

Vanuatu

Vanuatu is the perfect choice for anyone seeking tax incentives overseas and doesn’t mind travelling to, or living in, a somewhat isolated location.  

The country doesn’t tax personal income, corporate profits or inheritances. Vanuatu is a tax-haven in the ultimate sense of the word and while procedures have become more strict, anyone can become a Vanuatu resident or economic citizen.

Provided you’ve cleared up any estate matters and connections in your home country, being tied to Vanuatu would mean you could legally pay zero tax.

How to Avoid Estate Taxes: FAQs

Can I avoid estate taxes as a US citizen? 

There aren’t many ways for those who qualify for estate taxes to legally avoid them in the US. However, estate tax planning and redistributing wealth overseas are potential options. 

Do non-US citizens have to pay estate tax to the US?

Yes, non-US citizens can be obligated to pay estate tax. For example, a foreigner holding a G-4 visa may qualify for estate tax in the US regardless of where they’re domiciled, even though they usually don’t qualify to pay income tax in the US.

Can non-US citizens inherit from US citizens?

The short answer is yes but the truth is rarely that simple, especially when dealing with the IRS. One of the most important aspects of passing on an estate to a non-citizen or citizen is to ensure they are properly named in your will.

Can a US citizen receive an inheritance from a former US citizen who is a covered expatriate?

If a US citizen receives an inheritance from a former US citizen who is a covered expatriate, the Federal government of the US does apply a form of ‘Inheritance tax’ which acts as a substitute for the Estate Tax which would have been perceived had the covered expatriate not renounced US citizenship.  

A covered bequest generally is any property acquired by reason of the death of a covered expatriate. US situs assets in the covered expatriate’s estate are usually not considered covered bequests (if properly reported), as all non-resident aliens, including covered expatriates, must pay US Estate taxes on US situs assets. US citizens who inherit non-US Situs assets (assets that are not situated in the US) pay the special ‘covered bequest tax’, though surviving US spouses and US-based charities are generally exempted from the application of the special ‘covered bequest tax’.

What is the most you can inherit in the United States without paying taxes?

Six states in the United States impose an inheritance tax that can reach 18%. The rules of inheritance tax may vary depending on the state where the deceased person lived. For instance, in Nebraska, parents, siblings, and other close relatives are entitled to inherit $40,000 tax-free. More distant relatives pay 13% for over US$15,000, and non-relatives pay 18% for over US$10,000.

Are inheritance and estate taxes the same thing?

No, inheritance tax and estate taxes are not the same thing, in the US at least. Estate tax is levied on the estate before the assets are distributed to the heirs and this is a federal tax as well as a state tax in some states. The federal estate tax has a significant exemption above which the estate may be taxed at rates up to 40%. The federal estate tax is a progressive tax but is only applied above the exemption threshold.

How much is estate tax in the UK?

The UK has an inheritance tax rate of 40%, one of the highest rates in the world, but it applies only to the part of the estate above the current tax-free threshold of £325,000. 

What assets are not subject to inheritance tax?

In the US, laws regarding inheritance tax vary from state to state. Generally, some gifts and properties are exempt from inheritance tax, such as those given as wedding gifts or charitable donations. Relief may also be available for certain types of property, such as farms and business assets.

Where Can You Move to Avoid Estate Taxes?

If you want to pass your wealth on to your children, spouse or loved ones as a gift and not as a tax liability, then planning is essential. If you’re worried about what your potential beneficiaries will have to deal with when inheriting your wealth, then the time to plan is now. 

But don’t just talk to anyone.

If you have accumulated millions of dollars, then you know the importance of strategy and having a good team of advisors around you. Our team at Nomad Capitalist are the experts you need on your side. 

Just bear in mind, though, that planning your particular estate tax strategy may involve some lifestyle changes. As we mentioned earlier, you can’t simply pack your bags for a vacation and claim an exemption from your home country’s estate tax laws. Tax and residence planning is complicated.

If you’re willing to relocate to a tax haven or zero-tax country, your tax situation will be easier. 

If you’re willing to totally divorce yourself from your home country, you can make things much easier for yourself. However, even then, you’ll need proper estate planning. The bottom line is that only an international tax professional with knowledge of legal offshore strategies can help you achieve the results you need.

So, at the end of all this are you ready to live a life of financial and personal freedom? Do you want to legally reduce your taxes while safeguarding your wealth for future generations? If the answer is yes, then you can do it all with a holistic Nomad Capitalist Action Plan

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