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European inheritance gift and wealth tax

Inheritance, gift and wealth taxes and which jurisdictions in Europe they apply to. Please be aware there may be regional differences within the jurisdiction on how the tax is levied, if at all, and the exemptions that are available.

Inheritance tax (IHT)

IHT is levied differently across Europe. For example, in the UK, IHT is a tax on the value of a person’s estate on death and on certain transfers or gifts made during their lifetime. The deceased’s Personal Representatives or the person who makes the gift, the donor, is normally liable to payment of IHT., IHT can be  levied in different ways, for example in Spain IHT is levied on the value of the inheritance, on death or where the inheritance or gift is made during the donor’s lifetime. IHT is generally levied on the done or heirs. In some jurisdictions it may be possible for Personal Representatives or heirs to claim an exemption from IHT, for example, where the assets are gifted on death to the surviving spouse.

IHT can also be imposed on certain gifts made by an individual during their lifetime (see Gift tax).

Gift tax

Gift tax is chargeable when an individual gives away an asset (for example, a gift of cash or other assets) where no money is received in return for the gift (i.e. not for money or money's worth). The person making the gift is generally responsible for paying the gift tax although in some jurisdictions the recipient of the gift or their heirs may be liable.

Liability to gift tax will not apply to all gifts as an exemption may apply.

For example, gifts to recognised charities are exempt in the Netherlands.

Wealth tax

Wealth tax is generally imposed on individuals annually. It is usually calculated as a percentage of their net worth or a percentage of their net worth which exceeds a certain level. For example, in France an individual is liable to wealth tax based on their household's worldwide net wealth (i.e. spouse and children), which is currently levied on a progressive scale up to 1.25%, where the net value of the taxable assets exceeds €10,000,000. Net taxable assets below €1,310,000 are not taxable.

This form of taxation was a common way of taxing individuals in Europe although in recent years it has been abolished in a number of European countries. For example Finland abolished this tax in 2006 and Sweden followed suit in 2007.

The following table shows where inheritance tax, gift tax and wealth tax may apply in some countries within Europe.

Country

Inheritance tax

Gift tax

Wealth tax

Austria

Not applicable

Yes (1)

Not applicable

Belgium

Yes

Yes

Not applicable

Cyprus

Not applicable

Not applicable

Not applicable

France

Yes see note (1)

Yes see note (1)

Not applicable

Germany

Yes see note (1)

Yes see note (1)

Not applicable

Ireland

Yes see note (1)

Yes see note (1)

Not applicable

Italy

Yes

Yes

Yes

Luxembourg

Yes see note (1)

Yes see note (1)

Yes

Norway

No

No

Yes

Spain

Yes

Yes

Yes

Sweden

Not applicable

Not applicable

Not applicable

Switzerland

No

No

No

The Netherlands

Yes see note (1)

Yes see note (1)

Yes see note (2)

United Kingdom

Yes see note (1)

Yes see note (1)

Not applicable

 

(1) A limited or full spousal exemption applies

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(2) Wealth tax was abolished 1 January 2001. However there is a tax on Box III income. This is a tax on income from savings and investments specific to The Netherlands, and can be considered as a form of wealth tax.

The information provided in this article is not intended to offer advice.

It is based on Old Mutual Wealth's interpretation of the relevant law and is correct at the date shown at the top of this article. While we believe this interpretation to be correct, we cannot guarantee it. Old Mutual Wealth cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.

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