What options are there to avoid double taxation on inheritances?
December 26, 2023 | 120,00 EUR | answered by Albrecht Schneider
Dear Mr./Ms. Tax Advisor,
I am reaching out to you today as I am struggling with a tax question that is weighing heavily on my mind. My name is Leonie Born and I am facing the situation of inheriting an estate. Unfortunately, there is a risk of double taxation in this case, as both the country where the deceased resided and my country of residence could potentially tax the inherited assets. This is causing me great concern, as I do not want a large portion of the inheritance to be lost to taxes.
So, my current situation is that I am facing the challenge of avoiding double taxation on inheritances. However, I am unsure of what options exist to solve this issue. That is why I am reaching out to you in the hope that you can assist me.
Therefore, my question to you is: What specific measures or planning options are available to avoid double taxation on inheritances? Are there any particular legal regulations or agreements between countries that could help me in this case? I would greatly appreciate it if you could provide me with specific suggestions for resolving this tax issue.
Thank you in advance for your assistance.
Sincerely,
Leonie Born
Dear Ms. Born,
Thank you for your inquiry regarding double taxation on inheritances. This is indeed a complex topic that can pose great challenges for many heirs. It is understandable that you are concerned that a large portion of the inheritance could be lost to taxes. In the following, I will show you various measures and design options to avoid double taxation on inheritances.
One way to avoid double taxation is to take advantage of double taxation agreements (DTAs) between the countries involved. These agreements determine which country has the right to tax certain income and how double taxation can be avoided. It is important to inform yourself about possible DTAs between the deceased's country and your country of residence before accepting an inheritance, and if necessary, seek tax advice.
Another option is to credit foreign taxes paid against the domestic tax burden. This can help avoid double taxation, as taxes already paid abroad can be credited against the inherited assets. It is important to carefully keep all relevant tax assessments and proof of taxes paid abroad and to include them in your tax return.
Furthermore, you can also check if there are tax exemptions or benefits that can help you avoid double taxation. Some countries have special regulations for inheritances that can reduce the tax burden. Therefore, it is worth informing yourself about the tax framework in your country of residence and, if necessary, seeking professional advice.
In summary, there are various measures and design options to avoid double taxation on inheritances. It is important to inform yourself early on about the tax regulations in the countries involved and, if necessary, seek professional tax advice. I hope that my tips will help you and that you can find a solution to your tax issue.
Sincerely,
Albrecht Schneider
Tax Advisor
