The three triggers: why where you were born barely matters for inheritance tax
Deceased domicile, asset situs, and heir residence each independently create an inheritance tax obligation. Any one of them fires alone — and most estate plans only address one.
The three triggers: why where you were born barely matters for inheritance tax
Deceased domicile, asset situs, and heir residence each independently create an inheritance tax obligation. Any one of them fires alone — and most estate plans only address one.
The most common misunderstanding in cross-border estate planning is that inheritance tax exposure is about nationality — where you were born, what passport you hold. It is not. With two narrow exceptions (US citizenship and Japanese nationality), origin is almost entirely irrelevant. What determines exposure is three things that operate independently of each other.
Principle 01 — Trigger one: deceased domicile or long-term residence
Where the deceased was domiciled or resident when they died is the primary and widest-reaching trigger. It determines which country claims worldwide scope — the right to tax the entire estate regardless of where individual assets are located.
Principle 02 — Trigger two: asset situs
Every country taxes assets within its borders regardless of who owns them or where the owner lives. This is the situs trigger — it applies even where the deceased had no connection to that country beyond owning an asset there.
- UK property is always subject to UK IHT — even if the deceased was Australian-domiciled and all heirs are French-resident. FA 2017 extended this to UK residential property held through offshore companies.
- French real estate is always subject to French succession tax under art.750 ter §3 — regardless of where the deceased or heirs are domiciled.
- Spanish property is always subject to Spanish ISD at autonomous community rates — even for non-resident deceased and non-resident heirs.
- US-situs assets (US real estate, US-registered shares) are always subject to US estate tax for non-domiciled deceased above the ~$60k non-resident threshold.
- Philippine, Indonesian, and Thai land cannot be held by foreign heirs — forced divestment within one year applies regardless of domicile.
Principle 03 — Trigger three: heir’s residence (the most missed)
Five countries tax their resident heirs on worldwide assets received — regardless of where the deceased was domiciled and where the assets are located. This is entirely independent of the first two triggers.
| Country | Trigger | Scope | Top rate |
|---|---|---|---|
| France | 6 of prior 10 years French residence | All worldwide assets received | 45% (direct), 60% (others) |
| Germany | Current German residence | All worldwide assets received | 30% (direct), 50% (others) |
| Netherlands | Current Dutch residence | All worldwide assets received | 20% (direct), 40% (others) |
| Belgium | Current Belgian residence | All worldwide assets received | 27%+ (varies by region) |
| Japan | Japanese domicile or nationality within 10yr | All worldwide assets received | 55% marginal |
Principle 04 — The two nationality exceptions
US citizenship is the only major global example of citizenship (not domicile, not residence) being used as a permanent worldwide estate tax connector. A US citizen living in Singapore, Dubai, or London owes US estate tax on their worldwide estate above $15m (2026, OBBBA) regardless of where they live. No treaty removes this. No change of domicile eliminates it.
Japanese nationality creates a 10-year post-emigration worldwide scope for Japanese nationals — both as deceased and as heirs. A Japanese professional who moved to London 5 years ago still faces Japanese IHT on their worldwide estate if they died today.
Principle 05 — When all three fire simultaneously
Consider a French-domiciled parent who dies in Paris, leaving a Spanish property to a German-resident child. French succession tax applies to the worldwide estate (trigger 1). Spanish ISD applies to the Spanish property (trigger 2). German ErbStG applies to the worldwide assets received by the German-resident child (trigger 3). No France/Spain estate DTA. No France/Germany credit for this specific interaction. Three taxes, three countries, one transaction.
The diagnostic questions that determine cross-border IHT exposure: Where was the deceased domiciled? Where are the assets? Where do the heirs live? These three questions replace nationality as the analytical starting point for every cross-border estate.
Planning triggers — you should be reviewing this if…
- Your estate plan was drafted in one country without any assessment of the other countries involved
- Any beneficiary lives in France, Germany, the Netherlands, Belgium, or Japan
- You own property in a country other than your country of residence
- You have moved country in the past 10 years and have not reassessed your IHT position
- You are a US citizen or Japanese national living abroad
- Your will was drafted before April 2025 and you have significant UK residence history
What this article cannot tell you
- Whether you are UK-domiciled or LTR — requires facts-and-circumstances analysis
- Whether any of your heirs meets the 6-of-10-year French threshold — requires reviewing actual residence history
- Whether situs-state taxes apply to your specific assets — depends on asset type and structure
- How credits interact between the states with claims on your estate — requires bilateral specialist analysis
Frequently Asked Questions
What are the three triggers for inheritance tax?
The three independent triggers for cross-border inheritance tax are: (1) the deceased’s domicile or long-term residence — which country claims worldwide scope on the estate; (2) asset situs — which countries impose tax on assets located within their borders regardless of who owns them; and (3) heir residence — which countries (France, Germany, Netherlands, Belgium, Japan) tax their resident heirs on worldwide assets received. Any one of these fires independently of the others.
Does nationality matter for inheritance tax?
Almost never. With two exceptions, nationality is largely irrelevant: US citizenship creates a permanent worldwide US estate tax obligation regardless of where a US citizen lives, and Japanese nationality creates a 10-year post-emigration worldwide scope for Japanese nationals. For every other nationality, what matters is where the deceased was domiciled, where the assets are, and where the heirs live — not what passport anyone holds.
Can inheritance tax be triggered by where my children live?
Yes — this is the most commonly missed trigger. France, Germany, the Netherlands, Belgium, and Japan all tax their resident heirs on worldwide assets received, regardless of where the deceased was domiciled or where the assets are located. A French-resident child inheriting from an Australian parent faces French succession tax on the entire inheritance under art.750 ter §2, even if the estate has no French connection whatsoever.
Is there inheritance tax on foreign property I own?
Yes, in most countries. Every country taxes assets within its borders regardless of the owner’s nationality or domicile. UK property is always subject to UK IHT. French real estate is always subject to French succession tax. Spanish property is always subject to Spanish ISD. US real estate is subject to US estate tax for non-resident deceased above ~$60,000. The asset’s location is an independent trigger that applies even where the deceased had no other connection to that country.
What is the UK long-term resident test introduced in April 2025?
From 6 April 2025, the UK replaced its domicile-based IHT system with a Long-Term Resident test. Anyone who has been UK tax resident for 10 of the preceding 20 tax years is a UK LTR and faces UK IHT on their worldwide estate. A departure tail of 3–10 years (depending on total years of UK residence) continues the exposure after leaving the UK. This replaced the previous deemed-domicile rules and affects both UK nationals who have emigrated and foreign nationals who have spent significant time in the UK.
These FAQs are for general educational purposes only and do not constitute legal, tax or financial advice. Always consult a qualified cross-border estate specialist.
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