A US apartment can trigger 40% estate tax above $60,000. Dubai property without a DIFC will defaults to Sharia distribution. The succession rules on foreign property are knowable, and mostly ignored. #EstatePlanning #CrossBorderProperty #WealthStructuring #InheritanceTax
ByAbhii Dabas·はじめに
A cross-border property purchase is stress-tested on yield, financing, liquidity and exit. It is almost never stress-tested on death. That is a striking omission, because the rules that decide who inherits a foreign home, and what they pay to keep it, are set by the country the property sits in, not by the country the owner considers home. The mechanisms are unglamorous and entirely knowable: forced heirship, situs taxation, residence tests and default religious succession. Each one is cheap to plan around before completion and expensive or impossible to fix afterwards.
Brussels IV: The European Default Almost Nobody Overrides
Habitual Residence Governs the Whole Estate. EU Regulation 650/2012, known across the industry as Brussels IV, applies to everyone who died on or after 17 August 2015 and it changed the default logic of European succession. The law of the country where the deceased was habitually resident at death governs the entire estate, movable and immovable, wherever the assets physically sit. A Dutch citizen habitually resident in Portugal has Portuguese succession law applied to their French apartment by default.
The Clause Most Foreign Buyers Never Insert. Brussels IV also permits an express election, in the will, for the law of the testator's nationality to govern the succession instead. This single clause is the most valuable and most frequently omitted provision available to a cross-border buyer in Europe. It costs almost nothing to include at the drafting stage and it determines which country's rules will decide the fate of the asset. Buyers who complete on a property without revisiting their will have made the choice by accident.
The Exception That Still Bites. Brussels IV is not absolute. Where a member state imposes restrictions on the succession of particular categories of property for economic, family or social reasons, such as agricultural land, family businesses or property of cultural significance, those restrictions can apply regardless of the governing law chosen. The regulation requires this exception to be construed strictly, but buyers of rural land, vineyards or heritage property in particular should confirm the position locally rather than assume an election in the will resolves everything.
Forced Heirship: Where Your Will Does Not Decide
France Reserves Most of the Estate for the Children. French forced heirship, the réserve héréditaire, sets aside a fixed share of the estate for children irrespective of what any will says. One child is entitled to at least half the estate, two children share two-thirds between them, and three or more children share three-quarters. What remains is the quotité disponible, the only portion the owner may direct freely, including to a spouse or civil partner. A buyer intending to leave a French property entirely to a second spouse is attempting something French law does not permit by default.
The Civil Law Belt Is Wider Than France. Spain and Italy operate their own reserved-share regimes, and Spain layers regional variation on top, so the applicable rules can differ between autonomous communities. Across the civil law world the underlying principle is consistent: testamentary freedom is a common law assumption, not a universal one. Buyers arriving from the UK, the US, Australia or Singapore routinely assume they can leave property to whomever they choose, and in much of continental Europe that assumption is simply incorrect.
Choosing Your Law Changes the Rules, It Does Not Always Remove Them. The important nuance is that electing national law under Brussels IV changes which forced-heirship regime applies rather than guaranteeing escape from all of them. An English national electing English law may achieve substantial testamentary freedom over a French asset; a French national electing French law achieves nothing new. The value of the election therefore depends entirely on the nationality behind it, which is why the analysis has to be done per person rather than per property.
Situs Taxation: Where the Asset Sits Is Where the Bill Lands
The $60,000 Threshold That Has Not Moved Since 1976. A non-domiciled individual who dies owning US-situs assets is exposed to US federal estate tax at rates rising to 40% on value above a threshold of just $60,000. That threshold was set in 1976 and has never been indexed to inflation. US citizens and domiciliaries shelter roughly $15 million each. A single US apartment held directly by a foreign buyer can therefore generate a seven-figure estate tax charge on an estate that would pay nothing at home.
The Filing Obligation Survives the Treaty. The United States maintains estate tax treaties with around fifteen countries, including the UK, France, Germany, Italy, Japan, Australia, Canada, the Netherlands, South Africa and Switzerland. Treaty relief can reduce the liability substantially, in some cases to nil. It does not remove the compliance step: Form 706-NA is required wherever US-situs assets exceed $60,000 at death, even when the final tax is zero. Estates that assume treaty coverage means no filing discover the error during probate, when the asset is already frozen.
Japan Reaches the Heir, Not Just the Estate. Japan applies one of the highest inheritance tax rates in the world, topping out at 55%, against a basic exemption of only 30 million yen plus 6 million yen per heir. The scope rule is what catches international families: the worldwide estate can be pulled into Japanese inheritance tax if the deceased was resident in Japan within ten years of death, or if the heir is resident in Japan at the time of inheritance. A family whose child has moved to Tokyo for work may have changed the tax treatment of assets on the other side of the world without anyone noticing.
The UK Reset: From Domicile to a Residence Clock
Domicile Is Gone, Residence Decides. The United Kingdom abolished the non-domiciled regime with effect from 6 April 2025 and replaced it with a residence-based test for inheritance tax. An individual becomes a long-term resident, bringing worldwide assets within the scope of UK IHT, once they have been UK tax resident for at least ten of the previous twenty tax years. The concept of domicile, which had governed this question for generations and which many international families had structured around for decades, no longer performs that role.
The Tail That Follows You Out. Leaving the UK no longer ends the exposure immediately. A departing long-term resident remains within the scope of IHT on worldwide assets for a tail of between three and ten years. The minimum tail of three years applies to those resident for ten to thirteen of the last twenty tax years, and it extends by one further year for each additional year of residence, up to a maximum of ten. Long-term resident status resets only after ten consecutive years of non-residence.
Why This Reframes Property Portfolios. For internationally mobile families holding property across several countries, the reform converts a structuring question into a calendar question. The relevant analysis is now a count of tax years rather than an assessment of intentions and connections. Families who spent years managing domicile carefully should treat 2025 as a hard reset and re-examine holdings on the new test, because arrangements that were efficient under the old regime may now be actively counterproductive.
The Gulf Default: Dubai, Sharia and the DIFC Will
Sharia Applies by Default, Whatever Your Faith. This is the single most consequential and least understood rule affecting expatriate property owners in the Gulf. Where a non-Muslim owner of UAE assets dies without a registered will, UAE law defaults to Sharia distribution rules for those assets regardless of the owner's nationality or religion. Article 17(1) of the UAE Civil Code points toward the law of the deceased's home country, but the application of that provision has historically involved court discretion and genuine uncertainty, which is exactly what an estate does not want.
The DIFC Registry Solves It Directly. The DIFC Wills and Probate Registry, introduced in May 2015, allows non-Muslim expatriates to register a will covering Dubai assets including real estate, bank accounts and company shares, backed by protocols with other Dubai authorities. It converts an uncertain conflict-of-laws question into a registered, enforceable instrument. For anyone holding Dubai property who is not a Muslim, registering a DIFC will is close to the highest-return hour of administration available in the entire purchase process.
The Cost of Not Doing It Is Measured in Months. The practical difference shows up in probate timelines. With a registered DIFC will, probate through the DIFC Courts typically completes in four to eight weeks. Without one, the process commonly runs six to eighteen months, during which the property is illiquid, rental income can be disrupted and the family carries holding costs while the succession question is resolved. That delta is entirely avoidable and it is created at the moment of purchase, not at the moment of death.
What Actually Works: Structuring Before You Complete
Structures Solve Tax and Create Problems. Holding foreign property through a company, trust or foundation can address situs exposure, since shares in a non-US company are not US-situs assets in the way the underlying real estate is. The trade-offs are real and frequently understated. Corporate ownership can forfeit principal private residence reliefs, trigger annual charges, attract anti-avoidance regimes, and in several jurisdictions expose the owner to higher transfer taxes on acquisition. A structure that saves estate tax and costs more every year of a thirty-year hold is not obviously a win.
Do the Work Before Completion. Almost every mechanism described here is inexpensive to arrange before purchase and expensive, or unavailable, afterwards. Electing governing law in a will, registering a DIFC will, choosing between direct and structured ownership, and counting UK residence years are all pre-completion decisions. Retrofitting them means transferring an asset that has already appreciated, which can crystallise capital gains and transfer taxes that would not otherwise have arisen.
One Will Per Jurisdiction, Carefully Drafted. Families holding property in several countries usually need more than one will, drafted so that each covers a defined pool of assets and none inadvertently revokes another. A later will containing a general revocation clause can void an earlier foreign will and reinstate exactly the default rules the owner paid to avoid. This is a common and entirely preventable failure, and it argues for coordinated drafting across jurisdictions rather than separate instructions given to separate advisers over several years.
出典
- European e-Justice Portal — Succession and Regulation (EU) No 650/2012
- Deloitte TaxScape — Reform of the UK Non-Dom Regime, Inheritance Tax and Trusts
- PwC Worldwide Tax Summaries — Japan: Individual Other Taxes
- DIFC Courts — Property Will Registration for Non-Muslim Owners in Dubai
- Connexion France — Understanding French Forced Heirship Rules
- Baker Tilly — US Gift and Estate Taxes for Non-US Persons with US Assets
- HaysMac — Major Changes to UK Inheritance Tax: The Move to a Residence-Based Regime
Author
Abhii DabasFounder & CEO, INTRIC Global
Abhii Dabas is the Founder and CEO of INTRIC Global, the cross-border property intelligence platform for serious investors. He advises high-net-worth buyers on international real estate strategy across more than 40 countries, where the succession question is the one part of a purchase that costs nothing on completion day and everything a generation later.
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