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. 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 donee 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 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 (ie 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:
In 2012 the following gifts are exempt in The Netherlands:
- Gifts to recognised charities.
- Gifts up to a total of €5 000 per year from parents to their children in addition to a one-off exemption of €24 000 for a gift to a child who is between 18 and 35 years of age.
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 0.5%, where the net value of the taxable assets exceeds a certain amount on 1 January in the tax year concerned. In 2012, net taxable assets below €1.3 million 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 |
Not applicable |
Not applicable |
|
Belgium |
Yes |
Yes |
Not applicable |
|
Cyprus |
Not applicable |
Not applicable |
Not applicable |
|
France |
Yes see note (1) |
Yes see note (1) |
Yes |
|
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 |
Not applicable |
|
Luxembourg |
Yes see note (1) |
Yes see note (1) |
Not applicable |
|
Norway |
Yes see note (1) |
Yes see note (1) |
Yes |
|
Spain |
Yes |
Yes |
Yes |
|
Sweden |
Not applicable |
Not applicable |
Not applicable |
|
Switzerland |
Yes see note (1) |
Yes see note (1) |
Yes |
|
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.
(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 Skandia's interpretation of the relevant law and is correct as at the date at the top of this article. While we believe this interpretation to be correct, we cannot guarantee it. Skandia cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.