Foreign Succession Laws and Taxation

The legal systems in most of the mainland European countries are very different to that of the UK . The most notable difference is the concept of ‘forced heirship' under which the state prescribes how your estate is divided and distributed after your death. These laws apply to any property situated in the country in question and may apply to your worldwide estate if you become resident in that country.

It is, therefore, important to consider the interaction between the UK and foreign laws, focusing particularly on death taxes and succession laws. Often it will be necessary to have two Wills, one for the UK and one for the foreign country. In France , Italy , Spain , Portugal and Greece it is difficult to avoid the foreign succession laws with regard to property situated in those countries. Having said this, by using local or sometimes offshore companies it is possible to completely avoid Probate (and thus the operation of the succession laws) on the death of the owner. However, it is important to take advice as some of these jurisdictions impose penal rates of tax if ‘offshore' companies are used. However, the definition of ‘offshore' varies from country to country and it is still possible to use a company located in a tax-efficient jurisdiction to hold property.

Avoiding ‘forced heirship' rules on moveable assets is far more straightforward, but it is still important to take advice.

It is also possible in some cases to avoid capital gains taxes and stamp duties abroad, although it is always important to bear in mind your domestic liabilities as
UK-domiciled and resident individuals, for example, are liable to CGT on their worldwide gains.

As always, when dealing with foreign jurisdictions it is important to consider the impact of double tax treaties. The UK also has a limited network of capital tax treaties which govern how death taxes are paid where a taxpayer has a presence in more than one country.