Inheritance tax

inheritance tax

Inheritance tax, estate tax and death duty are the names given to various taxes which arise on the death of an individual. In international tax law, there is a distinction between an estate tax and an inheritance tax: the former taxes the personal representatives of the deceased, while the latter taxes the beneficiaries of the estate. However this distinction is not always respected. For example, the death tax in the UK is called "inheritance tax" but it is a tax on personal representatives, and is therefore, strictly speaking, an estate tax.


In some jurisdictions, such taxes are known as inheritance tax:

● The Republic of Ireland (where it is a tax on beneficiaries).
● The United Kingdom: see Inheritance tax (United Kingdom).
● Some states of the United States: see Inheritance tax at the state level:
    ● Nebraska
    ● New Jersey
    ● Pennsylvania
    ● Tennessee

● In some jurisdictions the term used is estate tax:
● The United States: see Estate tax in the United States.
● Some states of the United States: see Inheritance tax at the state level:
    ● Missouri
    ● Virginia
    ● Washington
    ● West Virginia
    ● Wisconsin
    ● Wyoming

● In some jurisdictions the term used is death duty, and for historical reasons that term is used colloquially - although it is no longer correct legally - in the United Kingdom and some Commonwealth nations.

● In some jurisdictions the term is estate duty:
    ● Hong Kong. See Estate Duty Ordinance Cap.111. However the tax was abolished in its entirety in the Budget Speech in 2006.

● In some jurisdictions, death gives rise to a charge to stamp duty:
    ● Bermuda

● In some jurisdictions, death gives rise to a charge to capital gains tax:
    ● Canada. See Taxation in Canada.
Where a jurisdiction has capital gains tax and inheritance tax (for example the United Kingdom) it is usual to exempt death from the capital gains tax.

● In some jurisdictions death gives rise to the local equivalent of gift tax (see Austria, below, for example). This was the model in the United Kingdom during the period before the introduction of Inheritance Tax in 1986, where estates were charged to a form of gift tax called Capital Transfer Tax. Where a jurisdiction has a gift tax and an estate tax (for example the United States at federal level) it is usual to exempt death from the gift tax. Also, it is common for inheritance taxes to share some features of gift taxes, by taxing some transfers which happen during lifetime rather than on death. The United Kingdom, for example, taxes "lifetime chargeable transfers" (usually gifts to trusts) to inheritance tax.

● Non-English speaking jurisdictions naturally use non-English terminology:
    ● Austria charges Erbschaftssteuer, which has some of the features of a gift tax.
    ● Belgium, a multilingual nation, uses the terms droits de succession and successierechten, taxes on beneficiaries which are collected at the federal level but distributed to the regional level.
    ● Czech Republic charges daň dědická, taxes on beneficiaries.
    ● Finland has perintövero (Finnish) or arvskatt (Swedish)
    ● France uses the term droits de succession, taxes on beneficiaries.
    ● Germany charges Erbschaftssteuer, a tax on beneficiaries.
    ● The Netherlands charges successierecht, a tax on beneficiaries.
    ● Switzerland has no Erbschaftssteuer / impôt successoral / imposta di successione at national level. However in the various cantons, three possibilities (a tax on the estate, a tax on the beneficiaries, or no tax) exist.

● Some jurisdictions have never had estate or inheritance taxes, or have abolished them:
    ● Australia
    ● Sweden abolished its inheritance tax in 2005.
    ● British Virgin Islands
    ● Some states of the United States: see Inheritance tax at the state level:
    ● New Mexico
    ● South Dakota
    ● South Carolina
    ● Utah
● Vanuatu

Taxes

What is tax?

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as unpaid labour

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