Can an estate be taxed in a country the deceased never lived in?
Yes, and that is the point of the term. Some estate taxes attach to the location of the asset rather than the residence of the owner, so a holding sitting in a country can fall within that country charge although the deceased never lived there, never filed there, and may never have visited. The consequence is that an estate has to be listed asset by asset with the location of each one tested, not summarised by where the deceased was resident. Residence still matters, but for a different question: which country taxes the estate on everything.
Where are shares located for estate tax purposes?
It depends on whose rule you are applying, which is the difficulty. One system may look to the place of incorporation, another to where the share register is kept, another to where the certificate physically sits, and a system may answer differently for a listed holding, a private company and an interest held through a nominee or a broker. So the question cannot be answered for a portfolio as a whole. Each holding is tested under the rules of each country that might have a claim, and the answer is recorded with the reason for it.
Do foreign bank accounts count as assets located in that country?
They are often treated differently from securities held in the same place, which surprises people who think of a deposit account and a brokerage account as the same kind of thing. Deposits, securities, real property, tangible movable property and debts owed by a local person can each fall into a different category under the same system rules. The practical approach is to take the statement for every account, identify what is actually held inside it rather than where the institution has its address, and test each class separately.
Can two countries both claim the same asset in an estate?
They can, where one taxes on the basis of the residence of the deceased and the other on the location of the asset, or where their location rules give different answers for the same holding. Double exposure is not resolved automatically. Relief depends on whether a treaty covers estates or inheritances at all, which is much less common than for income tax, and otherwise on whatever credit each country domestic law allows. That is why the position is worth establishing while it can still be changed rather than after death.
Why is the executor refusing to distribute before clearance?
Because a personal representative who distributes an estate before the tax position is settled can be personally liable for tax that later turns out to be due, with the assets already gone. That risk sits with the individual rather than with the estate, so an executor holding a distribution back is protecting themselves and, in the end, the beneficiaries from a claw-back. Beneficiaries who understand this argue about the delay less. Where a partial distribution is wanted, the question to work through is how much has to be retained to cover the range of possible outcomes.
Does moving an asset to another country change its situs?
It can, and that is why the timing and the reason for a move are examined closely. A transfer that changes the location of an asset shortly before death, or that leaves the owner with the same economic benefit through a different holding, tends to attract attention, and some systems have provisions that look through it. The step also has consequences of its own: a disposal, a withholding obligation, a change in the law governing succession. It is a decision to take on advice well in advance, not a late repair.
How do you avoid double taxation?
You claim relief once, in the right country, in the right order. Usually the source country taxes first, the residence country then gives a credit for that tax against its own charge on the same income, and a treaty caps the source-country rate. Getting the order wrong is what produces a double charge you then have to unwind. The mechanism differs by income type, which is why we map the whole position before filing either return. See how to avoid double taxation.
Is double taxation illegal?
It is legal. Two countries can each have a valid claim on the same income — one because the income arose there, the other because you live there — and nothing prohibits both from exercising it. What exists instead is relief: tax treaties allocate the claim, and domestic law gives a credit for foreign tax paid. The relief is not automatic, though. It is claimed on a return, and unclaimed relief is simply lost. See how double taxation is relieved.
