Inheritance tax

An inheritance or estate tax is a tax paid by a person who inherits money or property or a levy on the estate (money and property) of a person who has died.[1]

International tax law distinguishes between an estate tax and an inheritance tax—an estate tax is assessed on the assets of the deceased, while an inheritance tax is assessed on the legacies received by the estate's beneficiaries. However, this distinction is not always observed; for example, the UK's "inheritance tax" is a tax on the assets of the deceased, and strictly speaking is therefore an estate tax. For historical reasons, the term death duty is still used colloquially (though not legally) in the UK and some Commonwealth countries.

Varieties of inheritance and estate taxes

Some jurisdictions formerly had estate or inheritance taxes, but have abolished them:

Some jurisdictions have never levied any form of tax in the event of death:

Some U.S. states impose inheritance or estate taxes (see inheritance tax at the state level):


Inheritance tax was introduced with effect from 18 March 1986.

History (Succession duty)

Succession duty, in the English fiscal system, "a tax placed on the gratuitous acquisition of property which passes on the death of any person, by means of a transfer from one person (called the predecessor) to another person (called the successor)". In order properly to understand the present state of the English law it is necessary to describe shortly the state of affairs prior to the Finance Act 1894—an act which effected a considerable change in the duties payable and in the mode of assessment of those duties.

The Succession Duty Act 1853 was the principal act that first imposed a succession duty in England. By that act a duty varying from 1% to 10% according to the degree of consanguinity between the predecessor and successor was imposed upon every succession which was defined as "every past or future disposition of property by reason whereof any person has or shall become beneficially entitled to any property, or the income thereof, upon the death of any person dying after the time appointed for the commencement of this act, either immediately or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation and every devolution by law of any beneficial interest in property, or the income thereof, upon the death of any person dying after the time appointed for the commencement of this act to any other person in possession or expectancy". The property which is liable to pay the duty is in realty or leasehold estate in the UK and personalty—not subject to legacy duty—which the beneficiary claims by virtue of English, Scottish, or Irish law. Personalty in England bequeathed by a person domiciled abroad is not subject to succession duty. Successions of a husband or a wife, successions where the principal value is under £100, and individual successions under £20, are exempt from duty. Leasehold property and personalty directed to be converted into real estate are liable to succession, not to legacy duty.

Special provision is made for the collection of duty in the cases of joint tenants and where the successor is also the predecessor. The duty is a first charge on property, but if the property be parted with before the duty is paid the liability of the successor is transferred to the alienee. It is, therefore, usual in requisitions on title before conveyance, to demand for the protection of the purchaser the production of receipts for succession duty, as such receipts are an effectual protection notwithstanding any suppression or misstatement in the account on the footing of which the duty was assessed or any insufficiency of such assessment. The duty is by this act directed to be assessed as follows: on personal property, if the successor takes a limited estate, the duty is assessed on the principal value of the annuity or yearly income estimated according to the period during which he is entitled to receive the annuity or yearly income, and the duty is payable in four yearly instalments free from interest. If the successor takes absolutely he pays in a lump-sum duty on the principal value. On real property the duty is payable in eight half-yearly instalments without interest on the capital value of an annuity equal to the annual value of the property. Various minor changes were made. The Customs and Inland Revenue Act 1881 exempted personal estates under 300. The Customs and Inland Revenue Act 1888 charged an additional 1% on successions already paying 1% and an additional 11% on successions paying more than 1%. By the Customs and Inland Revenue Act 1889, an additional duty of 1% called an "estate duty" was payable on successions over 10,000.

The Finance Acts 1894 and 1909 effected large changes in the duties payable on death. As regards the succession duties they enacted that payment of the estate duties thereby created should include payment of the additional duties mentioned above. Estates under £1,000 (£2,000 in the case of widow or child of deceased) are exempted from payment of any succession duties. The succession duty payable under the Succession Duty Act 1853 was in all cases to be calculated according to the principal value of the property, i.e., its selling value, and though still payable by instalments interest at 3% is chargeable. The additional succession duties are still payable in cases where the estate duty is not charged, but such cases are of small importance and in practice are not as a rule charged.

United States

The United States imposed a succession duty by the War Revenue Act of 1898 on all legacies or distributive shares of personal property exceeding $10,000. This was a tax on the privilege of succession, and devises and land distributions of land were unaffected. The duty ran from 75 cents on the $100 to $5 on the $100, if the legacy or share in question did not exceed $25,000. On those over that value, the rate was multiplied 11 times on estates up to $100,000, twofold on those from $100,000 to $200,000, 21 times on those from $500,000 to a $1 million, and threefold for those exceeding a million. This statute was upheld as constitutional by the U.S. Supreme Court.

Many of the states also impose succession duties, or transfer taxes; generally, however, on collateral and remote successions; sometimes progressive, according to the amount of the succession. The state duties generally touch real estate successions as well as those to personal property. If a citizen of state A owns registered bonds of a corporation chartered by state B, which he has put for safe keeping in a deposit vault in state C, his estate may thus have to pay four succession taxes, one to state A, to which he belongs and which, by legal fiction, is the seat of all his personal property; one to state B, for permitting the transfer of the bonds to the legatees on the books of the corporation; one to state C, for allowing them to be removed from the deposit vault for that purpose; and one to the United States.

Piketty’s Influence

Thomas Piketty’s 2013 bestselling book, “Capital in the 21st Century” may well cause inheritance taxes worldwide to increase. The book emphasizes the themes of Piketty’s work on wealth concentrations and distribution over the past 250 years. It argues that the level of economic dis-equity in a nation becomes worse as that nation’s private capital becomes deeper. The slower the growth in a nation, the faster private capital accumulates through inheritance. He points out that the distribution of wealth in the United States today is as bad as it was just before the 1929 depression.[29] But without increasing inheritance taxes, Piketty says the situation should grow much worse. As world population subsides to a sustainable level,[30] economic growth will become very small or negative. This will power a tremendous growth in the importance of inherited wealth. Since, in the USA at least, we are starting from an already extreme level of economic dis-equity . . . he feels a revolution will be inevitable. To avoid this Mr. Piketty recommends a global (read UN), progressive tax on inheritance and/or wealth.

Other taxation applied to inheritance

In some jurisdictions, when assets are transferred by inheritance, any unrealized increase in asset value is subject to capital gains tax, payable immediately. This is the case in Canada, which has no inheritance tax.

When a jurisdiction has both capital gains tax and inheritance tax, inheritances are generally exempt from capital gains tax.

In some jurisdictions, like Austria, death gives rise to the local equivalent of gift tax. This was the UK model before the Inheritance Tax in 1986 was introduced, when estates were charged to a form of gift tax called Capital Transfer Tax. Where a jurisdiction has both gift tax and inheritance tax, it is usual to exempt inheritances from gift tax. Also, it is common for inheritance taxes to share some features of gift taxes, by taxing some transfers which happen during the lifetime of the giver rather than on death. The UK, for example, subjects "lifetime chargeable transfers" (usually gifts to trusts) to inheritance tax.


Ancient Rome

No inheritance tax was recorded for the Roman Republic, despite abundant evidence for testamentary law. The vicesima hereditatium ("twentieth of inheritance") was levied by Rome's first emperor, Augustus, in the last decade of his reign.[31] The 5% tax applied only to inheritances received through a will, and close relatives were exempt from paying it, including the deceased's grandparents, parents, children, grandchildren, and siblings.[32] The question of whether a spouse was exempt was complicated—from the late Republic on, husbands and wives kept their own property scrupulously separate, since a Roman woman remained part of her birth family and not under the legal control of her husband.[33] Roman social values on marital devotion probably exempted a spouse.[34] Estates below a certain value were also exempt from the tax, according to one source,[35] but other evidence indicates that this was only the case in the early years of Trajan's reign.[36]

Tax revenues went into a fund to pay military retirement benefits (aerarium militare), along with those from a new sales tax (centesima rerum venalium), a 1 tax% on goods sold at auction.[37] The inheritance tax is extensively documented in sources pertaining to Roman law, inscriptions, and papyri.[38] It was one of three major indirect taxes levied on Roman citizens in the provinces of the Empire.[39]

See also


  1. O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 358. ISBN 0-13-063085-3.
  2. "RESOLUÇÃO N° 9, DE 1992".
  3. "German Inheritance Tax".
  4. "L 383/2001".
  6. "DL 262/2006".
  7. "Bekijk hier de meest gestelde vragen over testamenten".
  8. "New form for inheritance tax in Spain". Grupo Salvador desde 1969.
  9. "Inheritance Tax - Rebate". InheritanceTax.
  11. "Erbschaftssteuer aufgehoben -".
  12. "Canada Inheritance Tax Laws & Information".
  13. The Estate Duty Act came into effect 15 October 1953. The E.D.(Amendment) Act of 1985 discontinued the estate duty on deaths occurring on or after 16 March 1985.
  14. "Your Taxes: Will the Tax Authority receive your inheritance". The Jerusalem Post -
  15. "Skatteetaten - Arveavgift".
  16. "Page not found - Inland Revenue Authority Of Singapore".
  17. "404 Error Page".
  18. Inheritance tax does not reduce inequality, The Guardian, August 31, 2006
  20. "Individuals".
  21. Julie Garber. "Estate Taxes by State - Does New Hampshire Have an Estate Tax?". Money.
  22. "USTC - USTC".
  24. "DOR: Inheritance Tax Information". 2014-12-22.
  25. "Iowa Department of Revenue: Iowa Taxes". 2010-07-08.
  26. 1 2 "A Guide to Kentucky Inheritance and Estate Taxes: General Information" (PDF). Kentucky Revenue Cabinet. March 2003. Retrieved 2009-05-29.
  28. Tenn. Code Ann. 67-8-303
  30. "Earth’s maximum carrying capacity is 10 billion humans if everyone became a vegetarian." Harvard Sociobiologist Edward O Wilson.
  31. Jane Gardner, "Nearest and Dearest: Liability to Inheritance Tax in Roman Families," in Childhood, Class and Kin in the Roman World pp. 205, 213.
  32. Gardner, "Liability to Inheritance Tax," pp. 205, 211.
  33. Gardner, "Liability to Inheritance Tax," p. 214; see further Bruce W. Frier and Thomas A.J. McGinn, A Casebook on Roman Family Law (Oxford University Press, 2004), pp. 19–20, and Beryl Rawson, "The Roman Family in Italy" (Oxford University Press, 1999), p. 15–18.
  34. Gardner, "Liability to Inheritance Tax," p. 214.
  35. Cassius Dio 55.25.5.
  36. Gardner, "Liability to Inheritance Tax," p. 205.
  37. Gardner, "Liability to Inheritance Tax," p. 205; Graham Burton, "Government and the Provinces," in The Roman World (Routledge, 1987, 2002), p. 428; Peter Michael Swan, The Augustan Succession: An Historical Commentary on Cassius Dio's Roman History Books 55–56 (9 B.C–A.D. 14) (Oxford University Press, 2004), p. 178.
  38. Gardner, "Liability to Inheritance Tax," p. 205. A 2nd-century AD epitaph for a Roman of equestrian rank, for instance, lists procurator of the 5 percent inheritance tax on his career résumé (CIL 10.482).
  39. Burton, "Government and the Provinces," p. 428.

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