Inheritance Tax Around the World – Complete Table
Have you ever considered that, after someone passes away, their heirs will have to gather documents, request certificates, and even pay taxes?
In Brazil, this tax is known as ITCMD (Inheritance and Donation Tax), but it is not unique to our country. Inheritance taxes are common worldwide, though each nation sets its own rules, rates, exemptions, and collection methods.
To help you understand this better, we have compiled a table showing the main countries where this tax applies and how much is charged. We will also explain how the tax works in Brazil and highlight some advantages Brazil offers compared to other countries. In short, you’ll gain a clear overview of inheritance taxes worldwide. Read on to learn more!
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Collaborator: Lucas Gomes Furtado
How is inheritance tax charged in Brazil?
After a person’s death, their heirs must begin the inventory of all the deceased’s assets. They must also bear the costs of the ITCMD (Tax on Transfers of Property by Death and Donation).
This tax is due whenever there is a transfer of an asset (movable or immovable) or a right from one person to another, in the event of death or donation, and is calculated based on its market value.
Therefore, as it’s a state tax, the ITCMD must be paid to the state of the federation where the inventory is made, and each Brazilian state has its own rules for charging it.
This means that the amount of the tax varies from state to state: in some, this percentage is fixed, but in others it can change depending on the case, considering the value of the assets and the family relationship with the deceased.
In many of them, the increase in this percentage is progressive, that is, the higher the value of the assets, the higher the amount of tax owed by the heirs.
Other states
For example, in states such as Paraná and São Paulo, the percentage is always fixed (4%), regardless of the quantity, value of assets, and kinship relationship with the deceased.
In others, such as Santa Catarina, the amount to be paid varies between 1% and 7%, provided that the heirs are direct relatives of the deceased. Or it will be fixed at 8% if they are collateral relatives or are not related to the deceased.
It’s also worth remembering that the maximum rate in the country is 8%, and that, in some states, heirs may be exempt from paying ITCMD, generally when it’s a single asset or assets of low value.
However, as each state of the federation has its own specific legislation, it’s recommended that heirs seek specialized legal assistance so that they can be correctly guided.
Why is Brazil the best place to carry out family inheritance?
Although it’s not widespread, Brazil can be considered an excellent place to carry out family inheritance, as it has many advantages over other countries.
After all, as previously mentioned, despite having a high tax burden, Brazil has relatively low values when it comes to the tax due on inheritance, the ITCMD.
In Brazil, the law establishes a maximum limit of 8% on the market value of assets for the payment of this tax, so that no state can charge more than this ceiling.
Around the world, many countries have established very high inheritance tax percentages compared to Brazil, which can catch people off guard at such a delicate time.
Check out the table below for some examples of countries and the percentage that inheritance tax can reach in their territories:
Inheritance tax around the world
| Country | Percentage (%) |
|---|---|
| Belgium | 80% |
| France | 60% |
| Japan | 55% |
| Germany | 50% |
| South Korea | 50% |
| Lebanon | 45% |
| United States | 40% |
| Netherlands | 40% |
| United Kingdom | 40% |
| Ecuador | 37% |
| Tunisia | 35% |
| Spain | 34% |
| Ireland | 33% |
| South Africa | 25% |
| Chile | 25% |
| Colombia | 15% |
| Denmark | 15% |
| Cameroon | 10% |
| Iceland | 10% |
| Lithuania | 10% |
| Mozambique | 10% |
| Portugal | 10% |
| Thailand | 10% |
Therefore, based on the information above, it’s clear that there are numerous advantages to transferring your assets to your heirs in Brazil, compared to other places around the world.
In addition to this low ITCMD limit, there is also the possibility of having a private pension, which may be another benefit for those who carry out family inheritance in Brazil.
Inheritance tax around the world and Social security
In our country, private pension plans can be closed or open. The first type of pension plan is created for employees of companies and for specific professional categories. The second type of pension plan can be purchased by anyone.
In other words, this type of pension plan serves as an alternative to the State pension plan, allowing the plan holder to ensure his/her livelihood after retirement, according to his/her circumstances.
However, after the death of the plan holder, the amounts left in the private pension plan are usually distributed directly to the beneficiaries, as determined by him/her during his/her lifetime.
This means that, as a rule, the amounts related to the private pension plan are not part of the inheritance, and are not part of the deceased’s inventory, and therefore, ITCMD is not charged on this amount.
Therefore, in this case, having a private pension plan in Brazil is considered advantageous with regard to a future family succession.
However, it’s important to note that there may be exceptions to the rule depending on each location and each situation, which is why it’s always worth seeking specialized legal advice.
Another possibility that may be favorable in relation to the payment of inheritance tax is the creation of a holding company.
A “holding” is nothing more than a company model created to allow strategic planning regarding the management of assets and/or other companies by the partners.
Thus, it’s worth mentioning that, in this type of company, the private assets of a group of people are gathered, which will be incorporated and will belong to the company, being managed by the partners.
This planning strategy can be beneficial for those who intend to carry out family succession in Brazil, since the taxation that falls on the holding company is usually lower than on individuals.
In addition, the creation of a holding company provides greater security and better management of the assets managed, which can be divided, after the death of the owner, in the manner that he/she has previously established.
Furthermore, this type of planning also helps to prevent bureaucracy, queues, and long processes for the transfer of the deceased’s assets to be completed.
Therefore, it’s clear that, compared to other nations around the world, Brazilian legislation establishes a series of advantages that can make family succession more interesting for those who plan to do so here.
If you need legal assistance from our team, please message us on WhatsApp.
