Worldwide Estate and Inheritance Tax Guide 2021 Preface he Worldwide Estate and Inheritance trusts and foundations, settlements, Tax Guide 2021 (WEITG) is succession, statutory and forced heirship, published by the EY Private Client matrimonial regimes, testamentary Services network, which comprises documents and intestacy rules, and estate Tprofessionals from EY member tax treaty partners. The “Inheritance and firms. gift taxes at a glance” table on page 490 The 2021 edition summarizes the gift, highlights inheritance and gift taxes in all estate and inheritance tax systems 44 jurisdictions and territories. and describes wealth transfer planning For the reader’s reference, the names and considerations in 44 jurisdictions and symbols of the foreign currencies that are territories. It is relevant to the owners of mentioned in the guide are listed at the end family businesses and private companies, of the publication. managers of private capital enterprises, This publication should not be regarded executives of multinational companies and as offering a complete explanation of the other entrepreneurial and internationally tax matters referred to and is subject to mobile high-net-worth individuals. changes in the law and other applicable The content is based on information current rules. Local publications of a more detailed as of February 2021, unless otherwise nature are frequently available. Readers indicated in the text of the chapter. are advised to consult their local EY professionals for further information. Tax information The WEITG is published alongside three The chapters in the WEITG provide companion guides on broad-based taxes: information on the taxation of the the Worldwide Corporate Tax Guide, the accumulation and transfer of wealth (e.g., Worldwide Personal Tax and Immigration by gift, trust, bequest or inheritance) in Guide and the Worldwide VAT, GST and each jurisdiction, including sections on Sales Tax Guide. who is liable, domicile and residence, Each guide represents thousands of hours types of transfers, rates, payment dates of tax research. The entire suite is available and filing procedures, inheritance and without charge online, along with timely gift taxes, sourcing of income, private Global Tax Alerts and other insightful purpose funds, exemptions and reliefs, publications on ey.com or in our EY Global gifts, pre-owned assets charges, valuations, Tax Guides app for tablets. 2 Worldwide Estate and Inheritance Tax Guide 2021 Online resources designed the Center to bring together our The EY Global Family Business Center of market-leading advisors from across the Excellence builds on more than 100 years global EY network to share knowledge and of EY experience working with and helping insights that will address family business family businesses succeed for generations. challenges and provide a seamless service The Center provides the latest thinking on for globally based family-led enterprises, family business with the regular publication wherever they operate in the world. of exclusive reports and thought leadership, To access the Center and find your local as well as surveys compiled in collaboration contact, visit ey.com/familyenterprise. with other internationally renowned The EY Growth DNA model of Family organizations in the family business arena. Enterprise supports both the personal and The EY organization is globally recognized business performance agendas of family as a trusted advisor to some of the world’s enterprise leaders and is based on success largest family enterprises, including a factors that facilitate family cohesion, large part of the world’s top 500 family business growth and long-term wealth businesses (familybusinessindex.com). We preservation in a family enterprise. Worldwide Estate and Inheritance Tax Guide 2021 3 Contents Australia 6 France 128 Austria 14 Germany 154 Belgium 22 Gibraltar 170 Brazil 42 Greece 178 Bulgaria 50 India 184 Canada 60 Indonesia 192 Chile 74 Ireland 198 China Mainland 82 Italy 210 Cyprus 88 Japan 222 Czech Republic 98 Luxembourg 234 Denmark 106 Malta 246 Finland 116 Mexico 256 4 Worldwide Estate and Inheritance Tax Guide 2021 Monaco 272 Spain 392 Netherlands 278 Sweden 406 New Zealand 290 Switzerland 414 Norway 302 Thailand 424 Peru 310 Turkey 432 Philippines 318 Ukraine 442 Poland 330 United Kingdom 454 Portugal 340 United States 474 Inheritance and gift taxes Russia 352 at a glance 490 Singapore 360 Foreign currencies 500 Slovenia 370 Contacts 502 South Korea 378 Worldwide Estate and Inheritance Tax Guide 2021 5 Australia EY contacts: 1. Types of tax Brisbane 1.1 Inheritance tax EY Level 51 There is no inheritance tax in Australia. 111 Eagle Street Brisbane, QLD 4000 Australia 1.2 Gift tax Ian Burgess There is no gift tax in Australia. [email protected] +61 7 3243 3711 1.3 Real estate transfer tax Peter Vilaysack [email protected] There is no real estate transfer tax in Australia. +61 7 3011 3162 6 Worldwide Estate and Inheritance Tax Guide 2021 Australia 1.4 Endowment tax There is no endowment tax in Australia. 1.5 Transfer duty In all states and territories, there is an exemption from stamp duty (or only nominal duty) regarding the vesting of dutiable property in the executor of a deceased person. This also applies to the transfer of assets to the beneficiary of a deceased estate. Worldwide Estate and Inheritance Tax Guide 2021 7 Australia 1.6 Net wealth tax There is no net wealth tax in Australia. 1.7 Others In some circumstances, an immediate income tax liability can arise upon death, including: • Asset transfers on death to a charity, superfund or foreign resident can have capital gains tax (CGT) costs. • Immediate CGT liability can arise when a discretionary trust deed provides that the trust is to vest on a specific date or on the death of the specified individual (often the parents). • When benefits in an Australian complying superannuation fund are paid to non-dependents on death, a tax of 17% is payable on the taxable component. • Earnings in a foreign superannuation or retirement fund that have accumulated since the member became an Australian resident may be taxable on payment to nominated beneficiaries. 2. Who is liable? There is no inheritance tax in Australia so this is not applicable. 3. Rates Although Australia does not have an inheritance or gift tax, there are certain circumstances where tax can be paid by an individual as a result of death as described above. Listed below are adult income tax rates for the 2020–21 income year (1 July 2020 to 30 June 2021) for resident individuals. Taxable income (AUD) Tax payable thereon (AUD) 0–18,200 None 18,201–45,000 19% in excess of 18,200 45,001–120,000 5,092 plus 32.5% in excess of 45,000 120,001–180,000 29,467 plus 37% in excess of 120,000 More than 180,000 51,667 plus 45% in excess of 180,000 A Medicare levy of 2.0% of taxable income applies to residents. Individual tax returns are generally due between 31 March and 15 May of the year following year-end (30 June each year) with tax payable broadly five weeks post-lodgement. 8 Worldwide Estate and Inheritance Tax Guide 2021 Australia 4. Exemptions and reliefs There are no inheritance or gift taxes in Australia. There are also exemptions from income tax and capital gains tax. 5. Filing procedures The executor of a deceased estate is responsible for filing the deceased’s final year income tax return. During the administration of the estate, the executor must file income tax returns for the deceased estate. 6. Assessments and valuations As Australia does not have an inheritance tax on death, this is not applicable. 7. Trusts, foundations and private purpose funds In addition to assets held in an individual’s own name, it is common for high-net-worth individuals (HNWIs) in Australia to hold considerable wealth in discretionary trusts, a superannuation fund (particularly nearing and post-retirement) and in private ancillary funds (PAFs). 7.1 Trusts Assets held within a discretionary trust cannot be dealt with in an individual’s will. Discretionary trusts are commonly used in Australia for HNWIs to hold the family’s wealth, particularly investment assets (with the relevant drivers being tax efficiency and asset protection advantages). The major estate planning consideration for discretionary trusts is the ongoing control of the trust. This involves a consideration of whom the individual wishes to control the trust on his or her death (on the assumption that the individual controlled the trust pre-death) and during any period he or she is incapacitated. In the context of control, it is necessary to consider the appointor or guardian (and their successors) and the trustee (including the ownership thereof if a corporate entity). The Trust Deed will determine whether the role of the appointor or guardian is considered to be the “ultimate controller” of the trust. In selecting the successor appointor and guardian, it is important to ensure that the chosen successor (and his or her controlled entities) is not precluded from being a beneficiary of the trust as a result of the successor position. Where an HNWI has multiple discretionary trusts, consideration should be given as to whether a corporate appointor or guardian is appropriate, as this enables the successor appointor or guardian role to be handled more efficiently and consistently. Family members often have unpaid present entitlements, e.g., rights to draw on prior trust distributions where the cash has not been paid to the beneficiary from discretionary trusts. It is important to take unpaid present entitlements into account in the context of an individual’s estate plan, particularly when treating family members equally and for asset protection. Worldwide Estate and Inheritance Tax Guide 2021 9 Australia It is necessary to review the vesting date of discretionary trusts during an estate planning review.