International tax law distinguishes between an estate tax and an inheritance tax. An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and property) of a person who has died.[1] However, this distinction is not always observed; for example, the UK's "inheritance tax" is a tax on the assets of the deceased,[2] 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. For political, statutory and other reasons, the term death tax is sometimes used to refer to estate tax in the United States.[citation needed]


There was a steep increase in the number of countries that implemented inheritance taxes throughout the 19th and early 20th century.[3] From 1960 onwards, inheritance taxes declined in prevalence as numerous countries repealed theirs.[3]

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:

United Kingdom

Main article: Inheritance Tax in the United Kingdom

Inheritance tax was introduced with effect from 18 March 1986. Succession duty, in the English fiscal system, is "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 briefly the state of affairs prior to the Finance Act 1894 (57 & 58 Vict. c. 30), 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 (16 & 17 Vict. c. 51) 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 installments 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 installments 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 (44 & 45 Vict. c. 12) exempted personal estates under £300. The Customs and Inland Revenue Act 1888 (51 & 52 Vict. c. 8) charged an additional 12% on successions already paying 1% and an additional 112% on successions paying more than 1%. By the Customs and Inland Revenue Act 1889 (52 & 53 Vict. c. 7), 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 (16 & 17 Vict. c. 51) 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 installments 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.[61]

United States

Main article: Estate tax in the United States

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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 (worth $308,902 in 2020 dollars[62]). 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.[citation needed] 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.[61]

The different U.S. states all have other regulations regarding inheritance tax:

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

Inheritance tax in Spain

Impuesto de sucesiones, in Spain, is the inheritance tax "that you must pay for the transference of goods due to the decease of a person. When a person dies in Spain, the set of goods will pass to their successors (heirs or legatees), and is for this acquisition of goods, rights, and obligations for which this tax must be paid".[71] In Spain, the tax is regulated in Law 29/1987, of December 18, on Inheritance and Donation Tax[72] by Royal Decree 1629/1991, of November 8, which approves the Tax Regulation on Inheritance and Donations.[73]

It is a progressive tax, from 7.65% to 34% not including bonuses or reductions. However, rebates or reductions are common in most of the autonomous communities, with several of them reducing the tax rate to 1%, sometimes even to 0% if the tax base does not exceed a certain minimum. The applicable rate also depends on the proximity of the recipient or heir, being lower the greater its proximity to the deceased or donor (descendants, spouse...). It is usually summarized with the donation tax, as many parents transfer their goods inter vivos to their heirs.

From this tax, the Spanish state gets 2,360,932,000 euros (2019) which is a 17.3% of the total recollected by the autonomous communities.[74]

This tax can be partially deduced according to the blood proximity of the person who will inherit the goods. The amount to deduce vary considerably depending on the autonomous community, and the reduction on the amount to pay has a descendant character, according to the membership group:[75]

History of the tax

There's a consensus that this tax is a direct heir of the vicesima hereditatium, created during the reign of emperor Augustus, taxing heirlooms and legacies. In Rome this tax was considered a donation and it depended on if the subject who passes their goods to their heir was alive (inter vivos) or deceased (mortis causa). This tax disappeared during the Middle Ages and was again restored temporally with Charles the IV in 1798, and finally consolidated on 1829 with two rates depending on consanguinity 2% for spouses and 12% for the intestate until IV grade[75]:.

This tax will be oscillating for almost two centuries between 1 and 15% depending on the proximity group until the 11th of June 1964, where acquisitions mortis causa will be drastically increased compared to the previous centuries.

It will then be eliminated temporarily in 1977 and restored in 1987 which will prevail until now. Here the reductions that you can make on the payment are specified according to the 4 Groups:[75]

It is also presented a reduction of 47,858.59 euros for people who present a legal condition of handicapped over 35%. This deduction can increase up to 150,253.03 in handicaps over 65%.

Decentralization on the Spanish autonomous communities

You can calculate the tax you must pay following the state law. However, in Spain the calculus of the amount you pay depends on the specific autonomous community where you have your tax residence. In this scenario you must pay a percentage of the amount you inherit plus a certain quantity according to the total quantity you inherit.

Autonomous Communities Inheritance Tax
Autonomous Community Amount collected with the succession and donation tax in 2019 (in €)[74] Maximum amount to pay (2022)
Andalusia 261,395,000 From 800,000: 26% + 171,620[76]
Aragón 104,468,000 From 797,555: 34% + 199,291[77]
Asturias 68,254,000 From 800,000: 36.50% + 205,920[78]
Balearic Islands 110,570,000 From 800,000: 34% + 199,291[79]
Canary Islands 26,518,000 From 797,555: 34% + 199,291[80]
Cantabria 33,619,000 From 797,555: 34% + 199,291[81]
Castile and León 188,467,000 From 797,555: 34% + 199,291[82]
Castile La-Mancha 70,552,000 From 797,555: 34% + 199,291[83]
Catalonia 559,825,000 From 800,000: 32% + 153,000[84]
Extremadura 28,604,000 From 797,555: 34% + 199,291[85]
Galicia 131,265,000 From 1,600,000: 18% + 198,000[86]
Madrid 455,409,000 From 797,555: 34% + 199,291[87]
Rioja 39,653,000 From 797,555: 34% + 199,291[88]
Valencia 265,669,000 From 797,555: 34% + 199,291[88]

The only Autonomous community excluded are Navarra and the Basque Country because they have their own tax system, and they work independently from the other communities or the central state.

This tax is deducible in many ways related to the consanguinity of the person who inherits, to the handicap level, the number of properties, usage of this properties, possession of enterprises, condition of victim of gender violence or terrorism.[89] There are a lot of causes that can reduce notably your amount to pay. Moreover, this amount and reductions vary enormously according to the Autonomous Community you reside. For example, in Galicia, direct relatives of the deceased person will be exempted to pay the inheritance tax until the amount to inherit doesn't arrive the million euros.[90] While in Asturias if you inherit a 700,000 property, the person will pay around a 20% of the amount depending on the variables.[91]

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

See also: List of Roman taxes

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.[92] 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.[93] 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.[94] Roman social values on marital devotion probably exempted a spouse.[95] Estates below a certain value were also exempt from the tax, according to one source,[96] but other evidence indicates that this was only the case in the early years of Trajan's reign.[97]

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.[97][98][99] The inheritance tax is extensively documented in sources pertaining to Roman law, inscriptions, and papyri.[97][100] It was one of three major indirect taxes levied on Roman citizens in the provinces of the Empire.[98]

See also


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