International Inheritance Tax

6.5.2025 — Increasing number of people are moving abroad or owning property abroad during their lifetime. This also means the increasing prevalence of international inheritance tax matters. When inheritance matters cross national borders, inheritance tax liability can vary significantly depending on the deceased's last place of residence, the country where the heir lives, or the country where the inherited property is located. In international inheritance matters, inheritance tax liability can surprise, and it is essential to be careful about which country the inheritance tax should be paid to, and which countries' tax authorities should be notified about the inheritance.

In international inheritance matters, inheritance tax must be paid to Finland under the Finnish Inheritance and Gift Tax Act in three different situations:

1. The heir lives in Finland and receives an inheritance from abroad.
2. The heir lives abroad, and the deceased lived abroad, but the inherited property includes real estate located in Finland or shares or interests in an entity whose assets consist of more than 50% of real estate located in Finland (e.g., properties, summer cottages, forest estates, or shares in a housing company).
3. The heir lives abroad, but the deceased lived in Finland at the time of death.

In the first two situations, the heir must submit an inheritance tax declaration to the Finnish Tax Administration regarding the inheritance received. The inheritance tax declaration must be submitted within three months of the deceased's death. In international cases, this three-month period is rarely enough, so it is essential to remember to apply for a sufficiently long extension for submitting the declaration within this period.

In the situation described in the third point, an inheritance tax declaration does not need to be submitted. When the deceased's last place of residence was in Finland, an estate inventory deed must be prepared after the deceased, which is submitted to the Finnish Tax Administration. The estate inventory deed then serves as a declaration of the inheritance, and the tax authorities receive inheritance tax information based on the estate inventory deed.

In international inheritance matters, it is also important to note that inheritance tax treaties concluded by Finland can affect inheritance tax liability in Finland. Finland has concluded inheritance tax treaties with six different countries. These countries include Denmark, the Netherlands, France, Switzerland, Iceland, and the United States. Regarding inheritance tax treaties, it is essential to remember that they can only act as factors limiting Finland's national taxation rights but not expanding them. Therefore, Finland cannot obtain taxation rights to an inheritance to which it would not already have taxation rights under the Inheritance and Gift Tax Act. The primary goal of inheritance tax treaties is to avoid double taxation, meaning that inheritance tax is not paid on the same inheritance in two different countries.

Even if Finland does not have taxation rights to the inheritance under the treaty, it is important to remember that this does not exempt from the obligation to submit an inheritance tax declaration. Therefore, it is essential for the heir to first determine whether they are obliged to submit an inheritance tax declaration.

In matters falling outside the scope of inheritance tax treaties, tax liability is determined in Finland under the Inheritance and Gift Tax Act. Even in these cases, double taxation can be avoided by claiming compensation for inheritance tax paid in another country based on the Inheritance and Gift Tax Act. As an example of a matter outside inheritance tax treaties Sweden can be mentioned. There is no valid inheritance tax treaty between Sweden and Finland. This means, for example, that if the deceased lived in Finland at the time of death and the heir lives in Sweden, the heir must pay inheritance tax to Finland under the Inheritance and Gift Tax Act. Inheritance tax liability to Finland arises even though there is no inheritance tax in Sweden.

On the other hand, an example of a country with which Finland has an inheritance tax treaty is the United States. According to the inheritance tax treaty concluded between Finland and the United States, the inheritance is primarily taxed according to the law of the country where the property is located. However, exceptions are the situations where neither of the States are conducting taxation based on the location. In such cases, the property is considered to be located where the deceased had a legal domicile at the time of death. This narrows Finland's inheritance tax rights, as the Finnish Inheritance and Gift Tax Act does not impose location-related restrictions on inheritance taxation.

In international inheritance matters, it is also important to note that inheritance tax liability is a separate issue from which law applies to the inheritance. This question is resolved based on the rules of international private law and, depending on the case, international treaties.

Lawyers at Attorneys-at-Law Reims & Co Ltd have extensive experience in international inheritance cases. We are happy to assist with questions related to international inheritance matters and the taxation thereof.