Dozens of countries impose no inheritance or estate tax at the national level, including Canada, Australia, New Zealand, Singapore, Hong Kong, Sweden, Norway, Austria, Israel, and most Gulf states. That list is real, but for anyone holding a US passport or a long UK residence history, the absence of a death tax where you live rarely tells the whole story. The US taxes citizens on worldwide assets no matter where they reside, and several “zero-tax” jurisdictions quietly collect at death through capital gains taxes or transfer duties that produce a similar bill under a different label.
Which Countries Have No National Inheritance or Estate Tax
A surprisingly large number of developed economies collect nothing when wealth passes at death, at least under the label of inheritance or estate tax.
- North America and Oceania: Canada, Australia, New Zealand, and Mexico.1PWC Tax Summaries. Inheritance and Gift Tax Rates
- Europe: Sweden (repealed 2005), Norway (repealed 2014), Austria, Estonia, Latvia, and Slovakia impose no inheritance or estate tax at the national level.1PWC Tax Summaries. Inheritance and Gift Tax Rates
- Asia-Pacific: Hong Kong (repealed 2006), Singapore (repealed 2008), China, India, and Malaysia.
- Other: Israel, Russia, and most Gulf states.
Some entries deserve an asterisk. Portugal formally abolished its inheritance tax in 2004 but still imposes a 10% stamp duty on inherited assets received by anyone outside the direct family line. Spouses, children, and grandparents pay nothing; siblings, unmarried partners, and friends face the full 10%. Switzerland has no national inheritance tax, but most cantons impose their own, particularly on bequests to non-direct descendants. When a country is described as having “no inheritance tax,” ask what replaced it.
Capital Gains Taxes That Replace Inheritance Tax
Two of the most-cited zero-tax countries, Canada and Australia, both collect at death. They just do it through the capital gains system instead.
Canada’s Deemed Disposition
Canada treats a deceased person as having sold all their property at fair market value immediately before death. This “deemed disposition” triggers capital gains tax on every dollar of appreciation, even though nothing was actually sold, and the liability lands on the deceased’s final tax return.2Canada.ca. Prepare Tax Returns for Someone Who Died – Report Income, Transfers, and Dispositions As of January 1, 2026, Canada’s capital gains inclusion rate is one-half for the first $250,000 in annual gains for individuals, and two-thirds for gains above that threshold.3Canada.ca. Government of Canada Announces Deferral in Implementation of Change to Capital Gains Inclusion Rate For an estate holding decades of appreciation in real estate or investments, combined federal and provincial tax can reach well above 25% of the gain.
Transfers to a surviving spouse or common-law partner are an exception. Those pass on a tax-deferred basis, pushing the deemed disposition to whenever the surviving spouse dies or sells.
Australia’s Inherited Cost Base
Australia takes a different route. No capital gains tax applies at the moment of death, and assets pass to beneficiaries tax-free at that point.4Australian Taxation Office. How CGT Applies to Inherited Assets The catch is that beneficiaries inherit the deceased’s original cost base for assets acquired on or after September 20, 1985. When the beneficiary eventually sells, they owe capital gains tax on the entire appreciation from the deceased’s original purchase date, not from the date they inherited.5Australian Taxation Office. Cost Base of Inherited Assets For assets the deceased acquired before that 1985 cutoff, the cost base resets to market value at the date of death, which is more favorable.
The contrast with US practice is sharp. In the US, inherited assets get a stepped-up basis equal to fair market value at death, effectively wiping out all unrealized gains for the heirs. Australia’s approach preserves the liability and simply delays collection. An heir who sells a property their parent bought 30 years ago will pay tax on three decades of appreciation.
Why Moving Abroad Does Not End US Estate Tax
This is where most planning goes wrong. A US citizen is subject to federal estate tax on worldwide assets no matter where they live. Moving to Singapore or New Zealand changes nothing. Citizenship-based taxation means the IRS follows you until you formally renounce.6Internal Revenue Service. Estate Tax
For non-citizens, the relevant concept is domicile, not residency. You can be a resident of several countries; you can only have one domicile. The IRS considers a non-citizen domiciled in the US if they reside here with no definite present intention of leaving. Once domiciled, the full US estate tax applies to worldwide assets, just as it does for citizens.
Shedding a US domicile requires more than buying a house overseas. The IRS looks at the totality of your ties: where you vote, where your bank accounts and investments are held, where you maintain driver’s licenses and professional memberships, and where your closest personal relationships are. Keeping a US voter registration while claiming foreign domicile is the kind of inconsistency that loses cases.
The UK Long-Term Resident Trap
The United Kingdom replaced its old “deemed domicile” rules in April 2025 with a long-term resident test.7GOV.UK. Deemed Domicile Rules Under the new system, you become subject to UK Inheritance Tax on your worldwide assets if you have been tax resident in the UK for 10 consecutive years, or for 10 or more years out of the previous 20.8GOV.UK. Inheritance Tax if You’re a Long-Term UK Resident
Leaving the UK does not immediately end the exposure. A tail period keeps you in scope for up to 10 additional tax years after departure, depending on how long you were resident. Someone who lived in the UK for 15 years retains long-term resident status for 5 years after leaving. Anyone who lived there for 20 or more years remains in scope for a full decade after departure.8GOV.UK. Inheritance Tax if You’re a Long-Term UK Resident For people who spent their working career in London and retired to a zero-tax jurisdiction, the UK’s 40% Inheritance Tax follows them well into retirement.
Reporting a Foreign Inheritance to the IRS
Even where a foreign country charges nothing at death, the US imposes a reporting obligation on the American who receives the money. A foreign inheritance is not automatically subject to US income tax, but the paperwork is not optional.
A US person who receives more than $100,000 in a year from a non-resident alien or foreign estate must report it on Form 3520.9Internal Revenue Service. Instructions for Form 3520 This is an information return, not a tax payment, but the penalty structure is punishing. Failure to file on time, or filing with incomplete or incorrect information, triggers a penalty starting at the greater of $10,000 or 35% of the reportable amount. If you still haven’t filed 90 days after the IRS sends a notice, an additional $10,000 accrues for every 30-day period of continued noncompliance, up to the full value of the inheritance.10Internal Revenue Service. Failure to File the Form 3520/3520-A Penalties On a $1 million foreign inheritance, the opening penalty alone is $350,000. Form 3520 is due with your income tax return, including extensions.
The $100,000 threshold is aggregated across all gifts and bequests from related foreign persons in the same year. Receive $60,000 from a foreign estate and $50,000 from a relative of the deceased in the same year, and you have crossed the line.
The Exit Tax if You Try to Renounce
Because the only way for a US citizen to fully escape US estate tax is to give up citizenship, planning conversations often drift toward expatriation. That has its own price. “Covered expatriates” face a mark-to-market exit tax under Section 877A that treats all worldwide assets as sold at fair market value on the day before expatriation.11Office of the Law Revision Counsel. 26 US Code 877A – Tax Responsibilities of Expatriation The resulting gain is taxed as income, with an exclusion of $890,000 for 2025 (the 2026 amount had not been published at the time of writing but is adjusted annually for inflation).12Internal Revenue Service. Expatriation Tax
You are classified as a covered expatriate if you meet any one of three tests:
- Net worth of $2 million or more on the expatriation date.
- Average annual federal income tax for the five years before expatriation exceeding an inflation-adjusted threshold (approximately $211,000 for 2026).
- Inability to certify under penalty of perjury that you have met all federal tax obligations for the five preceding years.11Office of the Law Revision Counsel. 26 US Code 877A – Tax Responsibilities of Expatriation
Narrow exceptions exist for dual citizens from birth who were US residents for no more than 10 of the 15 years before expatriation, and for individuals who renounce before age 18½ with similarly limited US residency. Everyone else who trips any of the three thresholds faces the deemed sale. Covered expatriates file Form 8854 for the year of expatriation, and in some cases annually thereafter.13Internal Revenue Service. Instructions for Form 8854 (2025)
For an American holding significant appreciated assets, the exit tax often exceeds any estate tax that would have been owed on the same wealth. The math of “moving to a no-inheritance-tax country” almost always comes back to a single question: are you willing to stop being a US citizen, and can you afford the toll on the way out.