The United States has entered into estate and gift tax treaties with several other countries. The purpose of a treaty is to reach an agreement between governments of two countries on issues affecting both countries. The estate and gift tax treaties affect tax treatment of gifts and estates for people who have ties to more than one country.
Countries with which the United States has signed gift and/or estate tax treaties include the following:
- United Kingdom
The U.S. also has treaties with several other countries around the world. These treaties are not all the same. The United States has reached different agreements with each country, and some treaties affect only estate taxes, not gift taxes.
These treaties resolve various tax and legal issues for people living in both countries, making transactions in both countries, or holding property in both countries. The issues include locating an individual’s domicile, resolving possible dual-domicile issues, and reducing or eliminating double taxation. Some treaties provide deductions or tax relief.
Estate and gift tax treaties provide a number of advantages for international taxpayers. For one, they eliminate some of the issues described above. Domicile problems and double taxation otherwise could result in taxpayers having to pay twice the amount of tax on gifts to relatives or in estates paying taxes on the same property in two countries.
Second, treaties may allow non-residents of the United States who are domiciled in a treaty country to live or conduct transactions in the U.S. for some period of time without worrying about U.S. estate and gift taxes. Of course, whether non-residents will pay taxes varies widely depending on their circumstances. Just because your country of origin has a treaty with the U.S. is not a guarantee that you will not owe U.S. taxes. The provisions of the treaty will govern which and how much taxes you will pay.
If you believe that your country of origin has an estate or gift tax treaty with the United States that may change your tax liability and affect your estate planning, contact a qualified attorney today. Your attorney can help you understand the treaty and make changes to your planning to account for its benefits.
Planning your estate? Look to the Law Offices of Janet Brewer to help with these kinds of issues. You can schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.