A solution to US Estate taxes

M

Marc

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The revenue ebrief on the 1st September moved the goal posts again on the taxation of non-Eu ETFs.

My preferred solution, to use Canadian ETFs, fell under the wheel of revenues change in practice and forced us to look again at US ETFs.

So the issue here is the exposure to federal estate taxes for non-resident foreign aliens (that’s basically the whole to the rest of the world that isn’t married to a US citizen.

Where we might expect an unlimited spousal exemption on the death of a spouse or Civil partner in Ireland, in respect of US assets (including US ETFs and shares in companies domiciled in the USA eg Apple, google etc) then the exemption is restricted to just $60,000 and the US has taxing rights. It doesn’t matter that you live in Ireland. The “property” is in the USA and Uncle Sam gets to tax the asset.

An inheritance taken by your spouse or civil partner on your death will therefore be subject to a US tax charge at a graduated rate of up to 40%.

Under Irish law there is no tax on inheritances taken by a spouse or civil partner and therefore there is no Irish tax to credit against the US tax due.

This means that an eventual inheritance taken by the family of the survivor could also be subject to Irish CAT as well as tax in the US resulting in a double tax charge.

This issue potentially is an problem for large numbers of employees in US Multinationals.

I set out a more detailed analysis and possible solution in this post

globalwealth.ie

Shares in a US Multinational May Be Subject to Tax at 72%

If you have shares in a US multinational, we have a solution that could save you thousands in US estate tax
globalwealth.ie globalwealth.ie
 
Good post.

Is a stock liable to estate tax simply dependent on whether or not it is domiciled in USA?
If so, how do we check where it is domiciled?

Certain stocks are traded on different stock exchanges.
For example, would buying Berkshire Hathaway off the Stuttgart (SWB) exchange remove estate tax liability?
 
alwaysonit said:
Certain stocks are traded on different stock exchanges.
For example, would buying Berkshire Hathaway off the Stuttgart (SWB) exchange remove estate tax liability?
Click to expand...
No. BRK is a US company. The exchange where you trade shares in BRK is irrelevant.
 

Instructions for Form 706-NA (09/2021) | Internal Revenue Service

www.irs.gov www.irs.gov

Per the above link:

Determining where assets are located

Unless a treaty provides otherwise (see Death Tax Treaties, earlier), use the following rules to determine whether assets are located in the United States.

Stock​


Generally, no matter where stock certificates are physically located, stock of corporations organized in or under U.S. law is property located in the United States, and all other corporate stock is property located outside the United States.
 
@Marc how much does this service cost, and does it only allow a spousal tax free transfer, or also a transfer to children, without US estate tax?
Thanks.
 
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