Concept
In a cross-border estate, everything turns on three connecting factors attached to the deceased: domicile, tax residence and nationality. Each answers its own question. Domicile and habitual residence compete over which law applies to the succession — English, Spanish, Russian. Tax residence and the situs of the assets decide which treasury takes the inheritance tax. Nationality gives the right to choose the applicable law in the will. The historical logic is simple: common law grew out of the idea of a "permanent home", continental Europe leaned on nationality and place of residence, and tax authorities added their own fiscal test on top of private law.
The factors do not coincide, and they mean different things in different countries. A person can be tax-resident in one country, domiciled in another and a national of a third — and each jurisdiction pulls in its own direction. Hence two classic conflicts: a dispute over the applicable law (whose forced-heirship rules apply) and double taxation, when two countries tax the same assets. The divergence of the tests makes itself felt in practice — sound planning is built on it, and, where planning is missing, years of litigation among the heirs grow out of it instead.
Domicile (common law)
Domicile is the Anglo-Saxon concept of a "permanent home". It is neither a nationality nor a residence permit, but the country a person regards as their true home and to which they intend to return. Domicile clings for a long time: it is acquired at birth (domicile of origin) and changed only by genuinely putting down roots in a new country (domicile of choice). For decades the United Kingdom reached worldwide assets through domicile for inheritance tax (UK IHT). From 6 April 2025 it gave that up: the non-dom regime was abolished and IHT moved to a residence-based test. UK tax on worldwide assets now catches the long-term resident — someone who has been UK tax-resident for at least 10 of the last 20 years, with a "tail" of exposure of 3 to 10 years after departure. In private law domicile remains and still determines the law applicable to succession in common-law countries.
Habitual Residence (EU)
Regulation (EU) 650/2012 (Brussels IV), in force since 17 August 2015, replaced domicile with habitual residence — the customary place of living at the moment of death. The test is down to earth: where the person actually lived, where the centre of their daily life sat. By default the law of that country governs the whole estate, without splitting it into movable and immovable. The Regulation binds all EU states except Ireland and Denmark, and through a single European Certificate of Succession it confirms the heirs' rights across the Union. An important caveat: Brussels IV determines the applicable law, but not the tax — each country levies inheritance tax under its own rules.
Citizenship
Nationality rarely decides a succession on its own, but it hands over a trump card — professio juris: under Brussels IV the deceased may choose in the will the law of their country of nationality instead of the law of their country of residence. This works for non-EU nationals too. A Russian living in Spain can subject the succession to Russian law and sidestep the rigid Spanish forced heirship. The continental tradition itself historically tied succession to nationality (lex patriae) — hence the roots of this choice.
Inheritance Tax: Where It Arises
The applicable law and the tax are two different axes. The law decides who inherits; the tax decides how much goes to the treasury and is computed on its own logic. The key concept here is situs, an asset's tax "registration". Real estate is almost always taxed where it sits (lex rei sitae), regardless of the owner's residence; shares, accounts and holdings drag the rules of their own jurisdiction along with them.
The most expensive trap is the American estate tax. The United States taxes its situs assets (shares of US companies, real estate in the States) in the hands of any foreigner, and the tax-free threshold for a non-resident is only $60,000, un-indexed since 1976; everything above is taxed at rates up to 40%. By comparison, US citizens and residents have $15 million per person exempt from 2026. Tax treaties and an ownership structure arranged in advance provide the protection. After 2025 the United Kingdom levies IHT on the worldwide assets of a long-term resident and on its UK-situs assets in the hands of everyone else.
Typical Scenarios
A Russian with a flat in London, a portfolio with an American broker and an account in Switzerland, a UAE tax resident. The applicable law and the tax are computed separately for each asset: the British real estate under UK IHT and English law, the American securities under US estate tax, the Swiss account under cantonal rules. Residence in the UAE by itself cancels none of these taxes.
A citizen of Russia permanently living in Spain. By default the succession is subject to Spanish law, with forced shares for the children and the spouse; a will choosing Russian law (professio juris) restores freedom of disposition. A US passport works differently: the United States taxes the estates of its citizens worldwide regardless of where the person lives — here nationality is stronger than relocation.
Why This Needs to Be Planned
Connecting factors lend themselves to design: relocation, abandoning a domicile, a choice of law in the will, a change of tax residence made in advance all redraw the whole picture. But it has to be done ahead of time and across every country at once. A change of residence can itself switch on an exit tax, and CRS has stripped structures of their former opacity; improvising at the last moment more often leaves the heirs a conflict of jurisdictions instead of assets. The sensible order is a single succession planning exercise coordinated across all the jurisdictions involved.
🧭 Check your case: Inheritance Navigator — which law applies, where forced heirship bites and the taxes.
This material is for reference purposes and does not constitute individual legal advice.