Concept
Foreign real estate is the most "stubborn" asset in an estate. Local title, registration and tax rules matter, but the applicable succession law is a separate question. Where Regulation 650/2012 applies, one law normally governs the whole estate, subject to exceptions; the property's location does not by itself impose the local reserved share. (Sources: EU succession rules; Russian Civil Code: Article 1224; FNS: CFC; FNS: foreign accounts; IRS: US-situs assets).
For foreign real estate, distinguish applicable succession law from local title, tax and procedural rules. Under Regulation 650/2012, habitual residence or a valid choice of nationality law can govern the whole estate, subject to exceptions; lex rei sitae is not a universal succession rule.
Historically, cross-border estates were divided into two regimes: movable property followed the owner—their domicile or last place of residence—while immovable property followed its location. This principle of scission still operates in most of the world today, which is why a single apartment abroad can drag a carefully assembled plan into a foreign legal order.
Example: a Moscow resident owns an apartment in Paris, a villa in Spain, and an account in Zurich. Identify the succession law for each proceeding, including any renvoi from Russian law, before deciding which reserved shares apply. Local title procedures and inheritance taxes are separate questions: three asset locations do not by themselves prove that three succession laws govern.
Three Problems
Forced heirship
An apartment in France or Spain does not automatically impose the local reserved share: first identify the applicable succession law and specific exceptions, including the French compensatory mechanism discussed below. In France, the réservataire children receive between one-half and three-quarters of the estate: 1/2 with one child, 2/3 with two, 3/4 with three or more. A will written "at home" may simply fail to work for such an asset.
Tax
Real estate almost always pays local inheritance tax by situs. The US situs-based examples below concern a deceased who was neither a US citizen nor US-domiciled; for that estate, the tax-free threshold on US assets is only $60,000, against $15 million for Americans themselves (the 2026 basic exclusion amount after the OBBBA, indexed annually), and the rate reaches 40%. In the UK the threshold (nil-rate band) is £325,000, with the same 40% rate. Without a double-taxation treaty, heirs risk paying twice: in the country of the real estate and in the country of their own residence.
Procedure
Local registration of the transfer of title requires local documents, translation, and an apostille under the 1961 Hague Convention, sometimes a separate "local" will and a local notary—in parallel with the main probate proceedings. In practice this means months and separate costs in every country where there is an asset.
Regulation: Brussels IV
Within the European Union, this mosaic was partly assembled by Regulation 650/2012 (Brussels IV), in force since 17 August 2015. By default it subjects the entire estate—both movable and immovable—to the law of the country of last habitual residence, abolishing the former scission for participating states. The testator may instead elect the law of their nationality in advance (professio juris), and cross-border recognition of heirs' rights is simplified by the European Certificate of Succession.
The Regulation has its limits. Denmark, Ireland and the United Kingdom do not participate; the UK did not participate before Brexit either. Authorities outside the participating states apply their own conflict rules, which may split the estate. The Regulation itself can designate the law of a non-participating country. And since 1 November 2021 France has revived the droit de prélèvement compensatoire: if the applicable foreign law does not protect the children's reserved share, and the deceased or a child is connected to the EU by nationality or residence, the réservataires recover the shortfall from French assets.
How It Is Structured
A common solution is to hold the real estate through a company: what is inherited is a share in it (movable property) under more flexible rules, while the asset itself stays in place. But the wrapper is not free, and many countries look through it precisely for real estate. France has an annual 3% tax on the value of real estate held through opaque structures; in the US, the sale of a US property by a company falls under FIRPTA. At the same time, shares in a foreign company count as a non-US asset for US estate tax—hence the popularity of blocker structures. Each of them is calculated in advance.
The logic of holding through a company is the same as for US-situs: see US estate tax.
An alternative to a company is a trust or private foundation: what is inherited is the beneficial interest, while title to the asset stays with the structure. But here too the country where the property sits may look through the ownership specifically for real estate, and Russian CFC duties may arise for a Russian tax-resident beneficiary who meets the applicable control conditions. The choice between a company, a trust, and direct ownership is calculated together with the exit tax and the local inheritance tax.
There are levers without a structure as well. A separate local will for each asset speeds up registration and removes conflicts of form; lifetime gifting or a usufruct reservation help to account for the reserved share in advance; a life-insurance policy gives heirs the liquidity to pay the local tax and avoid selling the real estate in a hurry.
Russia: Resident Heirs
Russia itself abolished inheritance tax back in 2006—heirs pay only a state duty (0.3% for close relatives, but no more than ₽100,000, and 0.6% for others, capped at ₽1 million). This relief does not extend to a foreign asset: the local situs tax must be paid where the real estate is. If the estate includes a foreign holding company, the heir's Russian tax residence and control must be tested for CFC reporting; foreign-exchange residence and reporting exemptions are assessed separately.
Eleven Property Markets Side by Side
The three problems above take a different shape in each market. The matrix reads eleven countries where international families most often hold homes on the axes that decide the plan: which succession law will reach the property, whether a reserve can bite, what tax a non-resident heir of a non-resident owner pays, whether a company wrapper is looked through, and what the local procedure is.
| Country | Succession law reaching the property | Reserve that can bite | Tax on a child as non-resident heir | Company or wrapper looked through | Local procedure |
|---|---|---|---|---|---|
| France | Reg. 650/2012: habitual residence or chosen nationality | réserve 1/2–3/4; prélèvement compensatoire on French assets | 5–45% after €100,000 | yes: 3% annual tax on entity-held property; property-rich company shares are French assets | notary; attestation immobilière |
| Spain | Reg. 650/2012 | legítima, regional | state scale 7.65–34%; regional reductions available to EU and non-EU heirs | 3% a year on the cadastral value for entities resident in tax havens, with exemptions (arts. 40–43 TRLIRNR) | notary and land registry; last-wills certificate |
| Italy | Reg. 650/2012 | legittima | Direct-line inheritance: 4% on each heir's taxable share above €1m. Mortgage and cadastral taxes on Italian immovable property are ordinarily 2% and 1% of the relevant tax value (minimum €200 each); qualifying prima casa succession relief reduces them to €200 each (Revenue Agency instructions). | — | succession return within 12 months; land-register transfer |
| Portugal | Reg. 650/2012 | legítima | none for descendants; 10% stamp duty for others | 7.5% property tax for entities domiciled in, or controlled from, listed low-tax territories (art. 112(4) CIMI) | habilitação de herdeiros; land registry |
| Germany | Reg. 650/2012 | Pflichtteil, a money claim | 7–30% on German property; allowance reduced pro rata | stakes of 10% or more in German companies are domestic assets (§ 121 no. 4 BewG) | Erbschein or notarial will; land register |
| United Kingdom | English law as lex situs for land | none; 1975 Act claims only for a UK-domiciled deceased | 40% above £325,000 | yes: UK homes held through offshore companies inside IHT since 2017 (Sch. A1 IHTA 1984); ATED on company-held dwellings | grant of probate; resealing for Commonwealth grants |
| United States | state law as lex situs | spouse's elective share | up to 40% above USD 60,000 | no: shares of a foreign corporation are non-US assets; FIRPTA on sale | ancillary probate in the state |
| UAE | UAE law; Sharia default for Muslims, civil rules for non-Muslims since 2023 | Sharia shares for Muslims | none | — | court order, then land department transfer; DIFC or ADJD will |
| Cyprus | Reg. 650/2012 | disposable portion capped (Cap. 195 s. 41) | none since 2000 | — | District Court grant, then Land Registry |
| Switzerland | law of last domicile; Swiss jurisdiction over Swiss land where the foreign state does not act | Pflichtteil if Swiss law applies | cantonal; descendants mostly exempt | — | certificate of inheritance; land register; heirs exempt from the foreign-buyer permit |
| Türkiye | Turkish law for land in Türkiye | saklı pay | Standard 2026 inheritance-tax schedule: progressive 1%, 3%, 5%, 7% and 10% on the taxable inherited share; each descendant has a TRY 2,907,136 exemption. Since 4 June 2026, Art. 16 also provides a special 1% rate for inheritance from a person benefiting from Income Tax Law Art. 20/D's 20-year foreign-income exemption during its valid period; the deceased's qualifying status and the relevant dates must be established (Arts. 4 and 16). | — | court or notary certificate of inheritance; land registry (tapu) |
The matrix shows that the succession-law column and the tax column have come apart. Inside the EU, Regulation 650/2012 lets one law govern a French flat, a Spanish villa and an Italian house together, and a choice of nationality law can change the applicable reserve without necessarily removing all restrictions. Outside the participating states, applicable law is determined under the relevant national conflict rules; the role of the land's location and any permitted choice of law vary. The tax column ignores the Regulation entirely: every country with an inheritance tax charges it on local land, and three of them have closed the company route. France taxes entity-held property at 3% a year unless the holders are disclosed, the United Kingdom brought offshore-held homes into inheritance tax in 2017, and Spain and Portugal charge special levies on entities from low-tax territories. The United States is the one large market where a foreign corporation can place shares outside the situs-based estate-tax base for a non-citizen, non-domiciled owner, at the price of corporate tax on a sale.
The zero-tax row — the UAE, Cyprus, Portugal for descendants — is not the same as a zero-friction row. The UAE freezes accounts and applies Sharia to Muslims by default; Cyprus runs a court grant before the Land Registry moves. The cheapest property to inherit is the one whose owner registered the local will and fixed the holding structure at purchase.
Worked example: one €2 million home, one adult child
The owner lives outside all six countries and leaves the home to one child who also lives abroad. In France, after the €100,000 allowance, the direct-line scale produces about €617,000. If €2m is also the relevant Italian taxable value of a home inherited wholly by one child, with no prima casa relief or other adjustment, the illustrative tax is €40,000 inheritance tax plus €40,000 mortgage and €20,000 cadastral tax, or about €100,000. A market price alone does not determine the assessment (Revenue Agency). In the United Kingdom, on the same value in sterling, 40% above the £325,000 nil-rate band is £670,000, or £600,000 if the residence nil-rate band applies to a home passing to a direct descendant. In the United States, estate tax on USD 2 million after the non-resident's USD 60,000 exemption comes to about USD 733,000. In the UAE and in Cyprus the tax is nil. The spread — from nothing to more than a third of the value — is set by where the building stands, not by where the family lives, which is why the tax is modelled before the purchase and the liquidity to pay it is arranged with life insurance or a holding structure.
Form of ownership by market
| Market | Form that usually survives the look-through |
|---|---|
| France | direct ownership or a disclosed French SCI, with a gift of bare ownership during life |
| United Kingdom | direct ownership; a company no longer removes inheritance tax and adds ATED |
| United States | foreign corporation or a trust structured for non-US situs, weighed against FIRPTA and corporate tax on sale |
| Spain, Portugal | direct ownership or an EU company; avoid entities in low-tax territories |
| UAE | registered DIFC or ADJD will, or a DIFC foundation or free-zone company holding the property |
Q/A
Which countries tax inherited property when neither owner nor heir lives there?
France, Spain, Italy, Germany, the United Kingdom, the United States and Türkiye all tax land located in their territory regardless of residence. The UAE and Cyprus levy no inheritance tax, and Portugal exempts descendants.
Does holding a US home through a foreign company still avoid US estate tax?
For an owner who is neither a US citizen nor US-domiciled, shares of a foreign corporation are generally outside the US-situs estate-tax base; the structure and any retained rights must still be checked. US citizens and domiciliaries are subject to a worldwide-estate analysis. The cost is on exit: a sale by the company falls under FIRPTA withholding and corporate tax, so the saving has to be weighed against the likely holding period.
I chose the law of my nationality under Brussels IV. Does that keep French tax off the flat?
No. Regulation 650/2012 fixes only the law governing the succession; tax is outside its scope altogether, as is the local registration of the transfer of title. France taxes the flat by its location, and the transfer to the heirs still has to go through French procedure, whatever law you chose for the rest of the estate.
I left everything to one child. Can the others claw it back out of my French flat?
Yes, where the droit de prélèvement compensatoire bites. Since 1 November 2021 Article 913 of the Code civil lets a disinherited child recover the reserved share out of French assets, provided the deceased or at least one child is an EU national or habitually resident in the EU and the applicable foreign law knows no reserve at all.
If I put the villa into a company, do the local reserved share and the local tax fall away?
Not automatically. What is inherited is a shareholding — movable property under more flexible rules — but the country where the property sits often looks through the wrapper precisely for real estate. France charges 3% a year on the market value of French property held through a legal entity, and lifts it only on an annual disclosure of everyone holding more than 1%.
There is no inheritance tax in Russia — so nothing is payable on the Spanish villa?
Something is, just not in Russia. A Russian heir pays the notarial state duty only: 0.3% of the value, capped at 100,000 roubles, for children, a spouse, parents and full siblings, and 0.6% capped at 1 million roubles for everyone else. Spanish inheritance tax is worked out where the villa sits and owes nothing to Russian rules.
I already have the succession certificate from home. Why does the local registry want its own?
Because title to real estate is registered under the rules of the country where it sits. That means local documents, a sworn translation and an apostille under the 1961 Hague Convention, often a separate local will and a local notary — running in parallel with the main estate proceedings. In practice it is months, and separate costs, in every country holding an asset.