Concept
Foreign real estate is the most "stubborn" asset in an estate. Wherever the owner lives, real estate is almost always inherited under the law of the country where it is located (lex rei sitae). This means foreign rules, foreign tax, and a foreign reserved share.
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. The account passes under the law of their last place of residence, while both properties pass under French and Spanish law: the French children receive their réserve, Spain takes its regional inheritance tax, and each of the two matters must be handled before a local notary. Three assets produce three different succession scenarios out of a single estate.
Three Problems
Forced heirship
An apartment in France or Spain is subject to their reserved share, even if the owner is a citizen of a country with testamentary freedom. 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. In the US, for a non-resident, the tax-free threshold on US assets is only $60,000, against almost $14 million for Americans themselves, 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 and Ireland are not bound by it, the UK after Brexit is an outright third country, and for assets outside the participating states succession is still governed by the local lex rei sitae. 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.
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 a Russian beneficiary picks up CFC rules. 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 Russian heir becomes a controlling person and falls under CFC reporting and currency rules.
🧭 Check your case: Inheritance Navigator — which law applies, where the reserved share and taxes fall.
This material is for informational purposes only and does not constitute individual legal advice.