Daniel Wildenstein's estate came down, in the judgment, to an inventory of things: paintings, New York property, a ranch in Kenya, a Caribbean island, stud farms and private jets — €301 million across seven trusts, the Paris appeal judgment of 5 March 2024, a reassessment of roughly €100 million. Thirteen years went into a question with no short answer: where was the thing located on the day of death, if it can fly, sail and travel between exhibitions. What follows is the mechanics of situs for tangible movables — where physical location decides the tax, and where a treaty rule displaces it.
The concept
Three distinct questions live around a single object, and they are constantly conflated:
- Who taxes the estate — situs operates here, and only where the deceased was a non-resident
- Which law determines the class of heirs and the reserved share — the deceased's personal law operates here
- What the tax treaty says — a treaty situs rule displaces the general rule, vessels and aircraft included
The sixty-thousand-dollar threshold
Where the date-of-death value of a non-resident's US-situs assets, together with the gift tax specific exemption used and the adjusted taxable gifts, exceeds the filing threshold of $60,000, the executor must file Form 706-NA. The threshold is not indexed, and it is drafted as a unified credit: IRC §2102(b)(1) gives «a credit of $13,000 … against the tax imposed by section 2101», a figure introduced by Pub. L. 100-647 of 10 November 1988 in place of the previous $3,600. The §2001(c) schedule closes with the line «Over $1,000,000 — $345,800, plus 40 percent of the excess». For US citizens and domiciliaries dying in 2026 the basic exclusion amount is $15,000,000 (Rev. Proc. 2025-32); the reform left the sixty-thousand threshold untouched.
The perimeter is drawn in 26 CFR §20.2104-1(a) — «real property located in the United States» and «tangible personal property located in the United States» — and the physical situs formula is given in 26 CFR §25.2511-3: such things «constitute property within the United States only if they are physically situated therein». IRM 4.25.4.7.1, in its version of 26 May 2023, repeats it without softening: «physically present in the United States on the date of death».
Deposits and portfolio debt are carved out by §2105(b), but 26 CFR §20.2105-1(k) adds a qualification: «Currency is not a debt obligation» — banknotes in a safe deposit box remain tangible movables with a US situs. A gift by a non-resident of a US tangible object attracts gift tax; a gift of US intangibles, shares in US corporations included, does not. A state layer sits on top of the federal one: New York Tax Law §960(a) taxes property with an «actual situs in New York state».
Jet and yacht: the register against the water
HMRC reproduces the common law formula in IHTM27073, citing Trustees Executors & Agency Co Ltd v IRC [1973] Ch 254: «A ship on the high seas is deemed to be situated at its port of registry but when it comes within territorial waters this artificial situs is displaced by the actual situs». A vessel falls within UK IHT if it lies in territorial waters on the date of transfer; the port of registry serves as the default for the high seas alone. The decision itself is more often discussed in the literature for the situs of an interest in an unadministered estate, so the formula is properly cited as HMRC's position. For everything else the rule is shorter, IHTM27075: «Household and personal goods (chattels) are situated where they happen to be at the relevant time».
A treaty inverts the picture. IHTM27071 directs you to start with the convention under IHTA84/S158: conventions drafted before 1975 usually contain detailed situs rules, later ones usually do not. The United Kingdom's surviving pre-1975 conventions are those with France, Italy, India and Pakistan; they operate on common law domicile, and deemed domicile does not apply to them. The France–United Kingdom estate duty convention of 21 June 1963 provides in art. 4 § i that «ships and aircraft and shares thereof shall be deemed to be situated at the place of registration», and art. 3 requires location to be determined «exclusively» by the rules in art. 4. Other tangible movable property under art. 4 § b is situated where it is physically located at the time of death or, if in transit, at the place of destination.
No dedicated rule for vessels and aircraft could be found in §§2104–2105, the US regulations or the IRM: the conclusion that the general category of tangible personal property applies follows from 26 CFR §20.2104-1(a)(2) and IRM 4.25.4.7.1, and it will have to be defended as a conclusion. The protocol of 8 December 2004 to the US–France convention does record that «ships and aircraft shall not be regarded as real property». The gap between the register and actual presence is illustrated by the HM Treasury review of Isle of Man VAT procedures: between 1 April 2012 and 31 March 2017 IOMCE processed 233 aircraft registrations, of which only 20 took the exemption for international transport, and 31 yacht registrations.
The collection: exhibition, consignment, freeport
The American rule on art grew out of a piece of leverage: according to Senate Report No. 2261 of 9 August 1950, a foreign collector told Congress that he «cannot allow his paintings to remain in the United States … unless the Congress enacts legislation exempting the collection from estate taxation», and the paintings began to leave the National Gallery of Art. IRC §2105(c) requires three conditions at once: importation solely for exhibition purposes; a loan to a public gallery or museum, «no part of the net earnings of which inures to the benefit of any private stockholder or individual»; and, at the moment of death, presence on exhibition or en route to or from it.
Practice is gentler than the letter. PLR 199922038 of 3 March 1999 considered 31 works belonging to a non-resident held by an American museum, most of them on exhibition since 1996, two of which had been bought within the United States and passed straight into a rotating display. The IRS allowed the rotation: «we consider the whole collection to be on exhibition for purposes of section 2105(c) even though only part of the collection will actually be on display to the public at any given time on a rotating basis». It also declined to read the importation condition literally for the two domestically bought works — the application of §2105(c) «does not depend upon the fulfillment of a useless act such as exporting the 2 items and then importing them back into the United States».
The British analogue has run since 6 April 2009: SI 2009/730, art. 13 inserted into IHTA 1984 s. 5(1)(b) the words covering a «foreign-owned work of art which is situated in the United Kingdom for one or more of the purposes of public display, cleaning and restoration (and for no other purpose)», and took such an object out of relevant property under s. 64(2). IHTM21047 sets out three conditions: the item is normally kept outside the UK; it would become liable to IHT solely because it happened to be in the UK at the relevant date; and it was brought here for public exhibition, cleaning or restoration and for nothing else. The definition of «foreign-owned» in s. 272 has been moved onto the new status: an object qualifies where the person beneficially entitled to it «is at that time not a long-term UK resident». Domicile left that test with the reform of 6 April 2025.
Consignment to a commercial gallery fails in all three systems: §2105(c)(2) requires a public gallery with no distribution of profit; the definition of «public display» in s. 272 expressly excludes «display with a view to sale»; NY §960(d) exempts a loan «to a public gallery … solely for exhibition purposes».
Freeports carry a denser load of myth than the rest. The European Parliament study (EPRS, October 2018) records 82 free zones notified to the European Commission as at 17 November 2017, and figures from the Swiss Federal Audit Office: more than 1.2 million pieces of art in the Geneva Ports Francs. The figure of some CHF 100 billion in warehoused value is reported in the same study on the authority of press coverage, and it is not an official estimate. A customs suspension does not cancel situs. Geneva exempts for a purely Swiss reason: inheritance tax in Switzerland is levied at cantonal level, and movable property is taxed by the canton of the deceased's last domicile. A federal tax remains hypothetical: the «pour l'avenir» initiative, proposing a 50% rate above a CHF 50 million threshold, was rejected on 30 November 2025 by 78.3% of votes on a turnout of 42.9%.
France: assiette matérielle
Art. 750 ter CGI, in the version in force since 31 July 2011, gives three independent bases of charge: the deceased was domiciled in France — the worldwide estate is taxed, including «biens ou droits composant un trust»; the deceased was not domiciled in France — assets in France are taxed; the heir has been domiciled in France for at least six of the last ten years — again the worldwide estate. Situs is worked out in BOI-ENR-DMTG-10-10-30 of 12 September 2012: § 90 treats as French assets «immeubles, meubles corporels, fonds de commerce exploités en France», and § 160 defines foreign assets as those having «leur assiette matérielle à l'étranger». Register and flag are absent from the text. The stakes are set by art. 777 CGI: 45% in the direct line above €1,805,677 and 60% between unrelated persons. Pre-death relocations run into art. L. 64 A LPF and its test of a «motif principal d'éluder ou d'atténuer les charges fiscales» — applying to reassessments notified from 1 January 2021 in respect of acts done from 1 January 2020.
This is also where the single case sits in which the situs of a movable object reaches into the substance of the succession. Art. 913 C. civ., as enacted by LOI n° 2021-1109 of 24 August 2021 and in force since 1 November 2021, allows a child to take a compensatory levy «sur les biens existants situés en France au jour du décès» where the applicable foreign law «ne permet aucun mécanisme réservataire protecteur des enfants». The provision's predecessor, art. 2 of the loi du 14 juillet 1819, was struck down by decision n° 2011-159 QPC of 5 August 2011 («Non conformité totale»). On complaint CPLT(2022)03325 the European Commission issued a pre-closure letter on 4 June 2026: on the French authorities' own explanation, the prélèvement bites only where the foreign law knows no mechanism at all for protecting children, and common law family provision counts as a functional equivalent of the réserve. The provision is formally alive, and after those explanations the space in which it operates is narrow.
The United Kingdom: LTR status on top of situs
The standard IHT rate is 40%, reduced to 36% where a tenth of the net value is left to charity; the nil-rate band is frozen at £325,000 from 6 April 2009 to 5 April 2031. From 6 April 2025 Finance Act 2025, s. 44 replaced the words about domicile outside the United Kingdom in IHTA 1984 ss. 6(1) and 6(1A) with the status of a person «who is not a long-term UK resident», and the test is set out in the new s. 6A: residence in at least 10 of the previous 20 tax years, with a tail of between 3 and 10 years of non-residence after departure. Domicile retains its significance for deaths before 6 April 2025 and for conventions that operate on common law domicile. For a long-term UK resident, moving objects out is pointless: the worldwide estate is taxed. For everyone else, moving a chattel out does change its situs, though the art relief requires the object to be «normally kept outside the UK».
Applicable law: the deceased's personal law
Regulation (EU) 650/2012 abolished scission of the estate. Art. 21(1): «The law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death», subject to the art. 21(2) proviso about a «manifestly more closely connected» State; art. 22(1) permits a choice of the law of the State of nationality; art. 23(2)(h) brings within the scope of the succession statute «the disposable part of the estate, the reserved shares and other restrictions on the disposal of property upon death». The Regulation applies to the estates of those dying on or after 17 August 2015; Denmark and Ireland do not participate, the United Kingdom did not participate even before Brexit, and Chapter VI created the European Certificate of Succession.
The tax dimension is cut away by art. 1(1): the Regulation «shall not apply to revenue, customs or administrative matters», and recital 10 leaves the calculation of succession taxes to national law. A succession may run in its entirety under Spanish law while tax arises simultaneously in the United States on the situs of a painting and in France on the situs of a yacht. The classical model outside the EU preserves scission, but for movables it produces the same personal connecting factor: art. 1224(1) of the Russian Civil Code subjects succession to the law of the country of the deceased's last place of residence, immovables to the law of their location, and property entered in a Russian state register to Russian law. Russia has had no inheritance tax since 1 January 2006 (Federal Law No. 78-FZ of 01.07.2005).
Popular, and it ends badly
| Practice | Why it appeals | How it ends |
|---|---|---|
| «The flag is offshore, so there is no tax where she berths» | The register was chosen for VAT and operating rules, and it seems to settle succession too | IHTM27075: chattels are situated where they happen to be at the relevant moment. The port of registry is the default for the high seas alone. In the French framework the register is not mentioned at all; what counts is the «assiette matérielle» |
| The same calculation between France and the United Kingdom | The logic that «physical location decides» has already been absorbed | Here it produces the opposite result: art. 4 § i of the convention of 21 June 1963 locates vessels and aircraft at the place of registration, and IHTM27071 requires the treaty to be checked before the general law |
| A painting «on sale or return» with a New York dealer | From outside it looks like the same exhibition as in a museum | §2105(c)(2) requires a public gallery with no distribution of profit, s. 272 in the UK excludes «display with a view to sale», NY §960(d) requires a «public gallery». The object is physically in the United States and the $60,000 threshold has been passed |
| Flying the aircraft out of the United States a month before death | Situs will disappear, and the tax with it | §2104(b) freezes situs for transfers within §§2035–2038: presence in the United States either at the time of transfer or at death is enough. §2035 reaches back three years, and §2035(b) returns gift tax paid to the gross estate |
| A nominee structure in the role of owner | The beneficiary's name surfaces nowhere | In the M/Y Amadea case the Second Circuit on 1 June 2026 called the claimants «straw owners» holding bare title and denied constitutional standing over a vessel worth €225 million, seized in April 2022 |
Q/A
A jet on the Maltese register spends six months at Nice. Where is it for succession purposes?
For French tax, physical presence decides: art. 750 ter 2° CGI together with BOI-ENR-DMTG-10-10-30, where situs is worked out through the «assiette matérielle» and the register does not feature. For UK IHT the answer turns on the pair of jurisdictions: IHTM27071 requires the treaty to be examined first, and the 1963 convention with France sends the aircraft, by art. 4 § i, to its place of registration. The same aircraft is located differently in different pairs of countries, and that is the system working as designed.
Is there a special US rule for yachts and aircraft?
No dedicated rule could be found in §§2104–2105, the regulations or the IRM. Practice proceeds from the general category — 26 CFR §20.2104-1(a)(2) and IRM 4.25.4.7.1 on physical presence at the date of death. That is an inference from a general rule, and it will have to be defended as one.
A painting travelled to an exhibition at an American museum and the owner died. Forty per cent?
With the full set of §2105(c) conditions, no. PLR 199922038 showed that rotating a display does not break the exemption, and that it extends even to works bought in the United States and passed straight to the museum. New York State is checked separately under §960(d).
The deceased was resident in France. Does moving the collection out in advance help?
No. Art. 750 ter 1° taxes the entire estate wherever it is situated. The same nil result follows where the heir lives in France with six years out of ten behind them (750 ter 3°). Above that sits art. L. 64 A LPF with its «motif principal» test.
A Russian deceased, a collection in Geneva and a jet in Dubai.
Succession to movables follows the law of the last place of residence (art. 1224(1) of the Russian Civil Code), that is Russian law; and Russia has levied no inheritance tax since 2006. Geneva does not tax the movable property of a person domiciled outside Switzerland, because the cantonal connecting factor is built on domicile. The answer changes the moment the aircraft flies into a jurisdiction that works on situs.
Sources
- IRS — Estate tax for nonresidents — $60,000 threshold, Form 706-NA
- 26 U.S.C. §2102 — unified credit $13,000, Pub. L. 100-647
- 26 U.S.C. §2001 — rate schedule, top line 40%
- IRS — Inflation adjustments 2026 — exclusion $15,000,000, Rev. Proc. 2025-32
- 26 U.S.C. §2104 — situs freeze under §2104(b)
- 26 CFR §20.2104-1 — tangible personal property in the US
- 26 U.S.C. §2105 — exclusions under §2105(b), three conditions in §2105(c)
- 26 CFR §20.2105-1 — currency is not a debt obligation
- 26 CFR §25.2511-3 — «physically situated therein», gifts by non-residents
- IRM 4.25.4.7.1 — physical presence at the date of death
- PLR 199922038 — rotating display, works bought in the US
- Senate Report No. 2261 (1950) — origin of §2105(c)
- NY Tax Law §960 — actual situs in the state, exemption in §960(d)
- HMRC IHTM27073 — port of registry and territorial waters, [1973] Ch 254
- HMRC IHTM27075 — chattels «where they happen to be»
- HMRC IHTM27071 — treaty priority under IHTA84/S158
- HMRC IHTM47072 — pre-1975 conventions: France, Italy, India, Pakistan
- SI 1963/1319 — art. 4 § i: vessels and aircraft at the place of registration
- SI 2009/730 — art. 13: foreign-owned work of art in s. 5(1)(b) and s. 64(2)
- HMRC IHTM21047 — three conditions for the art relief
- IHTA 1984, s. 272 — «foreign-owned», «public display» excluding sale
- Finance Act 2025, s. 44 — long-term UK resident from 6 April 2025
- IHTA 1984, s. 6A — the 10-of-20 test
- HMRC — IHT thresholds — NRB £325,000 to 5 April 2031
- Art. 750 ter CGI — three bases of charge, the six-of-ten rule
- BOI-ENR-DMTG-10-10-30 — «assiette matérielle»
- Art. 777 CGI — rates of 45% and 60%
- Décision n° 2011-159 QPC — striking down the 1819 prélèvement
- Art. 913 C. civ. — prélèvement compensatoire over assets in France
- European Commission, CPLT(2022)03325 — pre-closure letter of 4 June 2026
- Art. L. 64 A LPF — mini-abus de droit
- Regulation (EU) 650/2012 — arts. 1(1), 21, 22, 23, 84
- e-Justice — Succession — date of application, Denmark and Ireland, ECS
- Art. 1224 of the Russian Civil Code — movables by last place of residence
- Federal Law No. 78-FZ of 01.07.2005 — abolition of inheritance tax from 2006
- Protocol of 08.12.2004, US–France — ships and aircraft are not real property
- AFC/ESTV — cantonal tax, movables by domicile
- EFD — the «pour l'avenir» initiative — 78.3% against, 30 November 2025
- EPRS — Free ports study — 82 zones, 1.2 million objects
- HM Treasury — Isle of Man VAT — 233 aircraft, 20 exemptions, 31 yachts
- Actu-Juridique — Wildenstein — €301 million, appeal of 5 March 2024
- US v. M/Y Amadea (2d Cir.) — «straw owners», standing denied
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