Inheritance tax rates across Europe – how does Britain compare to other countries?

What is inheritance tax?

This is levy imposed by many Governments on the estates, including their money, possessions and property, of their citizens after they passed away.

The unpopular tax is charged when an estate is moved from a deceased individual to any number of beneficiaries.

Usually, spouses or civil partners are not liable to pay IHT, however other beneficiaries could have to pay the charge.

These include direct descendants, such as children or grandchildren, parents, siblings, friends and business partners.

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How much inheritance tax do Britons pay?

As it stands, inheritance tax is paid at a 40 per cent rate to HM Revenue and Customs (HMRC) if the estate is above the £325,000 threshold.

It is due within six months after the estate owner’s death, at which point interest will accrue based on the Bank of England’s base, if has not been paid.

IHT is paid directly to HMRC by the executor of the will, or legal representative involved in handling the estate.

The tax due is paid to the Government department through a direct transfer of funds or by selling off property equity.

How much do other countries in Europe pay in inheritance tax?

• Austria – No inheritance tax paid
• Belgium – Yes, inheritance tax paid at rate of between three to 80 per cent depending on region.
• Bulgaria – Yes, inheritance tax paid at rate of between 0.4 to 6.6 per cent
• Croatia – Yes, inheritance tax paid at rate of four per cent
• Cyprus – No inheritance tax paid
• Czechia – Yes, income tax applies with inheritances being fully tax-exempt but gifts may be taxed
• Denmark – Yes, inheritance tax paid at rate of zero to 52 per cent
• Estonia – No inheritance tax paid
• Finland – Yes, inheritance tax paid at rate of between seven to 33 per cent
• France – Yes, inheritance tax paid at rate of between five to 60 per cent
• Germany – Yes, inheritance tax paid at rate of between seven to 50 per cent
• Greece – Yes, inheritance tax paid at rate of between one to 40 per cent
• Hungary – Yes, inheritance tax paid at rate of between ine to 18 per cent
• Iceland – Yes, inheritance tax paid at rate of 10 per cent
• Ireland – Yes, inheritance tax paid at rate of 33 per cent
• Italy – Yes, inheritance tax paid at rate of between four to eight per cent.
• Latvia – No inheritance tax paid on estates income applies to gifts.
• Lithuania – Yes, inheritance tax paid at rate of between five to 10 per cent
• Luxembourg – Yes, inheritance tax paid at zero to 48 per cent
• Malta – No inheritance tax paid but five perc cent transfer duty can apply.
• Netherlands – Yes, inheritance tax paid at rate of between 10 40 per cent.
• Norway – No inheritance tax paid
• Poland – Yes, inheritance tax paid at rate of between zero to 20 per cent
• Portugal – Yes, inheritance tax paid at rate of 10 per cent
• Romania – No inheritance tax paid except in relation to transfer retail estate in certain situations
• Slovakia – No inheritance tax paid
• Slovenia – Yes, inheritance tax paid at rate of between five to 39 per cent.
• Spain – Yes, inheritance tax paid at rate of 7.65 to 87.6 per cent depending on the region
• Sweden – No inheritance tax paid.
• Switzerland – Yes, inheritance tax paid at rate of between zero to 50 per cent depending on caton
• Turkey – Yes, inheritance tax paid at rate of between one to 30 per cent
• UK – Yes, inheritance tax paid at rate of between 20 to 40 per cent.

Since 2022, there was no inheritance, estate and gift taxes in eight European Union countries, the Tax Foundation found.

These include Austria, Cyprus, Estonia, Latvia, Malta, Romania, Slovakia and Sweden. Among the EFTA countries, there were also no wealth transfer taxes in Norway.

Laura Hayward, the tax partner Evelyn Partners, noted that the UK has seen a hike in IHT receipts due to fiscal drag.

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This happens when tax thresholds, such as the £325,000 inheritance tax amount, remain frozen while the cost of estates go up.

She explained: “IHT is harvesting more in revenue than was ever forecast as rising house prices and growth in investment assets have boosted the value of estates over the last couple of decades.

“This has drawn more estates, and more assets in each liable estate, over the threshold at which IHT kicks in, which has been frozen at £325,000 since April 2009. Modest property downturns as we have seen in the last year or so will do little to dent this trend.

“In recent years there has also been a Covid effect on mortality which has further increased the overall IHT take.”