Global mobility, dispersed assets, and a tax challenge that requires timely planning

We live in a context where international mobility is part of everyday life for many Portuguese families. Some work in Germany, others have retired in Portugal after a career in Switzerland, some have children studying or living in Spain, and others hold real estate assets in countries such as the United States or Brazil. This geographical dispersion, seen as natural in daily life, becomes a real challenge when the time comes to organise succession.

Few matters generate as many practical problems, conflicts between heirs, and tax surprises as successions with international elements. The issue is not only the value of the inheritance, but above all the lack of planning.

The first critical point is the tax residence of the deceased. Many assume that nationality is the determining factor, but in most cases it is tax residence that defines which country has the right to tax the succession. A Portuguese citizen resident abroad may be subject to succession and tax rules that are completely different from those in Portugal.

Secondly, it is important to understand where the assets are located. Real estate, bank accounts, shareholdings or financial investments may be spread across several countries. Each jurisdiction may apply its own rules, require specific declarations and, in some cases, levy separate taxes on the transfer of those assets.

In Portugal, there is no classic inheritance tax as in many other countries. However, Stamp Duty continues to apply, namely to the transfer of assets located in national territory, when the heirs are not spouses, partners in a de facto union, descendants or ascendants. This seemingly simple detail often catches many heirs by surprise.

When countries such as France, the United Kingdom, Spain or the United States come into play, the scenario becomes more complex. Some of these countries apply high inheritance taxes, with progressive rates, and there are not always conventions to avoid double taxation in inheritance matters. The risk of paying tax twice is real and frequent.

Another common mistake is postponing the drafting of a will or opting for a document that does not have international validity. A will made in Portugal may not produce the desired effects in another country, especially if it does not comply with formal rules or legal limits imposed by local law.

The European Succession Regulation brought some harmonisation within the European Union, allowing the choice of the law applicable to the succession. However, this tool is little known and rarely used strategically, when it could avoid litigation and significantly reduce the tax burden.

From a practical point of view, international succession planning should be seen as a continuous process and not as a last-minute decision. Assessing the structure of the assets, tax residence, location of the assets and the profile of the heirs makes it possible to anticipate risks and make informed decisions.

In conclusion, in an era in which families no longer fit within borders, succession has ceased to be a purely legal or emotional matter. It is a tax and strategic issue, deeply linked to family peace of mind. Seeking specialised advice in good time is not a luxury – it is a responsible way to protect assets and avoid future problems.