inheritance tax for foreign nationals

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nimap
Posts: 67
Joined: Fri Nov 01, 2019 10:07 pm

inheritance tax for foreign nationals

Post by nimap » Thu Feb 17, 2022 11:47 pm

I have a friend from Bangladesh who's living in Finland since 2002 on a permanent residence (not citizen yet). His father was (already dead) real estate broker and amassed few properties in Bangladesh. The properties were transferred to his mother who is also on her final days. He has 4 brothers and sisters and they are already planning about inheritance in case of mother's death.

He may get one house as inheritance but living in Finland and maintaining the house in Bangladesh would be difficult. At first he was thinking to sell the property and bring money to Finland but it is not legally possible to remit money out from Bangladesh as individual (foreign nationals can do that but he is still Bangladeshi citizen). Bangladesh has strict restrictions about outflow of money from the country.

He still has to pay inheritance tax in Bangladesh, how does this taxation works in Finland.

For instance, if his inheritance would be equivalent to €100k, he needs to pay some minimal amount in Bangladesh as inheritance tax (he cannot be exempt from this tax as he is still a citizen and the property is in the country).

How much would he be taxed in Finland in both cases:-
1. He plans to sell the property and deposit money in the Bank in Bangladesh earning some interest.
2. He plans to keep the house and rent it to get some monthly income.

I see, he'll even have to fork taxation on earned interest and earned monthly rent. But the question here is about inheritance tax. Can he also deduct the amount he was forced to pay in Bangladesh as inheritance tax?



inheritance tax for foreign nationals

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FinnGuyHelsinki
Posts: 1439
Joined: Sun Nov 08, 2009 8:52 pm

Re: inheritance tax for foreign nationals

Post by FinnGuyHelsinki » Fri Feb 18, 2022 7:01 am

nimap wrote:
Thu Feb 17, 2022 11:47 pm
I have a friend from Bangladesh who's living in Finland since 2002 on a permanent residence (not citizen yet). His father was (already dead) real estate broker and amassed few properties in Bangladesh. The properties were transferred to his mother who is also on her final days. He has 4 brothers and sisters and they are already planning about inheritance in case of mother's death.

He may get one house as inheritance but living in Finland and maintaining the house in Bangladesh would be difficult. At first he was thinking to sell the property and bring money to Finland but it is not legally possible to remit money out from Bangladesh as individual (foreign nationals can do that but he is still Bangladeshi citizen). Bangladesh has strict restrictions about outflow of money from the country.

He still has to pay inheritance tax in Bangladesh, how does this taxation works in Finland.

For instance, if his inheritance would be equivalent to €100k, he needs to pay some minimal amount in Bangladesh as inheritance tax (he cannot be exempt from this tax as he is still a citizen and the property is in the country).

How much would he be taxed in Finland in both cases:-
1. He plans to sell the property and deposit money in the Bank in Bangladesh earning some interest.
2. He plans to keep the house and rent it to get some monthly income.

I see, he'll even have to fork taxation on earned interest and earned monthly rent. But the question here is about inheritance tax. Can he also deduct the amount he was forced to pay in Bangladesh as inheritance tax?
See https://www.vero.fi/en/individuals/prop ... ituations/ . What one does with the inheritance afterwards (e.g. whether one keeps or sells an inheriteed house) does not matter, the inheritance tax is due for the inherited value. How Vero calculates or estimates property values abroad, I have no idea.

nimap
Posts: 67
Joined: Fri Nov 01, 2019 10:07 pm

Re: inheritance tax for foreign nationals

Post by nimap » Fri Feb 18, 2022 10:27 am

FinnGuyHelsinki wrote:
Fri Feb 18, 2022 7:01 am
See https://www.vero.fi/en/individuals/prop ... ituations/ . What one does with the inheritance afterwards (e.g. whether one keeps or sells an inheriteed house) does not matter, the inheritance tax is due for the inherited value. How Vero calculates or estimates property values abroad, I have no idea.
Also what happens in case of double taxation? Like they say here:
The decedent lived in another country, not Finland. You live in Finland and you inherit cash. You and all the other inheritors living in Finland must pay inheritance tax to Finland.
other country may have the same rules as
The decedent lived in Finland. You live outside of Finland and you inherit a house or apartment not located in Finland. You must pay Finnish inheritance tax. Not only the inheritors who live in Finland but also those living in a foreign country must pay inheritance tax to Finland.
isn't this case of double taxation for the same property? as the country where the property is located will also tax the inheritor. Only handful of countries are in the list of bilateral tax agreement where double taxation is avoidable.

Upphew
Posts: 10748
Joined: Tue Apr 08, 2008 10:55 pm
Location: Lappeenranta

Re: inheritance tax for foreign nationals

Post by Upphew » Fri Feb 18, 2022 11:37 am

nimap wrote:
Fri Feb 18, 2022 10:27 am
isn't this case of double taxation for the same property? as the country where the property is located will also tax the inheritor. Only handful of countries are in the list of bilateral tax agreement where double taxation is avoidable.
https://www.vero.fi/en/individuals/prop ... n-country/
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FinnGuyHelsinki
Posts: 1439
Joined: Sun Nov 08, 2009 8:52 pm

Re: inheritance tax for foreign nationals

Post by FinnGuyHelsinki » Fri Feb 18, 2022 11:44 am

nimap wrote:
Fri Feb 18, 2022 10:27 am
FinnGuyHelsinki wrote:
Fri Feb 18, 2022 7:01 am
See https://www.vero.fi/en/individuals/prop ... ituations/ . What one does with the inheritance afterwards (e.g. whether one keeps or sells an inheriteed house) does not matter, the inheritance tax is due for the inherited value. How Vero calculates or estimates property values abroad, I have no idea.
Also what happens in case of double taxation? Like they say here:
The decedent lived in another country, not Finland. You live in Finland and you inherit cash. You and all the other inheritors living in Finland must pay inheritance tax to Finland.
other country may have the same rules as
The decedent lived in Finland. You live outside of Finland and you inherit a house or apartment not located in Finland. You must pay Finnish inheritance tax. Not only the inheritors who live in Finland but also those living in a foreign country must pay inheritance tax to Finland.
isn't this case of double taxation for the same property? as the country where the property is located will also tax the inheritor. Only handful of countries are in the list of bilateral tax agreement where double taxation is avoidable.
That's how it goes, without a tax treaty both countries follow their own rules. Note that also capital gains from a foreign country are taxable in Finland, should you choose to rent the property. You can of course ask Vero just to make sure.

riku2
Posts: 1045
Joined: Tue Jul 08, 2008 10:13 pm

Re: inheritance tax for foreign nationals

Post by riku2 » Sun Feb 20, 2022 10:07 pm

nimap wrote:
Fri Feb 18, 2022 10:27 am
isn't this case of double taxation for the same property? as the country where the property is located will also tax the inheritor. Only handful of countries are in the list of bilateral tax agreement where double taxation is avoidable.
You should remember that some countries tax the people inheriting (eg the children) and some countries tax the estate of the dead person (a dead parent for example). So there is not always a guaranteed double taxation anyway. In Finland the people receiving the inheritance pay tax, in the UK and most of the USA for example the estate of the dead person is taxed and the people receiving an inheritance pay no tax regardless of how much they inherit.
The Finnish rule you quoted about the house of a dead person in Finland and people living abroad is an attempt to get some tax even if the people inheriting live in countries like the UK where they would otherwise not pay tax.


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