Non-US owners abroad face US estate tax above US$60,000, not US$15m

When an owner who lives in Vietnam dies holding property abroad, the United States, Japan, South Korea and the United Kingdom each tax at least what sits on their soil; Australia abolished its inheritance taxes by 1982.

In the US the allowance turns on status: the estate of a non-citizen not domiciled there gets a credit covering the tax on the first US$60,000 of taxable US estate, while citizens and domiciled people dying in 2026 have US$15 million.

Where the asset sits decides who taxes it

The table assumes the deceased lived in Vietnam and was neither a citizen nor a long-term resident of the country concerned, and, for Japan, that the heirs live outside Japan or are temporary residents there. A resident heir in Vietnam may also owe Vietnamese tax on the same inheritance.

United States: a US$13,000 credit that covers US$60,000

Federal estate tax reaches the estate of every “nonresident not a citizen”, but only the part situated in the United States: US real estate, tangible property there and shares of US companies, wherever the certificates are kept.

Under the statute, shares of non-US companies are outside, and so are deposits with a US bank that are not connected with a US trade or business. Whether the Internal Revenue Service (IRS) can look through a foreign company that holds US real estate was not examined.

The rates are the citizens’ 18% to 40%; the allowance is not. The estate gets a credit of US$13,000, exactly the tax the schedule sets on US$60,000, so taxable estate above that is taxed from 26%, rising to 40% above US$1 million. Applying that schedule and the credit, a taxable US estate of US$1 million would owe US$332,800.

Unless a treaty allows otherwise, a marital deduction is available only if the surviving spouse is a US citizen or the property passes to a qualified domestic trust, the IRS instructions say.

The executor must file Form 706-NA, and pay, within 9 months of death when US assets plus certain lifetime gifts exceed US$60,000, a threshold the Internal Revenue Service says is not indexed for inflation.

For citizens and residents the tax covers the whole estate, wherever the assets are, with a basic exclusion of US$15,000,000 for deaths in 2026 under section 70106 of Public Law 119-21, signed on 4 July 2025. The IRS list of estate and gift tax treaties includes Australia, Japan and the United Kingdom, not Vietnam.

A resident, for estate tax, is a person domiciled in the US: living there with no definite present intention of leaving. The green-card test in section 7701(b) applies to the Internal Revenue Code “other than subtitle B”, which contains estate and gift tax, and the IRS notes that a person can be resident for income tax yet non-resident for estate tax.

This means a green card alone does not make its holder domiciled; a holder who lives in the US with no definite present intention of leaving does meet the test, and falls on the US$15 million side. The EB-5 route and its conditional green card are covered in a separate article.

Gifts of US real estate and tangible property in the US are taxed on the same schedule, though gifts of US shares are not. The annual exclusion is US$19,000 per recipient in 2026, and the lifetime gift credit in section 2505 is given to a citizen or resident. This indicates that a non-resident’s gift of a US house is taxable on its value above that exclusion.

States may tax separately. New York, the only state checked for this article, requires a return from the estate of a person not resident in the state if it includes real or tangible property there and the federal gross estate, plus certain gifts, exceeds US$7,350,000 for deaths in 2026.

Japan: the heir’s status matters as well

Japan taxes the heir, and the reach depends on both heir and deceased. A person who held no Japanese nationality and was not domiciled in Japan at death is a “non-resident decedent”.

The National Tax Agency states that an heir living abroad with no address in Japan is taxed only on property in Japan. This indicates that its exceptions do not reach a Vietnamese heir in Vietnam of a parent who lived in Vietnam. Real estate is located where it stands, deposits at the accepting branch, shares at the issuer’s head office.

A “temporary resident” holds a status from Table 1 of the Immigration Control Act, such as Business Manager, and has been domiciled in Japan for 10 years or less in the past 15. The Inheritance Tax Act does not tax such an heir on worldwide inheritances where the deceased was a non-resident decedent.

This means a Vietnamese investor in Japan on such a status who inherits from a parent in Vietnam pays Japanese tax only on Japanese assets, while a permanent resident, whose status is in Table 2, cannot be a temporary resident and is taxed on worldwide inheritances.

After a basic deduction of ¥30 million plus ¥6 million per statutory heir, rates of 10% to 55% (above ¥600 million) apply to each statutory heir’s notional share, and the total is shared out in proportion to what each heir received. Heirs other than the spouse and first-degree blood relatives, such as siblings, pay 20% more.

The return and the tax are due within 10 months of the day after the heir learned of the death, through a tax agent for an heir with no address in Japan.

Under the government’s FY2026 tax reform outline, certain rental real estate bought or built within 5 years before death is to be valued at its ordinary market price, for property inherited from 1 January 2027.

South Korea: only the basic deduction

Korea taxes according to where the deceased lived. Under the Inheritance Tax and Gift Tax Act, in its version in force since 2 January 2026, a resident’s whole estate is taxed and a non-resident’s only property in Korea; a resident has a domicile in Korea or a residence there of 183 days or more.

On a non-resident’s death, besides charges and debts secured on the Korean property or tied to a Korean business, only the ₩200 million basic deduction applies; the spouse deduction of at least ₩500 million, the ₩500 million lump-sum deduction and the other personal deductions require a resident’s death.

Rates run from 10% to 50% above ₩3 billion, according to the National Tax Service. The return is due 6 months after the end of the month of death, or 9 months where the deceased or any heir is domiciled abroad.

A government bill to tax each heir on what that heir receives, No. 2210618, was submitted on 28 May 2025 and remained in committee with no vote recorded as at 10 October 2026. It is not law.

United Kingdom: ten years of residence changes the reach

Since 6 April 2025, UK Inheritance Tax has turned on long-term residence rather than domicile. A long-term UK resident, resident for at least 10 of the 20 tax years before the year of death, is taxed on assets everywhere and stays in scope for 3 to 10 tax years after leaving.

An owner in Vietnam who has never been long-term resident pays only on UK assets, such as UK property, accounts at UK branches and shares on a UK register, although an account in a currency other than sterling is excluded on death if the owner was neither UK resident nor long-term resident immediately before it.

Where neither spouse is long-term resident, the manual of HM Revenue and Customs (HMRC) treats the spouse exemption as available in full.

A foreign company, partnership, trust or loan does not take a UK home out of scope. Under Schedule A1 to the Inheritance Tax Act 1984, shares in a foreign close company are taxable to the extent their value comes from UK residential property, and so are loans used to buy, maintain or improve it.

HMRC’s example is a Jersey company whose only asset is a London flat. Stakes below 5%, counting connected persons, are outside the rule, which since 6 April 2026 also covers UK agricultural property. How cross-border trusts hold family wealth is described in a separate article.

The rate is 40% above the £325,000 nil-rate band. A further £175,000 residence band applies only to a home the deceased lived in, left to children or grandchildren, and for someone not based in the UK only to a UK home; a buy-to-let never lived in does not qualify, and the band tapers above £2 million.

The two bands and the £2 million taper, already fixed to 5 April 2030, are held to 5 April 2031 by clause 72 of the Finance (No. 2) Bill, which received Royal Assent as the Finance Act 2026 on 18 March 2026, according to Parliament’s record. The bill was read for this article, not the enacted Act.

Tax is due by the end of the sixth month after death. None of the UK’s 10 inheritance tax conventions is with Vietnam.

Australia: no inheritance tax, one capital gains event

Australia “does not levy estate, inheritance or gift taxes”, a Treasury review paper stated in 2008; the Productivity Commission records that the last state tax went in 1982. A capital gain arising for an asset on its owner’s death is disregarded.

The heir takes over the deceased’s cost base for Australian real estate bought since 20 September 1985, but where the deceased was a foreign resident, assets that are not “taxable Australian property”, such as portfolio shareholdings, pass at market value.

The exception is capital gains tax (CGT) event K3: a deceased Australian resident leaves to a foreign-resident beneficiary an asset that is not taxable Australian property; that category includes Australian real estate, so real estate is outside K3. The gain then goes into the deceased’s date-of-death return, as when a parent who had become resident leaves portfolio shares to a child living in Vietnam.

This indicates that K3 cannot arise for an owner who was never an Australian resident, but that Australian real estate stays within capital gains tax when the heir sells, and that the main-residence exemption for deceased estates is unavailable where the deceased had been continuously a foreign resident for more than 6 years at death.

The Vietnamese layer

Under Law 109/2025/QH15 on personal income tax (as amended by Law 09/2026/QH16), in force since 1 July 2026, a resident heir pays 10% on the value above VND 20 million of each inheritance of securities, business capital, real estate or assets that must be registered.

Real estate passing between spouses, parents and children (including adoptive and in-law), grandparents and grandchildren, or siblings is exempt. Residents are taxed on income arising inside and outside Vietnam.

This indicates that inherited foreign shares or property come within the tax, though no text says so in terms, and that the close-family exemption would then cover real estate abroad too.

Decree 253/2026/NĐ-CP values inherited assets by Vietnamese benchmarks such as exchange reference prices and provincial land-price tables, without saying how a house in Osaka left outside the family circle would be valued.

A non-resident heir is taxed only on inheritances “in Vietnam”; how tax residence is decided is explained in a separate article.

No treaty read for this article relieves the overlap. Vietnam’s agreements with Japan, Korea, the UK and Australia cover taxes on income, and in the UK case capital gains. The credit clause of Decree 253/2026, Article 6(3), covers personal income tax paid abroad in a treaty country and says nothing about foreign estate or inheritance taxes.

The Vietnamese civil-law rules on who inherits are covered separately; a guide to cross-border succession covers the planning side.

What this article has not established

It was not established whether Vietnam taxes a resident’s inheritance of foreign assets in practice, how such assets are valued and timed, or whether a foreign estate or inheritance tax can be credited against Vietnamese tax.

In the US, only New York among the states was checked, the US Code was read in its 2024 edition, before Public Law 119-21, and IRS look-through of foreign companies was not examined.

No list of Japan’s or Korea’s inheritance tax conventions was found. For Japan, it was not established how the domicile counts work in practice, how statutory heirs are counted for a foreign decedent, how a surviving spouse is treated, or what the final rental-valuation rule is.

Korea’s rates come from tax-service guidance, as the statutory table is an image. The UK statute text was not read.

The Australian Taxation Office’s pages could not be opened, the date from which the 6-year rule applies was not established, and Australian state duties on passing property to heirs were not checked.