Cross-border family disputes tax considerations

Family legal disputes can be challenging, especially if they are increasingly contentious and are taking place cross-border. Communication between parties may be more difficult, and there may be language barriers that are hard to overcome. A common international dispute that arises between families concerns tax, especially inheritance tax. Understanding inheritance tax obligations when you live abroad can be difficult to navigate, which is why it is important to seek legal help as soon as possible.

In this guide, we will explore some common cross-border family disputes, and the various tax issues that can arise. We will also explain how to handle tax disputes cross-border, how much UK inheritance tax you could be paying on foreign inheritance, and how an international lawyer can help you.

Click on the links below to jump to that section:

Discover more about the common reasons for family disputes cross-border

Find out more about the tax issues that can come to light during cross-border family disputes

Here’s what you can do if any tax issues arise during your dispute

Find out how much you could be paying in tax on foreign inheritance

Here’s how an international solicitor can assist in your family dispute

Here’s how we can help you

What are some common examples of cross-border family disputes?

Legal issues can occur between families for several reasons. Most commonly, family members can disagree over inheritance and become involved in will disputes, especially if someone has been left out of a will or hasn’t received as much as they anticipated. Inheritance disputes can also occur cross-border if the deceased lived in another country to their family. Inheritance laws and taxes can differ in various countries, which can make legal matters more contentious.

Divorces can happen between two people living in separate countries, which can be a confusing process if you are unsure where the applicable law lies. If you were married in one country but live in another, or your spouse is a different nationality than you, divorcing may not be as straightforward as anticipated.

Living in a different country to the children in your life, whether you are their parents or grandparents, can be difficult and applying for custody or visitation rights may be tricky. Disputes can arise when a custodial parent is removed, your attempt for visitation has been denied, or there are parental responsibility issues.

You can find out more about family disputes on our website here.

What tax issues can arise during cross-border family disputes?

Payable taxes occur in family disputes when a death is involved. You do not need to pay tax on a divorce settlement in the UK, and there are no applicable taxes for solving a cross-border family dispute. The main tax issues that can arise with cross-border family disputes include the taxes involved when someone dies such as inheritance tax.

These taxes can occur both in the UK and cross-border, but they may take longer to resolve if the other parties involved are located in a different country. When a loved one dies, there are various taxes that need to be considered, such as council tax and business taxes. The council should already be notified of a death, but it may be worth contacting them for a council tax reduction if a property is unoccupied after their death.

If the deceased ran a business, payroll taxes, VAT and corporation tax all need to be considered and dealt with. Attempting to resolve these tax issues from abroad can be hard, especially if you are embroiled in an inheritance or probate dispute. Although handling council and business taxes may be more straightforward with the help of an international solicitor, inheritance tax and cross border tax arrangements are more likely to be contentious during a cross-border legal dispute.

How do I handle inheritance tax cross-border?

Inheritance tax is only paid on UK assets, so if the deceased was domiciled abroad, there will be no UK inheritance tax to pay on their foreign assets and cross border estate.

HMRC will treat the deceased as living in the UK if they have lived in the UK for 15 of the past 20 years, or they had a permanent home in the UK for the last three years of their life. The executor might be able to reclaim tax through a double taxation treaty if the inheritance tax is charged on the same assets by the country where the deceased lived and the UK.

If you live abroad and your loved one lived in the UK when they passed, you will still need to pay inheritance tax on their UK assets. UK inheritance tax will need to be paid on assets worth over £325,000.

How much is UK inheritance tax on foreign inheritance?

Inheritance sourced from overseas assets is not liable to income tax, but you must pay inheritance tax, and the value must be reported to HMRC. Inheritance is taxable at around 36%, so it is important to understand how much inheritance you are receiving and how much tax you are going to pay.

It is advised that you seek legal advice if the issue of inheritance tax arises during your cross-border family dispute. To find out more, or to book a consultation, please contact us via our website today.

How can a cross-border solicitor help me?

A solicitor based in the UK who has sole knowledge of UK law will be able to assist you with inheritance tax and family disputes, but solving issues cross-border may be difficult. Due to possible language barriers and a lack of knowledge of foreign law, proceedings may take longer to carry out, which can make a stressful situation even more demanding.

By acquiring the help of an international solicitor, you can utilise a scope of knowledge to your advantage, helping you get the results you need efficiently for your international family law case. Knowledge of the laws in the country where the dispute has arisen means that legal proceedings may take place in a quicker fashion, allowing for a more streamlined process.

How Giambrone and Partners can assist

Here at Giambrone and Partners, we have various lawyers knowledgeable in the laws and jurisdiction of a range of countries, including Italy, Spain and the UK. We have vast experience in solving cross-border family disputes, from inheritance issues to divorce and child custody, and can implement effective dispute resolution.

To find out more, or to book a consultation with a lawyer skilled in your country of choice, please get in touch with us via our online form today.

Related content

Using mediation for cross-border family disputes

Handling cross-border family disputes involving children

Arbitration in cross-border family disputes