Estate Inventory for Property Abroad
· 2 min read
Foreign property in the deed
When the deceased has property abroad, all property is reported in the estate inventory conducted in Finland. Foreign bank accounts, real estate, investments, and other assets are recorded in the deed at fair market value on the date of death. Property in foreign currency is converted to euros at the European Central Bank's reference rate on the date of death. Required certificates are requested from foreign banks and authorities.
Local appraisals or market-value-based assessments are used for valuing foreign real estate. In some countries, a separate inheritance procedure is required under local legislation.
Applicable law
The EU Succession Regulation (650/2012) determines that the law of the country where the deceased had their last habitual residence at the time of death applies to the inheritance. The deceased may choose in their will that the law of their country of citizenship applies. Finnish inheritance law applies if the deceased lived in Finland. The regulation covers all EU countries except Denmark and Ireland. For non-EU countries, the rules of private international law and possible bilateral agreements apply.
The applicable law affects heir status, forced share, and inheritance portions.
Deceased who lived abroad
If the deceased lived permanently abroad, the estate inventory obligation in Finland depends on the location of the property and the heirs' place of residence. The Tax Administration taxes property located in Finland regardless of the deceased's place of residence. Additionally, an heir residing in Finland is obliged to pay inheritance tax on all inherited property, including property located abroad. Foreign documents may be needed for the estate inventory of a deceased who lived abroad, and these must be translated into Finnish or Swedish if necessary.
Avoiding double taxation
In international inheritance situations, there is a risk of double taxation when two countries tax the same inheritance. Finland has inheritance tax treaties with some countries, and based on these, tax is paid only in one country or the other country's tax is credited. Without a tax treaty, Section 4 of the Inheritance and Gift Tax Act enables crediting inheritance tax paid abroad against Finnish tax. The credit is applied for from the Tax Administration by attaching proof of tax paid abroad to the inheritance tax return. Expert assistance is recommended in international inheritance situations.
Frequently asked questions
How is foreign property reported in the estate inventory?
In an estate inventory conducted in Finland, all of the deceased's property is reported, including property abroad. Foreign real estate, bank accounts, investments, and other property are recorded in the deed at fair market value on the date of death. Property in foreign currency is converted to euros at the exchange rate on the date of death. Balance certificates are requested from foreign banks, and local appraisals are used for property valuation. In some countries, a separate estate inventory or equivalent procedure may be required under local law.
Which country's law applies to international inheritance?
Under the EU Succession Regulation (650/2012), the law of the country where the deceased had their last habitual residence applies to the inheritance by default. However, the deceased may specify in their will that the law of their country of citizenship applies. Finnish inheritance law applies if the deceased lived in Finland at the time of death. The EU Succession Regulation covers EU countries but not Denmark, Ireland, or non-EU countries. For third countries, bilateral agreements or principles of private international law apply.
Must the estate inventory of a deceased who lived abroad be conducted in Finland?
If the deceased lived abroad but was a Finnish citizen, the estate inventory obligation depends on whether the deceased has taxable property in Finland. The Tax Administration requires an estate inventory in Finland if the deceased has property subject to taxation in Finland. Under the Code of Inheritance, the estate inventory is conducted according to the deceased's last domicile. A supplementary estate inventory may be conducted in Finland for a deceased who lived abroad, reporting property located in Finland. An inheritance tax return must in any case be filed in Finland if the heir resides in Finland.
How is double inheritance taxation avoided?
Double inheritance taxation can be avoided through tax treaties or unilateral credits. Finland has inheritance tax treaties with a few countries. If no tax treaty exists, Finland may grant a credit for inheritance tax paid abroad pursuant to Section 4 of the Inheritance and Gift Tax Act. The credit is applied for from the Tax Administration, and the tax paid abroad is deducted from the inheritance tax payable in Finland. However, the credit cannot exceed the inheritance tax payable in Finland on the property in question.
Read also
What documents are needed for an estate inventory? A comprehensive list: family records, civil registry certificates, will, bank statements, and property documents.
How is inheritance tax determined based on the estate inventory? Tax classes, exempt portions, tax tables, and deductions clearly explained.
The estate inventory must be conducted within three months of the deceased's death. Learn about calculating the deadline, consequences, and requesting an extension.