Inheritance of Overseas Assets—Understanding Estate Value and Deductions

If a deceased family member leaves assets overseas, it is essential to understand whether those assets are subject to Taiwan's estate tax when filing the estate tax return in Taiwan.

Deceased Family Member's Status	Domestic (Taiwan) Estate	Overseas Estate
Taiwan citizens who have habitual residence in Taiwan	✓	✓
Taiwan citizens who habitually reside abroad, or non-Taiwan nationals	✓	X

According to the Estate and Gift Tax Act, individuals who meet one of the following conditions are classified as "habitually residing in Taiwan":

• Having a domicile in Taiwan (i.e., being registered in Taiwan) within two years prior to their death.

• Not having a domicile but having a residence in Taiwan, with a total stay in Taiwan for more than 365 days within two years before their death.

Individuals who do not meet the above criteria are considered to be "habitually residing abroad." In practice, it is common for a deceased person to be Taiwanese but have real estate or bank accounts overseas. In such cases, both the domestic and overseas estates are subject to inheritance tax in Taiwan. For domestic estates, Taiwan’s National Taxation Bureau provides a one-stop service for citizens to inquire about financial assets in Taiwan, including bank deposits, loans, insurance, securities accounts, etc. For overseas estates, if the heirs do not have relevant documentation regarding the value of the deceased's assets, they need to inquire with the tax authorities of the country where the assets are located.

Declaration Value of Domestic and Overseas Estates

The Estate and Gift Tax Act has different valuation rules for various types of assets. For example, the value of publicly traded stocks is based on the closing price on the date of inheritance, while for unlisted stocks, the estate value is based on the net asset value of the company on the date of the deceased's death. Real estate value is calculated based on governance-assessed value for land and buildings separately. For overseas assets like financial accounts, the exchange rate on the date of inheritance is used to convert them into New Taiwan Dollars. For overseas real estate, the local market value is generally used, and heirs can provide an appraisal report to substantiate the property's value.

Foreign National Heirs

Under Taiwan's Estate and Gift Tax Act, deductions are available for heirs depending on their relationship to the deceased. If the heir is a foreign national, they must provide proof of the relationship with the deceased to apply for the following deductions. For example, if the parents are Taiwanese but the child was born in the United States and holds a U.S. passport, the child must provide proof of their relationship with the deceased (e.g., a birth certificate) and have it certified by the relevant foreign government before they can claim the deduction from the estate.

Heir’s Status	Estate Deduction	Foreign National Heir
Spouse	5.53 million NTD	Proof of relationship required
Direct descendants (children)	560,000 NTD
Parents	1.38 million NTD
Disabled or severely ill heirs (under the Mental Health Act)	Additional 6.93 million NTD per person
Siblings or grandparents supported by the deceased	560,000 NTD

When the Deceased is a Foreign National

If the deceased is a foreign national and the heir is a Taiwanese citizen, estate tax is only applied to the assets left by the deceased in Taiwan. However, the estate deductions listed above do not apply to foreign nationals. For the estate of a foreign national, the deductible items are limited to the following, and these deductions apply only to expenses and fines that occurred within Taiwan:

• Exemption amount: 13.33 million NTD

• Taxes, fines, and penalties owed by the deceased before death.

• Unpaid debts with sufficient proof before the deceased’s death.

• Funeral expenses, calculated at 1.38 million NTD.

• Direct necessary costs for executing the will and managing the estate.

The inheritance of overseas estates often involves additional complexities, such as overseas inheritance laws, foreign estate tax laws, and specific ownership regulations (e.g., joint financial accounts, Japanese leasehold rights). Therefore, overseas inheritance cases tend to be more complicated. It is advisable to consult a professional accountant to understand the relevant inheritance tax laws.