Succession planning for internationally mobile clients
Borders between nations fade as you do business and live your life across the globe. What happens with your wealth when you would suddenly pass away? Where is it taxed? Would there be double or even multiple taxation? These might not be questions you ask yourself every day. Nevertheless it is very well worth considering – for yourself and the people close to you.
For legal and tax purposes borders between nations are still very relevant. The succession laws of various countries differ hugely. From liberal to very conservative. Moreover, within the European Union alone, inheritance and estate tax is levied based on no less than ten different connecting factors. This means that in your international situation the risk of double or even multiple taxation is very real.
For example, an estate left by a German national living in the Netherlands to his daughter living in Spain, could be exposed to triple taxation: in the Germany, the Netherlands and Spain.
How do you plan your succession?
To provide the people who are close to you with the reassurance that when you pass away, no unexpected legal and tax difficulties will arise, it’s important to carefully plan the legal and tax consequences of your succession.
- The core of your succession planning is an up-to-date will and testament, including a choice for the applicable law of succession that provides for sufficient flexibility. Double taxation with inheritance tax may be prevented by a different structuring of your assets.
- A proper succession planning involves far more than just dealing with legal and tax issues. It’s also about preparing your children for the challenges that come with the responsibility for a significant fortune.
- Determining the governance rules within your family is vital for a successful transfer of the family wealth to the next generation. Ways to achieve this are to prepare a family charter or to set a charitable foundation, to involve family members, in particular those of younger generations.
Rubenvan der WiltTax adviser Associate
Ruben van der Wilt (1987), tax adviser, specialises in Dutch and international taxation matters. He focuses on managers, investment funds, private equity clients and institutional investors on (re)structuring, acquisitions, divestments and other cross-border and domestic transactions.T: +41 43 266 55 52 M: +41 79 102 57 02 E: Ruben.van.der.Wilt@loyensloeff.com