case. Although inheritance tax has been abolished there, it now charges its residents a wealth tax of 1.5% of their assets above ?200,000 ($350,000 US) each year. This new wealth tax raises far more revenue than the old, abolished inheritance tax. There has in fact been a net loss to the Swedish taxpayers as a result of this reform.

The case of Italy, however, is the most interesting of all. Italian Inheritance and Gift Tax (Imposta sulle Donazioni e Successioni) was abolished in October 2001. As a result, there is now no inheritance tax whatsoever in Italy. Unlike the situation in Sweden, however, taxation was not increased in other areas to cancel out the inheritance tax saving: it is a genuine saving that applies to anyone domiciled in Italy, i.e. a

They say that two things are inevitable in life: death and taxes. We don't much care for thinking about either. Inheritance tax is the one tax we don't pay until we are dead, so perhaps understandably it's a subject way down our list of priorities. When pressed, most people express the hope that their families, rather than the state, will inherit their wealth when they die. Western governments vary considerably in the extent to which they accommodate this basic human desire. To a greater or lesser degree, death taxes are nearly everywhere viewed as a legitimate tool for promoting the objective of social equality. Karl Marx, Andrew Carnegie and John Maynard Keynes had this in common: they all favored high inheritance taxes. However, this view is by no means universal: with a little planning and a global perspective, there are steps that can be taken to avoid the tax altogether. Indeed, there is some truth in the old assertion that inheritance taxes are paid only by the poorly advised.

Most countries, with the exception of the UK and USA, tax the beneficiaries of a will, rather than the estate itself. International comparisons are difficult, but the following details are illuminating:

• In the USA, a surviving spouse pays nothing. All other bequests above $1.5 US are subject to federal taxation at 45%, with additional local taxes pushing that figure above 50% in many states. When the current republican administration came into office in January 2001, the lower threshold was only $675,000: it has more than doubled in just 5 years. The USA now has the second-lowest inheritance taxes in the world.

• In the UK, a surviving spouse again pays nothing. All other bequests above ?275,000 (?396,000 Euro or $483,000 US) are subject to taxation at 40%.

• In Germany, inheritance tax is paid by the beneficiary: spouses pay 7% on legacies above ?307,000 Euro ($374,000 US), rising to 30% on legacies above ?25.9 Million Euro ($31.5 Million US) on a sliding scale. Non-spouse relatives pay 12% to 40%, and non-relatives pay 17% to 50% on legacies above ?307,000 Euro ($374,000 US), both rising on a similar sliding scale.

• In France, as in Germany, inheritance tax is paid by the beneficiary. A surviving spouse pays 5% on legacies above ?76,000 Euro ($92,000 US), rising on a sliding scale to 40% on legacies above ?1.776 Million Euro ($2.162 Million US). Other relatives pay at similar rates but with a lower tax-free allowance, while non-relatives pay at up to 60% with an almost zero tax-free allowance.

• In Spain, spouses have to pay 8.5% on legacies above ?16,000 Euro ($19,000 US), rising to 34% on legacies above ?800,00 Euro ($974,000 US). There is a partial-exemption system, but to benefit from it the beneficiary must keep any real estate asset at least 10 years. When the surviving spouse dies, inheritance tax has to be paid again - but this time on 100% rather than 50% of the assets. The Spanish tax system appears specifically designed to hit disproportionately all non-Spanish or second-home-owning beneficiaries.

Sweden is an interesting case. Although inheritance tax has been abolished there, it now charges its residents a wealth tax of 1.5% of their assets above ?200,000 ($350,000 US) each year. This new wealth tax raises far more revenue than the old, abolished inheritance tax. There has in fact been a net loss to the Swedish taxpayers as a result of this reform.

The case of Italy, however, is the most interesting of all. Italian Inheritance and Gift Tax (Imposta sulle Donazioni e Successioni) was abolished in October 2001. As a result, there is now no inheritance tax whatsoever in Italy. Unlike the situation in Sweden, however, taxation was not increased in other areas to cancel out the inheritance tax saving: it is a genuine saving that applies to anyone domiciled in Italy, i.e. a

a little planning and a global perspective, there are steps that can be taken to avoid the tax altogether. Indeed, there is some truth in the old assertion that inheritance taxes are paid only by the poorly advised.

Most countries, with the exception of the UK and USA, tax the beneficiaries of a will, rather than the estate itself. International comparisons are difficult, but the following details are illuminating:

• In the USA, a surviving spouse pays nothing. All other bequests above $1.5 US are subject to federal taxation at 45%, with additional local taxes pushing that figure above 50% in many states. When the current republican administration came into office in January 2001, the lower threshold was only $675,000: it has more than doubled in just 5 years. The USA now has the second-lowest inheritance taxes in the world.

• In the UK, a surviving spouse again pays nothing. All other bequests above ?275,000 (?396,000 Euro or $483,000 US) are subject to taxation at 40%.

• In Germany, inheritance tax is paid by the beneficiary: spouses pay 7% on legacies above ?307,000 Euro ($374,000 US), rising to 30% on legacies above ?25.9 Million Euro ($31.5 Million US) on a sliding scale. Non-spouse relatives pay 12% to 40%, and non-relatives pay 17% to 50% on legacies above ?307,000 Euro ($374,000 US), both rising on a similar sliding scale.

• In France, as in Germany, inheritance tax is paid by the beneficiary. A surviving spouse pays 5% on legacies above ?76,000 Euro ($92,000 US), rising on a sliding scale to 40% on legacies above ?1.776 Million Euro ($2.162 Million US). Other relatives pay at similar rates but with a lower tax-free allowance, while non-relatives pay at up to 60% with an almost zero tax-free allowance.

• In Spain, spouses have to pay 8.5% on legacies above ?16,000 Euro ($19,000 US), rising to 34% on legacies above ?800,00 Euro ($974,000 US). There is a partial-exemption system, but to benefit from it the beneficiary must keep any real estate asset at least 10 years. When the surviving spouse dies, inheritance tax has to be paid again - but this time on 100% rather than 50% of the assets. The Spanish tax system appears specifically designed to hit disproportionately all non-Spanish or second-home-owning beneficiaries.

Sweden is an interesting case. Although inheritance tax has been abolished there, it now charges its residents a wealth tax of 1.5% of their assets above ?200,000 ($350,000 US) each year. This new wealth tax raises far more revenue than the old, abolished inheritance tax. There has in fact been a net loss to the Swedish taxpayers as a result of this reform.

The case of Italy, however, is the most interesting of all. Italian Inheritance and Gift Tax (Imposta sulle Donazioni e Successioni) was abolished in October 2001. As a result, there is now no inheritance tax whatsoever in Italy. Unlike the situation in Sweden, however, taxation was not increased in other areas to cancel out the inheritance tax saving: it is a genuine saving that applies to anyone domiciled in Italy, i.e. a

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