How to deal with an inheritance as an American living in the European Union

TaxesInvestments
Written By Niels McEvoy

Living abroad comes with a host of financial complexities—especially when it comes to cross-border inheritance. We’ve helped countless US-citizens manouver the complexities of dealing with a family estate.

If you’re an American living in the European Union and you’ve recently inherited (or expect to inherit) assets from a U.S.-based relative, you may be wondering: What are the tax implications? How do you access the funds? What reporting is required?

Here are 5 things you should know when dealing with an inheritance as a US-citizen while living in Europe:

How to handle inheritance as American living in Europe

Main challenges

1. Accessing the Inheritance: Bank Transfers & Account Restrictions

2. Understanding US Estate taxes and when they apply

3. Tax implications in the EU

4. Reporting requirements

5. Different asset types matter (real estate, cash, IRA’s,..) and must be handled on case-by-case basis.

1. Accessing the Inheritance: Bank Transfers & Account Restrictions

Many American expats discover that U.S. financial institutions are hesitant—or outright refuse—to deal with foreign addresses or international clients due to regulatory burdens like FATCA (Foreign Account Tax Compliance Act). This can create issues such as:

  • Delays in receiving funds or assets

  • Difficulty opening or maintaining U.S. brokerage accounts

  • Wire transfer limitations or extra paperwork

When dealing with inherited IRA’s or Inherited Roth IRA’s, you need to open accounts in your name in order to receive the inheritance. Often times a US-address is required, but not always - some custodians allow foreign addresses. It’s not recommended to use a family-member or friends address, this can lead to compliance issues.

Tip: If possible, keep an active U.S.-based bank account to facilitate transfers. Consider using a U.S.-based trustee or executor familiar with cross-border situations.

2. Understanding U.S. Estate Taxes (and When They Apply)

The good news: U.S. federal estate tax typically doesn’t apply unless the estate exceeds $13.61 million (as of 2024). So, most Americans won’t face direct estate tax liabilities. However, state-level estate or inheritance taxes may still apply depending on where your relative lived or owned property.

Note: You, as the beneficiary, usually don’t pay estate tax—the estate does. But you might still have paperwork or tax obligations depending on what you receive.

3. Tax Implications in Your EU Country of Residence

This is where things get tricky. While the U.S. may not tax you on the inheritance itself, many EU countries do—either via inheritance tax, gift tax, or deemed income.

For example:

  • France, Spain, and Belgium tax worldwide inheritances for residents.

  • Germany and Italy apply progressive inheritance taxes based on your relationship to the deceased.

  • Portugal currently has no inheritance tax on direct heirs—but this could change.

The tax treatment can depend on:

  • Your residency status

  • The type of asset (cash, real estate, stocks)

  • Your relationship to the deceased

  • Any applicable tax treaties between the U.S. and your country of residence

Tip: Consult a cross-border tax advisor to prevent double taxation and explore potential credits or exemptions.

4. Reporting Requirements: Don’t Skip the Paperwork

Receiving a large inheritance may trigger reporting obligations—even if it’s not taxable. Some key U.S. and EU-related forms include:

  • Form 3520 (U.S.): If you receive a gift or inheritance from a foreign person over $100,000, you must report it. This form is not a tax form, but failure to file it can lead to heavy penalties.

  • FBAR (FinCEN 114) & FATCA (Form 8938): If you hold inherited assets in foreign financial accounts, you may need to report them if balances exceed certain thresholds.

  • Local EU reporting: Many EU countries require residents to report foreign inheritances or bank accounts—even if no tax is due.

5. Asset Types Can Complicate Things

Not all inheritances are cash. Inheriting real estate, retirement accounts (like IRAs), or U.S. stocks can bring added complexity:

  • Inherited IRAs: You’ll face required minimum distributions (RMDs) and potential U.S. withholding taxes. EU countries may tax this income again. You will need to open an inherited IRA account in your name to inherit the assets.

  • U.S. Stocks: You may face U.S. dividend withholding taxes and capital gains taxes in your EU country upon sale.

  • Real Estate: Selling inherited U.S. property as a non-resident may involve FIRPTA (Foreign Investment in Real Property Tax Act) withholding.

Tip: Before selling or transferring inherited assets, get advice on timing and structure to minimize tax exposure.

Conclusion

Receiving an inheritance should be a moment to honor your loved ones—not to get buried in tax forms and legal confusion. But for Americans living in the EU, navigating the intersection of U.S. and local tax laws can be challenging without proper planning.

Working with a financial advisor who specializes in cross-border planning can help you:

  • Avoid double taxation

  • Make smart decisions about transferring or investing your inheritance

  • Stay compliant with both U.S. and EU regulations

Every situation is different, so when in doubt, get personalized advice tailored to your country of residence and type of inheritance.

Need help navigating a U.S. inheritance while living in Europe? Our cross-border planners specialize in guiding Americans abroad through complex life events. Contact us today for a free consultation.

Niels McEvoy

Financial Strategist for Americans & Europeans living abroad. Happily married to my Italian wife with whom I have one son. Passionate about financial independence, snowboarding & craft-beers.

https://crossborder-planning.com
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