How Non-Americans Might Have To Pay U.S. Estate Taxes


Are you a non-American expat who owns shares in Apple, Google, Coca Cola, Johnson & Johnson or a U.S. index?

If the answer is yes, your heirs might have to pay U.S. Estate Taxes when you die. 

You’ve never stepped foot on U.S. soil? That doesn’t matter.   It’s important

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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13 Responses

  1. sendaiben says:

    This is incredibly arrogant, eh? Bad enough that they tax their citizens regardless of residency, but taxing non-resident foreigners???

    I’m having trouble tracking down the number on the Japan-US treaty -it seems to be based on the proportion of assets that the US assets represent, which then results in a proportional allocation of the $5m exemption?

    Regardless, I wouldn’t put it past the IRS to change the rules in the future, so I’ll be taking a new look at our allocations…

    • If you’re a non-American living in Japan, it will apply to you Ben.

      The treaty I mentioned, with respect to Canadians, is only for Canadians residing in Canada.

      Once you’re an expat, it’s open season.

      • sendaiben says:

        Japan also has a treaty with the US that covers residents of Japan, as does the UK if I remember correctly. It’s fairly hard to find the actual numbers online, but I remember that the limits for both were in the millions of $ a couple of years ago.

        A post on the various limits for different countries would be a great resource 🙂

        PS just finished your new book and enjoyed it very much.

  2. Barry says:

    I believe there is an advantage of using the new ETF’s in Australia recently launched by Vangaurd (VGS and VGE) over my current VTS / VEU in terms of withholding tax implications, because they’re Australian domiciled funds / not CDIs. It is also discussed in this thread:

    • Hi Barry,

      You are an Australian resident, correct? If that’s the case, much of what I say about withholding taxes or estate taxes may not apply to you. The same could be said for what you might read on other blogs or forums. You would need to check with an Australian accountant. Rules are different for residents, country by country.


  3. Brett says:

    Equal parts maddening and sickening. I’m a US citizen and resident and I am shocked, SHOCKED, (well…not that shocked) that the IRS would pull this crap. I mean, there is a reason that expats leave and I’m certain “taxes” are at the top of the list for many.

  4. Chris says:

    Hi Andrew,

    I was confused by your comments in your new book (good read by the way!) about International Brokers.

    You state that as they hold all equities in a US account, you could be liable to estate tax on all your holdings, even those bought on a foreign exchange.

    So to be clear, if I buy a UK FTSE 100 ETF on the UK exchange through International Brokers, you are saying I could be liable for estate tax on this?

    I thought that estate tax was only liable on shares of US companies?

    Thanks for your clarification!

  5. Chris says:

    Hi again Andrew,

    Just wanted to check in my previous comment I named the brokerage correctly, Interactive Brokers!



  6. inspecteurmancini says:

    Hi Andrew, this is taken from a US expat tax website: “It is very important to remember that if one resides outside of the US for more than ten years he/she will automatically become exempt from the estate tax as an expatriate.”

    that’s an option.

    • Thanks for the link. This story, however, was about non-Americans using U.S. domiciled funds.


      • inspecteurmancini says:

        Thanks Andrew, so my understanding is tha- as a non US citizen not planning /having to go to work in the States, I could invest with IB in the US and ,as long as I don’t reside in the US , that Estate tax would not affect my investment?

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