Double Taxation on Inheritance in Portugal for Expats: How to Navigate It

In brief: Portugal's generous inheritance tax exemptions for direct heirs mean many expat families face zero Portuguese tax. But the heir's country of residence may still impose its own inheritance or estate tax — and the interaction of two countries' rules is where cross-border families need specialist advice.

Portugal's Inheritance Tax: A Quick Summary

Portugal levies inheritance tax through the Imposto do Selo (Stamp Duty). The key facts:

• Rate: 10% of net asset value
• Direct heirs fully exempt: spouses, children, grandchildren, parents, grandparents pay zero Imposto do Selo on inheritance
• Collateral heirs and non-relatives: pay 10%
• Scope: Portuguese-situated assets (real estate registered in Portugal, bank accounts at Portuguese banks, assets on Portuguese platforms)

For most expat families with direct-line heirs, the Portuguese inheritance tax question is straightforward: there is no Portuguese tax.

When Can Inheritance Be Taxed in Two Countries?

Double taxation on inheritance can arise when:

1. The heir lives in a country that taxes worldwide inheritance: some countries tax their residents on all inherited assets, wherever those assets are located in the world
2. The deceased was considered domiciled in a country that taxes the worldwide estate: notably the UK and USA
3. Both countries have a claim on the same asset: for example, Portuguese real estate inherited by a UK-resident heir could be subject to UK Inheritance Tax (if the deceased was UK-domiciled) and Portuguese Imposto do Selo simultaneously

Let's look at the most common situations.

UK Nationals in Portugal: A Complex Picture

If the deceased was UK-domiciled (broadly: if they retained UK as their permanent home in the legal sense, even while living in Portugal), HMRC levies UK Inheritance Tax (IHT) at 40% on the worldwide estate above the nil-rate band (£325,000 as of 2026, potentially higher with a residence nil-rate band).

This means UK property, Portuguese property, bank accounts everywhere — all potentially subject to UK IHT.

Portugal also has a claim on Portuguese-situated assets. For direct heirs, Portugal charges zero. For collateral heirs or non-relatives, Portugal charges 10%.

There is no UK-Portugal estate tax treaty. Relief from double taxation depends on UK domestic rules: the UK offers unilateral relief for foreign taxes paid on foreign-situated assets (IHTA 1984, s158). Since Portugal often charges zero, the relief is often irrelevant — but the UK IHT itself is not avoided.

Domicile is the critical concept here and is highly fact-specific. British expats who have lived in Portugal for many years should take specialist advice on whether they have acquired a domicile of choice in Portugal — this affects which country's rules apply.

German, Dutch, French, and Belgian Nationals in Portugal

Most European countries (Germany, Netherlands, France, Belgium) levy inheritance tax on assets received by their tax-resident heirs, or on the worldwide estate of their deceased residents. The specific rules vary significantly.

Most EU bilateral tax conventions (DTCs) between Portugal and other EU countries cover income tax — not inheritance tax. The result is that:

• Portuguese-situated assets are subject to Portuguese Imposto do Selo rules (often zero for direct heirs)
• The same assets are also subject to the heir's country rules
• Relief, if any, must come from unilateral domestic provisions (e.g. Germany allows a credit for foreign inheritance tax under ErbStG §21, but only if foreign tax was actually paid)

Since Portugal often charges zero on direct heirs, there is often no credit to claim — the heir's home country collects its full domestic inheritance tax without a Portuguese offset.

EU Regulation 650/2012 and Tax

It is important to understand what Brussels IV does and does not do:

✅ It does: determine which country's succession law governs the estate and where succession proceedings take place

❌ It does not: govern inheritance tax. Tax is explicitly outside the scope of EU Regulation 650/2012

A single set of succession proceedings held in Portugal (under Brussels IV) simplifies the administration — but it does not prevent tax obligations arising in the heir's country of residence or in the country where the assets are located.

Practical Advice for Expats in Portugal

Get a domicile and residency assessment. For British nationals especially, whether you are legally domiciled in Portugal or the UK can determine whether your worldwide estate or only your Portuguese assets are subject to UK IHT. This requires legal advice — not guesswork.

Map your assets by country. Each country where you hold assets may have its own tax claim. Real estate, bank accounts, investments, and crypto — list them all, with the countries where they are held.

Check your heirs' country rules. The Portuguese exemption for direct heirs does not prevent your children in Germany, France, or the UK from paying tax in their country of residence on their inheritance. Their local tax adviser should confirm the rules.

Use a cross-border succession specialist. A notary in Portugal handles the Portuguese succession proceedings; they do not advise on UK IHT or German Erbschaftsteuer. A cross-border specialist who understands both systems is essential for complex estates.

Organise your estate documentation. Beyond tax planning, your heirs need to find and access your assets. Use Sucesio to maintain a clear inventory of all your accounts, properties, digital assets, and important documents — so your executor has a complete picture from day one.

This article is provided for informational purposes only and does not constitute tax, legal, or financial advice. Always consult qualified advisers in all relevant jurisdictions.