Several countries have chosen to abolish inheritance tax in recent years, citing various economic and social reasons. Among them are Sweden, Norway, Austria, Slovakia, and Cyprus. Here’s a breakdown of when each country made this decision:
- Sweden: In 2004, Sweden decided to abolish its inheritance tax.
- Norway: Following suit in 2014, Norway also eliminated its inheritance tax.
- Austria: In 2008, Austria joined the ranks of countries abandoning inheritance tax, reshaping its taxation policies.
- Slovakia: Similarly, in 2004, Slovakia opted to abolish inheritance taxation.
- Cyprus: Leading the trend, Cyprus abolished inheritance tax as early as 2000, fostering a favorable environment for business and wealth accumulation.
Austria and Cyprus are among the countries that have undertaken significant tax reforms, including the abolition of inheritance tax. These decisions were motivated by various economic and social factors, aiming to foster investment, simplify tax systems, and attract individuals and businesses to their respective jurisdictions. Here’s a closer look at the specifics of each country’s approach:
Austria
Since August 2008, Austria has abolished inheritance tax, shifting its focus to property transfer tax for heirs inheriting property from relatives. This change, though often still discussed publicly as an inheritance tax, effectively ceased its existence. The move came as part of a broader tax reform in 2015/2016, which saw a notable increase in real estate transfer tax.
The decision to abolish inheritance tax was partly driven by the Austrian Constitutional Court’s ruling, citing significant inequality in taxing financial assets versus real estate.
Surprisingly, the actual revenue generated from inheritance tax prior to its abolition in 2008 was minimal, signaling its insignificance as a revenue source for the state. Despite its previous prominence in public and political discourse, the Austrian government currently has no plans to reintroduce inheritance tax, viewing it as an unnecessary levy.
Cyprus
On January 1, 2000, Cyprus boldly abolished inheritance tax as part of a comprehensive tax reform strategy aimed at attracting foreign investment and stimulating economic growth. This move positioned Cyprus as an attractive destination for individuals and businesses seeking a favorable tax environment.
The abolition of inheritance tax meant that both Cypriot residents and expatriates with assets in the country would no longer be subject to taxation on inherited property or other assets. This significant change simplified the process of transferring wealth between generations and removed a potential obstacle for expatriates considering relocating to Cyprus.
