US Estate Tax for Americans in Europe: 2026
The United States taxes the estate. Most of Europe taxes the heir, and several countries dictate who the heirs must be. Two provisions decide how those systems meet — and Portugal and Spain, the two largest American destinations in Europe, sit outside the treaty network entirely.
The U.S. taxes the estate; most of Europe taxes the heir, and several countries dictate who the heirs must be. For 2026 the U.S. basic exclusion is $15,000,000 per person. The unlimited marital deduction switches off when the surviving spouse is not a U.S. citizen, and Portugal and Spain have no U.S. estate tax treaty.
| Item | Position for 2026 |
|---|---|
| Basic exclusion | $15,000,000 per person, up from $13,990,000 for 2025. It is a round statutory figure rather than an inflation-adjusted one, and indexing begins only for decedents dying after 2026 |
| Statutory source | Public Law 119-21, enacted 4 July 2025. The amount has no scheduled expiry, which is not the same thing as permanent |
| The $30,000,000 couple figure | Achievable, but only through portability of the deceased spousal unused exclusion. The IRS requires the estate’s representative to file a timely Form 706, and the election is irrevocable. A first estate far below any filing threshold that skips the return forfeits up to $15,000,000 silently |
| Annual gift exclusion | $19,000 per recipient, unchanged from 2025 |
| Spouse who is not a U.S. citizen | The unlimited marital deduction switches off. Section 2523(i) substitutes an indexed annual figure — $194,000 for 2026 |
| At death | The qualified domestic trust under section 2056A is the substitute mechanism |
| Applicable law in the EU | Regulation (EU) No 650/2012, for deaths on or after 17 August 2015. Article 21 defaults to the law of habitual residence; Article 22 allows a choice of the law of nationality |
| Article 36 | Routes an Article 22 choice by an American to the law of a particular U.S. state. There is no federal internal conflict-of-laws statute on succession for Article 36(1) to operate on, so a will naming a specific state leaves less to the fallback than one referring to the law of the United States |
| European Certificate of Succession | Lets heirs, legatees, executors and administrators prove their status in other Member States without any special procedure |
| Forced heirship in Portugal | Where a spouse and children survive, the legitimate share is two-thirds and the available quota one-third, under Article 2139 of the Civil Code. Where the spouse is the only compulsory heir, the split is half and half under Article 2144 |
| Treaty coverage | Neither Portugal nor Spain has a U.S. estate tax treaty |
| Life insurance | Proceeds paid by reason of death are generally excluded from the beneficiary’s gross income under section 101(a), but section 2042 separately includes them in the gross estate where the decedent held any incidents of ownership |
The U.S. side, stated precisely
For estates of decedents dying in 2026 the basic exclusion amount is $15,000,000, up from $13,990,000 for 2025. The figure is a round statutory number rather than an inflation-adjusted one; indexing begins for decedents dying after 2026. It was set by Public Law 119-21, enacted 4 July 2025 — an act the IRS itself refers to by two different names on two different pages, which is why the public law number is the safer identifier. The accurate description is that the amount has no scheduled expiry, not that it is "permanent."
The $30,000,000 figure quoted for married couples is achievable, but not automatically. It depends on portability of the deceased spousal unused exclusion, and the IRS states that to elect it the estate’s representative must file a Form 706 and file it timely; the election is irrevocable. A surviving spouse whose estate is far below any filing threshold, and who therefore skips the return, forfeits up to $15,000,000 of exclusion silently — a live risk in expatriate families, where the first estate is often small and administered abroad.
The annual gift exclusion for 2026 is $19,000 per recipient, unchanged from 2025.
The provision most often missing from expatriate estate summaries
The unlimited marital deduction — the single largest shelter in American estate planning — switches off when the surviving spouse is not a U.S. citizen. Section 2523(i) denies the deduction and substitutes an indexed annual figure, which for 2026 is $194,000 for gifts to a non-citizen spouse.
At death, the substitute mechanism is the qualified domestic trust under section 2056A. It requires at least one trustee to be an individual U.S. citizen or a domestic corporation, requires a qualified trustee to have the right to withhold applicable tax on distributions other than income, and requires an election by the executor on the estate tax return — irrevocable once made.
For an American married to a national of the country they live in, this is usually the largest single difference between their position and that of a couple who never left.
How Europe taxes the other side of the transaction
In Spain, the Impuesto sobre Sucesiones y Donaciones falls on the recipient: the tax authority states that in acquisitions on death the persons liable are the heir or legatee. The tax is largely devolved to the Autonomous Communities, so effective rates vary substantially by region and no single national rate describes it.
Reserved shares are a separate constraint, operating on who inherits rather than on what is taxed. The European e-Justice Portal records that in Spain the reserved share of children and descendants is two-thirds of the parents’ estate, and that ascendants take half — or a third where a spouse also holds a share. For Portugal it records that where a spouse and children survive, the legitimate share is two-thirds and the available quota one-third, under Article 2139 of the Civil Code; where the spouse is the only compulsory heir, the split is half and half under Article 2144.
What is specific to Americans abroad
Two articles of the EU Succession Regulation carry most of the weight, and a third resolves a problem unique to citizens of federal states.
Regulation (EU) No 650/2012 applies to the succession of those who die on or after 17 August 2015. Article 21 sets the default: unless otherwise provided, the law applicable to the succession as a whole is that of the state in which the deceased had their habitual residence at death. Article 22 provides the alternative: a person may choose the law of the state whose nationality they possess at the time of making the choice or at death. Denmark and Ireland do not participate. The Regulation also creates the European Certificate of Succession, which heirs, legatees, executors and administrators can use to prove their status in other Member States without any special procedure.
Article 36 is the provision that matters for Americans and is almost never mentioned. Where the law specified is that of a state comprising several territorial units each with its own succession rules, the internal conflict-of-laws rules of that state determine which unit’s law applies; where there are none, the Regulation supplies a cascade turning on habitual residence, closest connection, and location. There is no such thing as "United States succession law" to choose — succession is a matter of state law. An Article 22 choice by an American designates the law of their state of nationality, and Article 36 then routes that to a particular U.S. state. Because there is no federal internal conflict-of-laws statute on succession for Article 36(1) to operate on, the fallback does the work — so a will naming a specific state’s law leaves less to that fallback than one referring to the law of the United States.
The treaty position is the other structural fact, and it is checkable. The IRS list of estate and gift tax treaties runs to fifteen countries: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom. Portugal and Spain are not on it. France and Germany are covered for both estate and gift tax, Italy for estate tax. Americans in those three therefore have a treaty allocating taxing rights at death; Americans in Portugal and Spain do not, and rely on the unilateral credit for foreign death taxes.
One more asymmetry is worth naming. Life insurance proceeds paid by reason of the insured’s death are generally excluded from the beneficiary’s gross income under section 101(a) — an income tax rule. Section 2042 separately includes in the gross estate amounts receivable by the executor, and amounts receivable by other beneficiaries under policies over which the decedent held any incidents of ownership at death. "Income-tax-free to the beneficiary" and "outside the taxable estate" are two different questions with two different answers.
What the two systems ask of the same estate
An estate spanning both systems answers two questions at once: who is taxed, and who must inherit. The U.S. answer turns on the size of the estate, whether portability was elected, and whether a spouse is a citizen. The European answer turns on habitual residence, whether an Article 22 choice was made and how precisely it was expressed, and the reserved shares of the country whose law applies. Those answers are set by documents — a will, a beneficiary designation, an election on a return — each effective or not on its own terms, and none assessable without knowing the family’s citizenships, residence and where the assets sit.
Sources
- Internal Revenue Service — Rev. Proc. 2025-32, §4.14 and §4.42 (2026 basic exclusion $15,000,000; annual gift exclusion $19,000; non-citizen spouse exclusion $194,000) — https://www.irs.gov/pub/irs-drop/rp-25-32.pdf — checked 2 August 2026
- Office of the Law Revision Counsel — 26 U.S.C. §2010 (basic exclusion; deceased spousal unused exclusion; the election) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2010&num=0&edition=prelim — checked 2 August 2026
- Internal Revenue Service — Frequently asked questions on estate taxes (portability requires a timely Form 706) — https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes — checked 2 August 2026
- Office of the Law Revision Counsel — 26 U.S.C. §2523(i) (non-citizen spouse) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2523&num=0&edition=prelim — checked 2 August 2026
- Internal Revenue Service — Estate and gift tax treaties (international): the fifteen-country list — https://www.irs.gov/businesses/small-businesses-self-employed/estate-gift-tax-treaties-international — checked 2 August 2026
- EUR-Lex — Regulation (EU) No 650/2012, OJ L 201, 27.7.2012, Articles 21, 22 and 36 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32012R0650 — checked 2 August 2026
- European e-Justice Portal — Succession (application from 17 August 2015; Denmark and Ireland; European Certificate of Succession) — https://e-justice.europa.eu/166/EN/succession — checked 2 August 2026
- European e-Justice Portal — Succession: Portugal (reserved shares; Civil Code arts. 2139 and 2144) — https://e-justice.europa.eu/topics/family-matters-inheritance/inheritance/succession/pt_en — checked 2 August 2026
- Agencia Tributaria — Impuesto sobre Sucesiones y Donaciones (no residentes), preguntas frecuentes (the heir or legatee is the taxpayer) — https://sede.agenciatributaria.gob.es/Sede/no-residentes/impuesto-sobre-sucesiones-donaciones/preguntas-frecuentes.html — checked 2 August 2026
- Office of the Law Revision Counsel — 26 U.S.C. §2042 (incidents of ownership) — https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section2042&num=0&edition=prelim — checked 2 August 2026
- U.S. Department of Labor, ERISA Advisory Council — Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans, December 2012 — https://www.dol.gov/sites/dolgov/files/ebsa/pdf_files/2012-current-challenges-and-best-practices-concerning-beneficiary-designations-in-retirement-and-life-insurance-plans.pdf — checked 2 August 2026
Figures and rates cited were current as of August 2026 and are subject to change.
Common questions
- How much can I pass on before U.S. estate tax applies in 2026?
- The basic exclusion amount is $15,000,000 per person for estates of decedents dying in 2026, up from $13,990,000 for 2025. It was set by Public Law 119-21, enacted 4 July 2025, and is a round statutory number rather than an inflation-adjusted one — indexing begins for decedents dying after 2026. The amount has no scheduled expiry, which is not the same as being permanent.
- Does the unlimited marital deduction still apply if my spouse is not a U.S. citizen?
- No. Section 2523(i) switches the unlimited marital deduction off when the surviving spouse is not a U.S. citizen and substitutes an indexed annual figure, which for 2026 is $194,000. At death the substitute mechanism is the qualified domestic trust under section 2056A, which requires at least one trustee to be an individual U.S. citizen or a domestic corporation and an irrevocable election by the executor.
- What happens if my spouse’s estate is too small to file and we skip Form 706?
- The unused exclusion is forfeited. Portability of the deceased spousal unused exclusion is what makes the $30,000,000 married-couple figure achievable, and the IRS states that electing it requires the estate’s representative to file a Form 706 timely — the election is irrevocable. A surviving spouse far below any filing threshold who therefore skips the return loses up to $15,000,000 of exclusion silently.
- Can my will just choose U.S. law if I live in Spain or Portugal?
- Article 22 of the EU Succession Regulation lets a person choose the law of the state whose nationality they possess, but there is no such thing as “United States succession law” to choose, because succession is a matter of state law. Article 36 routes that choice to a particular U.S. state, and a will naming a specific state’s law leaves less to the Regulation’s fallback.
- How much can I give away each year without touching my US gift exclusion?
- The annual gift exclusion for 2026 is $19,000 per recipient, unchanged from 2025. A gift to a spouse who is not a U.S. citizen runs on a separate indexed figure of $194,000 for 2026, because section 2523(i) switches off the unlimited marital deduction in that case and substitutes the annual amount instead.
- Does the US have an estate tax treaty with Portugal or Spain?
- No. The IRS list of estate and gift tax treaties runs to fifteen countries — Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom. Americans in Portugal and Spain rely on the unilateral credit for foreign death taxes instead.
- Which country’s law decides who inherits if I die while living in Spain?
- The law of habitual residence at death, by default. Article 21 of Regulation (EU) No 650/2012 provides that unless otherwise stated, the law applicable to the succession as a whole is that of the state where the deceased was habitually resident at death. It applies to those who die on or after 17 August 2015, and Denmark and Ireland do not participate.
- Can I leave my estate to whoever I want in Portugal, or do my children get a fixed share?
- Reserved shares apply, and they govern who inherits rather than what is taxed. The European e-Justice Portal records that in Portugal, where a spouse and children survive, the legitimate share is two-thirds and the available quota one-third under Article 2139 of the Civil Code; where the spouse is the only compulsory heir, the split is half and half under Article 2144.
- Who pays inheritance tax in Spain — the estate or the person inheriting?
- The person inheriting. The Spanish tax authority states that in acquisitions on death the persons liable for the Impuesto sobre Sucesiones y Donaciones are the heir or legatee. The tax is largely devolved to the Autonomous Communities, so effective rates vary substantially by region — the mirror image of the U.S., which taxes the estate.
- Is life insurance tax-free for my family if I die while living abroad?
- Free of income tax and inside the estate are two different questions. Section 101(a) generally excludes proceeds paid by reason of the insured’s death from the beneficiary’s gross income. Section 2042 separately includes in the gross estate amounts receivable by the executor, and amounts receivable by other beneficiaries under policies over which the decedent held any incidents of ownership at death.
- How do my heirs prove they inherited when the assets sit in another EU country?
- Through the European Certificate of Succession, created by Regulation (EU) No 650/2012. Heirs, legatees, executors and administrators can use it to prove their status in other Member States without any special procedure. It travels with the same Regulation that sets habitual residence as the default connecting factor.
A note on financial planning content
Financial planning topics discussed by US Expat are educational and general in nature. They should not be treated as personalized investment, financial, or retirement advice unless provided through the appropriate advisory relationship and documentation. Where regulated advisory services are referenced, they are offered separately and are subject to applicable jurisdiction, registration, and compliance requirements.
The information provided by US Expat is for educational and informational purposes only. It should not be treated as personalized tax, legal, immigration, investment, insurance, or financial advice. U.S. citizens abroad should consult qualified professionals who understand their specific facts and circumstances. US Expat is not a law firm, tax filing firm, or immigration law firm.
Rules and thresholds for U.S. citizens abroad change. Pages are reviewed periodically; confirm current details with a qualified professional before acting.
