Glossary / Tax and structure

US estate tax for non-residents

A person who is neither a US citizen nor US domiciled is subject to US federal estate tax on US situs assets above an exemption of sixty thousand dollars, at rates rising to forty percent.

US shares and US domiciled funds are US situs. The exemption available to non-residents is a tiny fraction of the one available to US persons, and a treaty may raise it for residents of some countries.

The UAE has no estate tax treaty with the United States.

Where people get it wrong

Assuming the large US exemption applies to everyone. For a non-domiciled non-citizen it is sixty thousand dollars, not millions.

The framework behind it Fund domicile, and the sixty thousand dollar trap sets out the rule, the arithmetic and where it breaks.

Read the framework

Related terms

Situs Situs is the legal location of an asset for tax purposes, which for shares is generally the country of the issuing company and for funds the country of domicile, regardless of where the owner lives or where the asset is held. Fund domicile A fund's domicile is the country in which it is legally established, and it determines the withholding tax the fund suffers on its holdings and the estate tax exposure of the person who owns it. Double tax treaty A double tax treaty is an agreement between two countries setting out which of them may tax a given kind of income and at what rate, so that the same income is not fully taxed twice.

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