Gifting Strategies for Families With Assets in Multiple Countries
Why cross-border gifting requires a different playbook
For families whose members live in different countries or whose assets are spread across multiple jurisdictions, wealth transfers through gifting are rarely as straightforward as they are for purely domestic families. The donor and recipient may be subject to different tax systems. The assets being transferred may have situs in a third country. Gift tax treaties may or may not apply. Foreign gift reporting requirements may be triggered on the U.S. side regardless of any actual U.S. tax liability. Getting the strategy right requires understanding how multiple legal systems interact — and where the conflicts lie.
The U.S. gift tax rules: who is subject and on what
U.S. citizens and domiciliaries are subject to U.S. gift tax on gifts of all property — wherever situated in the world — that exceed the available annual exclusion ($18,000 per recipient in 2024) and the lifetime exemption (currently approximately $13.61 million, subject to sunset after 2025). Non-resident aliens, by contrast, are subject to U.S. gift tax only on gifts of tangible property situated within the United States. Gifts of intangible property — including U.S. stocks, partnership interests, and debt obligations — by a non-resident alien are generally not subject to U.S. gift tax, creating a significant planning asymmetry.
Receiving large gifts from foreign persons: Form 3520
A U.S. person who receives a gift or bequest from a foreign person must report it on Form 3520 if the aggregate amount received from that foreign person exceeds $100,000 in a calendar year (for gifts from foreign individuals or foreign estates) or $19,570 in 2024 (for gifts from foreign corporations or partnerships, adjusted annually for inflation). Form 3520 is an information return — it does not by itself create a tax liability on the recipient. The United States does not impose an income tax on gifts received, regardless of their source. But failure to file Form 3520 can result in penalties of up to 25% of the amount of the gift.
Foreign gift and inheritance taxes: the other side of the equation
Many countries impose gift or inheritance taxes on the recipient of a transfer — not the donor. France, Germany, Japan, and the United Kingdom all have recipient-based inheritance tax systems. In those countries, a U.S. resident who receives an inheritance from a foreign family member may owe tax in the foreign country on the value of the bequest. Whether that foreign tax can be credited against any U.S. tax liability — or simply represents an additional cost — depends on the applicable tax treaty and the specific facts. In the absence of a treaty, careful structuring of the transfer can sometimes minimize the foreign tax burden.
Strategies for tax-efficient cross-border gifting
• Use the annual exclusion strategically: gifts up to $18,000 per recipient per year are excluded from U.S. gift tax entirely and do not use the lifetime exemption
• For non-resident alien donors, structure large gifts as transfers of intangible property — particularly U.S. securities — which are not subject to U.S. gift tax
• Make large gifts before establishing U.S. domicile, when only tangible U.S. property is subject to U.S. gift tax
• Use the unlimited marital deduction for transfers to a U.S. citizen spouse; for non-citizen spouses, consider a Qualified Domestic Trust (QDOT) or annual exclusion gifts up to the special non-citizen spouse limit ($185,000 in 2024)
• Coordinate the timing of gifts with the estate tax exemption sunset — using the current elevated exemption before it potentially decreases after 2025
• For families with treaty partners, analyze whether gift tax treaty provisions can reduce or eliminate double taxation on cross-border transfers
The importance of coordinated advice
Cross-border gifting strategies that look efficient from a U.S. tax perspective can create unexpected liability in the recipient's country — or in the country where the asset is situated. Effective planning requires counsel who understands both sides of the transaction and can coordinate the strategy across jurisdictions. A gift that saves U.S. estate tax but triggers a 40% inheritance tax in France is not a win.
Whether you are making large gifts to family members abroad or receiving transfers from foreign relatives, the cross-border tax implications deserve careful attention. Our international private client attorneys design gifting strategies that account for all relevant tax systems. Contact us to begin planning.
