Practical Pointers to Obtain the U.S. Foreign Death Tax Credit

Sep 19, 2026

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Guidance explains how U.S. citizens or residents can obtain the foreign death tax credit to avoid double taxation on certain property situated outside the United States at death. The discussion highlights the extra time required for identifying qualifying foreign taxes, completing Form 706 and related filings, translating documents, converting currency, and paying foreign tax. It also covers the role of local counsel, rules for determining creditability, and key situs and tax-type considerations.

LanguageEnglish

CategoryLetters

FormatPDF

Pages6

Reading Time2 min

AccessFree to download

Extra Time Involved

Use Local Counsel

Qualifying for the Credit

Determining Creditability of the Foreign Tax

Practical Pointers to Obtain the U.S. Foreign Death Tax Credit By Brandon A.S. Ross Brandon A.S. Ross is an associate in the Boca Raton, Florida, office of Proskauer Rose LLP. With the rise of internationalization, the use of the U.S. foreign death tax credit (the “Credit”) has grown. The Credit is available for U.S. citizens or residents to avoid double taxation of certain property located outside of the United States at death. The Credit applies to a transfer of property at death that is subject to a transfer tax substantially similar to the U.S. federal estate tax levied by the foreign country, state, jurisdiction, or political subdivision based on the property’s location in that foreign jurisdiction. For purposes of this article, the terms “foreign country,” “state,” “jurisdiction,” or “political subdivision” are used interchangeably. The Credit’s usefulness has increased as society has globalized and advances in technology have made the world smaller. Despite the Credit’s enlarged role in estates, guidance for the Credit’s use from the IRS, the Department of the Treasury, and the courts is scarce. This article offers some practical pointers to obtain the Credit. Extra Time Involved The first point to emphasize, after realizing that there is property located outside the United States that may be subject to tax in the United States and a foreign jurisdiction, is that obtaining the Credit will take significant extra time. Extra time will be needed for (1) the additional steps to determine what foreign taxes may apply and if those taxes qualify for the Credit,(2) completing Schedule P of the U.S. Estate (and Generation-Skipping Transfer) Tax Return (Form 706) (the “706”),(3) converting foreign currency into U.S. dollars,(4) translating into English the documents to file with the 706,(5) preparing and filing the Certificate of Payment of Foreign Death Tax (Form 706-CE, the “706-CE”), and (6) paying the foreign tax. For advisors who do not automatically extend the time for filing the 706, it may be wise to file for an extension of time to file the 706 in order to accomplish all of these tasks. Use Local Counsel Another aspect of obtaining the Credit that will take additional time and money is employing legal counsel in the jurisdiction where the foreign property is located, in order to facilitate qualifying for the Credit and identifying any nontax-related issues, such as an ancillary probate. The assistance of counsel familiar with the foreign jurisdiction’s taxes and laws will be needed to (1) determine what taxes may apply to the property,(2) pay those taxes, and (3) file the 706-CE, including having the foreign taxing authorities certify the 706-CEs and send them to the IRS. Although finding local counsel may beas easy as calling a tax partner in the firm’s local office, most advisors do not work in firms with offices across the world, and, even if they do, the local counsel may not be familiar with the local death tax laws or be able to convey them coherently to the U.S. advisor. Similarly, it may also be wise to hire a Published in Probate and Property , Volume 28, Number 3, ©2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. competent translator to assist throughout the process of obtaining the Credit. Involving local legal counsel (and, if needed, a translator) may take significant time up front but should prove invaluable for obtaining the Credit. Qualifying for the Credit After allowing for extra time to obtain the Credit and enlisting local counsel, the threshold issue will be to determine if any taxes in the foreign jurisdiction qualify for the Credit. Taxes that qualify for the Credit are estate, inheritance, legacy, or succession taxe

FAQs

Why does obtaining the U.S. foreign death tax credit require extra time?

It requires additional steps to identify qualifying foreign taxes and complete Schedule P on Form 706, convert currency, translate documents, prepare and file Form 706-CE, and pay the foreign tax.

What is the purpose of using local counsel when seeking the credit?

Local counsel helps determine what taxes apply, pay those taxes, and file Form 706-CE, including coordinating certification by foreign taxing authorities and addressing non-tax issues such as ancillary probate.

How is creditability of the foreign tax determined?

Creditability depends on the decedent being a U.S. citizen or resident at death and on the property situs being in the foreign country imposing the tax. The article also notes that defining qualifying tax types involves limited guidance and interpretation.

Sep 19, 2026

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