When a foreign national inherits bank deposits, proceeds from the sale of real estate, or other assets located in China and wishes to transfer the funds overseas, the inheritance documents alone are usually not sufficient.
A key issue is whether the deceased was a Chinese national or a foreign national.
This situation is generally treated as an inheritance-related transfer of personal property abroad.
The foreign heir must provide documents proving the inheritance relationship, ownership of the inherited property, the lawful source of the funds, and the settlement of relevant taxes.
In practice, the heir is generally required to obtain:
inheritance documents, such as a notarized inheritance certificate or an effective court judgment;
a tax clearance certificate or other tax-related supporting documents; and
foreign-exchange approval for the transfer of inherited property.
After the foreign-exchange authority issues the relevant approval document, the heir may apply to a bank to purchase foreign currency and transfer the funds overseas.
This procedure can be summarized as:
Inheritance documents + tax clearance documents + foreign-exchange approval
Where both the heir and the deceased are foreign nationals, the transaction is generally not handled through the same inheritance-property transfer approval procedure applicable to the estate of a Chinese national.
In practice, prior approval from the foreign-exchange authority is usually not required. However, the bank will still review the inheritance relationship, ownership of the property, source of funds, and tax compliance.
For a single outward payment exceeding the equivalent of USD 50,000, the bank may require a Tax Record Filing Form for Outbound Payments under Trade in Services and Other Items.
This procedure can generally be summarized as:
Inheritance documents + outbound-payment tax filing form + bank review
The tax filing requirement does not mean that China imposes inheritance tax on the estate. Its purpose is to allow the tax authority and the bank to verify the nature of the payment, the source of the inherited funds, and whether any relevant taxes have been properly settled.
Therefore, when dealing with an inheritance involving assets in China, it is not enough to consider only the nationality of the heir. The nationality of the deceased may directly affect the procedure for transferring the inherited funds abroad.
By David Gao
David Gao is a Chinese lawyer with more than 20 years of legal practice experience. He also holds a certificate from the China Accreditation Test for Translators and Interpreters (CATTI). He has a strong command of legal English and is fluent in spoken and written English.
In 2018, Mr. Gao was selected for the Ministry of Justice’s National Talent Pool of 1,000 Lawyers with Foreign-Related Legal Expertise.
Throughout his legal career, Mr. Gao has handled a wide range of foreign-related civil and commercial matters. He has extensive experience in cross-border divorce, international inheritance, foreign-related litigation, and the drafting and review of English-language contracts.
Email: gaohexin@jingsh.com; gaohexin@163.com
Tel: +86 136 1115 8067
