Key Legal Points for Overseas Heirs Inheriting Assets in China

As an increasing number of children and family members of high-net-worth households acquire foreign residency or citizenship, the legal demand for overseas heirs to inherit assets located in mainland China has grown significantly. According to the Hurun Wealth Report published in 2025, China is projected to see RMB 20 trillion in wealth transferred across generations over the next decade. Among the current generation of private entrepreneurs, it has become quite common for their children or family members to have obtained overseas status.

The core of the process for an overseas heir to inherit assets in China lies in "bridging the domestic and the foreign": foreign documents must be "converted" into a form recognized within China through authentication procedures, and domestic processes and the outward remittance of assets must strictly comply with Chinese law. Each step is closely interconnected, and the requirements for document compliance and procedural accuracy are exceptionally high. This article provides a systematic overview of the key legal points in cross-border inheritance, with the aim of helping overseas heirs effectively mitigate legal risks and ensuring the smooth transmission of family wealth.

I. Categories of Overseas Heirs

Pursuant to the Supreme People's Court's interpretations of the Civil Procedure Law and the Law on the Application of Laws to Foreign-Related Civil Relations, an inheritance relationship that contains any foreign element — whether in respect of the subject (the heir or the decedent), the object (assets located outside China), or the legal facts (such as the decedent dying or executing a will outside China) — is classified as a foreign-related inheritance relationship. This article focuses on the scenario of "subject-related foreign element," namely, an overseas heir inheriting assets within China. Overseas heirs primarily fall into the following three categories:

1. Foreign-Citizen Heirs

Under the Nationality Law of the People's Republic of China, a foreign national is a person who does not hold Chinese nationality. Foreign-citizen heirs are the most typical scenario in cross-border inheritance.

2. Overseas Chinese (Chinese Citizens Settled Abroad)

Pursuant to the Provisions on Defining the Status of Overseas Chinese, Foreign Nationals of Chinese Descent, Returned Overseas Chinese, and Family Members of Overseas Chinese, an "overseas Chinese" refers to a Chinese citizen who has settled abroad. "Settled" requires satisfaction of one of the following conditions:

• The Chinese citizen has obtained long-term or permanent residency in the country of residence and has resided there continuously for at least two years, with cumulative residence of no fewer than 18 months within the two-year period; or
• The Chinese citizen, although not having obtained long-term or permanent residency, has obtained lawful residency status in the country of residence for five or more consecutive years and has resided there for a cumulative period of no fewer than 30 months within the five-year period.

Importantly, Chinese citizens studying abroad (whether government-sponsored or self-funded) or working abroad on official business (including dispatched laborers) are not regarded as overseas Chinese during the period of such study or work.

3. Residents of Hong Kong, Macau, and Taiwan

Under Article 7 of the Provisions of the Supreme People's Court on Several Issues Concerning the Jurisdiction of Foreign-Related Civil Cases, civil and commercial cases involving Hong Kong, Macau, and Taiwan are to be handled with reference to the procedures for foreign-related cases. Because Hong Kong, Macau, and Taiwan each have their own inheritance laws and legal frameworks that differ from those of mainland China, inheritance matters involving these regions are processed under foreign-related procedures.

II. Methods for Overseas Heirs to Inherit Assets in China

Assets located in China primarily include movable property (bank deposits, wealth management products, stocks, fund units, equity interests, vehicles, etc.) and immovable property (real estate, land-use rights, etc.). Depending on whether a dispute exists among the heirs, inheritance may be effected through notarized succession or judicial succession.

(I) Notarized Succession

1. Overview

Where there is no dispute among the heirs as to the scope of the estate, the respective shares of inheritance, or other matters, and all heirs are willing to cooperate in completing the notarization procedures, an overseas heir may pursue notarized succession. Notarized succession may be either intestate succession or testate succession.

It is important to clarify that notarized succession and a notarized will are distinct concepts. A notarized will alone — even the original — cannot be used directly to effect transfer or withdrawal of estate assets at the real estate registration authority, banks, or other institutions. The reason is that registration authorities cannot determine, based solely on a single document, whether it represents the final and valid legal instrument — issues such as whether the will has been forged or whether a more recent will exists can present major obstacles to inheritance.

Notarized succession refers to the statutory certification process whereby a notary public, after verifying key elements such as the heir's entitlement and the subject matter of the estate, confirms the heir's lawful right to inherit. The heir receives a Certificate of Inheritance Rights issued by the notary public, which serves as the valid evidentiary document for completing the final procedures at each asset registration and administration authority.

2. Document Authentication

Cross-border inheritance cases generally involve documents generated outside China, and such foreign documents must undergo notarization and authentication. Since the Hague Convention (Apostille Convention) entered into force for China on November 7, 2023, the appropriate authentication method depends on whether the country where the document was issued has acceded to the Convention:

Apostille Certification: Applicable to Convention member states (such as the United States, the United Kingdom, Japan, Australia, and most EU countries). The procedure is: notarization by a local notary public, followed by issuance of an Apostille by the designated authority at the state/provincial or federal level.

Consular Authentication (Three-Step Certification): Applicable to non-Hague Convention countries. The procedure is: notarization by a local notary public, followed by authentication by the foreign ministry or authorized agency of that country, and finally consular authentication by the Chinese embassy or consulate in that country.

Special Authentication Procedures for Hong Kong, Macau, and Taiwan:

• Documents from Hong Kong or Macau must be reviewed by China Legal Service (H.K.) Ltd. or China Legal Service (Macau) Ltd. under the Ministry of Justice, and bear the official transmission seal, before they may be used in mainland China.
• Documents from Taiwan must be notarized by a notary authority in Taiwan, and the notarized duplicate must be forwarded through the Straits Exchange Foundation (SEF) channel to the mainland Notary Association for verification, after which the documents may be used in mainland China.

3. Processing Procedures

Once the heir has prepared the required documents, the heir may apply to the foreign-related notary public office located at the place where the majority of the decedent's estate is situated or at the decedent's domicile at the time of death. The notary public will review the materials and may request supplementation or verification. In complex cases or where the materials are questionable, the notary office will issue a public notice of inheritance rights (typically 15 working days) to exclude other potential claims.

The overseas heir must appear in person at the notary office with the original valid identity documents to sign the relevant documents. If an authenticated Power of Attorney has been processed, a duly authorized agent may act on the heir's behalf. Upon satisfactory review, the notary office will issue the Certificate of Inheritance Rights. Armed with this certificate, the heir may then proceed to the following institutions to complete the transfer, payment, or registration change procedures for the assets in China:

• Real estate/land: Transfer registration at the real estate registration center
• Bank deposits/wealth management products: Account balance inquiry, withdrawal, or transfer at the bank
• Stocks/funds: Non-trade transfer at the securities company or fund company
• Vehicles: Ownership transfer registration at the vehicle administration office
• Company equity: Shareholder change registration at the market supervision and administration authority

(II) Judicial Succession (Litigation)

1. Determining the Competent Court and Applicable Law

Where a dispute arises concerning an overseas heir's inheritance of assets in China, Chinese courts have exclusive jurisdiction under Article 34 of the Civil Procedure Law over disputes involving immovable property within China and over inheritance cases where the decedent's domicile at death or the location of the principal estate is in China.

Once the competent court is identified, the applicable law governing the inheritance dispute must be determined in accordance with the law. Articles 31 to 35 of the Law of the People's Republic of China on the Application of Laws to Foreign-Related Civil Relations set out clear rules for different categories of disputes, including intestate succession and the formal and substantive validity of wills.

2. Litigation Process

• Ascertain the scope of the estate: If the heir is unable to independently investigate the decedent's assets, the heir may apply to the court for an investigation order, and with the assistance of legal counsel, trace the full extent of the estate — including obtaining bank account transaction records, conducting real estate registry searches, obtaining securities account details and trading records, and retrieving company registration filings from market supervision authorities.
• Examine disputed matters, such as the validity of the will or the ownership of specific property.
• Preliminary mediation.
• Judgment determining the distribution and vesting of the estate.

3. Estate Transfer or Enforcement

Armed with the court's effective judgment or ruling, the heir may proceed to the relevant institutions to complete the transfer, payment, or registration change procedures for the assets in China.

III. Transferring Inherited Assets Out of China

After an overseas heir has obtained assets from an inheritance in mainland China, any outward remittance of funds is subject to administrative approval by the State Administration of Foreign Exchange (SAFE). The procedure involves: first applying to SAFE for a foreign exchange purchase and remittance approval notice, and then presenting the approval notice to a bank to complete the foreign exchange purchase and remittance. Where the total amount to be transferred exceeds RMB 500,000, the application must be submitted to the SAFE at the national level for approval after initial review by the local SAFE office.

Under Article 6 of the Interim Measures for the Administration of Sale and Payment of Foreign Exchange for the Outward Transfer of Individual Assets, all assets inherited from the same decedent must be applied for in a single application once liquidated, though the remittance may be made in one lump sum or in installments. Assets inherited from different decedents must be applied for and remitted separately. This means the overseas heir should carefully verify that all inherited assets in China have been fully liquidated, as there is only one opportunity to apply for the outward transfer of inheritance proceeds.

It is crucial to note that mere overseas residency status (e.g., foreign permanent residency or long-term residency, i.e., the status of an "overseas Chinese") does not by itself qualify an heir to apply for an inheritance transfer. Only after the heir has acquired foreign citizenship or the status of a resident of Hong Kong, Macau, or Taiwan may the heir apply for the inheritance asset transfer procedures in mainland China.

It is advisable to consult with the local SAFE office prior to initiating the process to obtain the latest checklist of required documents and a sample of the Application Form for Outward Transfer of Individual Assets, and to prepare the approval documents in advance. Since SAFE exercises considerable discretion in the approval process, multiple rounds of communication and coordination may be necessary.

IV. Common Legal Difficulties in Cross-Border Inheritance Cases

(I) Applicable Law for the Form and Validity of Wills

Different countries have markedly different rules regarding the form and validity of wills. Common law jurisdictions (such as the UK, the US, Canada, and Australia) emphasize formal requirements and the presence of witnesses, while civil law jurisdictions (such as China, Germany, France, and Japan) place greater weight on the testator's true intent and allow for a greater diversity of forms.

With respect to testamentary freedom, common law jurisdictions generally follow the principle of full testamentary freedom (e.g., England and most U.S. states), under which a testator may leave property to anyone and may even entirely disinherit a spouse or children. Civil law jurisdictions (such as Germany, France, and Japan) have forced heirship regimes, under which a testator cannot, by will, completely deprive a spouse, children, and other statutory heirs of their minimum inheritance share. Chinese law requires that a will reserve a necessary portion of the estate for heirs who lack the capacity to work and have no source of livelihood, but permits the testator to disinherit adult children who are capable of working — a feature that places greater emphasis on party autonomy than traditional forced heirship regimes.

In cross-border testamentary succession cases, the primary difficulty in assessing the validity of a will lies in determining the applicable law. For both the form and the substantive validity of a will, multiple connecting factors exist: the law of the testator's habitual residence at the time of making the will or at the time of death, the law of the testator's nationality, and the law of the place where the testamentary act was performed. The parties may expressly choose the applicable law, but in the absence of agreement, the court will determine the governing law based on the doctrine of the closest connection.

Judicial practice indicates the following tendencies:

• Where any connecting factor in the case points to China, the court is inclined to apply Chinese law as the governing law to determine the validity of the will.
• Where all connecting factors in the case point to a foreign country, the court will apply the foreign law as the governing law.

(II) Recognition and Enforcement of Foreign Judgments

Foreign court judgments rendered in inheritance cases face significant obstacles when application is made for recognition and enforcement in mainland China. On the one hand, the parties often lack a targeted bilateral civil and commercial mutual legal assistance mechanism covering inheritance cases. On the other hand, where a foreign court's judgment falls within the exclusive jurisdiction of Chinese courts, the domestic courts will refuse to recognize and enforce the foreign judgment.

With respect to the coverage of mutual legal assistance treaties, while China has concluded civil and commercial judicial assistance treaties with 39 countries and regions, the vast majority of these treaties expressly exclude testamentary and inheritance disputes from the scope of mutual recognition and enforcement. Moreover, the signatory countries do not include the primary immigration destinations for Chinese citizens or the countries where their assets are concentrated (such as the United States, Canada, and Australia).

Additionally, under the Civil Procedure Law, lawsuits brought in respect of immovable property disputes fall under the exclusive jurisdiction of the people's court at the place where the immovable property is located, and lawsuits brought in respect of inheritance disputes fall under the exclusive jurisdiction of the people's court at the place of the decedent's domicile at the time of death or the place where the principal estate is located. Accordingly, any inheritance case involving immovable property within China, or where the decedent's domicile at death or the location of the principal estate was in China, falls within the exclusive jurisdiction of Chinese courts. A foreign court judgment rendered in such a case may be denied recognition and enforcement in China on the ground that it violates China's rules on exclusive jurisdiction.

Consequently, for inheritance cases involving cross-border immovable property, it is advisable to initiate legal proceedings in the jurisdiction where the property is located.

(III) Tax Filing Considerations

When an overseas heir processes the outward foreign exchange remittance of inherited assets, the domestic tax clearance certificate and the overseas tax filing deadlines can easily become misaligned. Since SAFE does not operate on a fixed timeline for approving inheritance asset transfers and exercises considerable flexibility in practice — particularly where the assets involved are substantial or the source of funds is complex, and where SAFE may initiate further reviews such as anti-money laundering checks — the capital remittance timeline may far exceed expectations, directly impacting the subsequent steps in the process.

At the same time, the tax authority in the overseas heir's country of residence (i.e., the country of tax residency) typically imposes strict deadlines for the reporting and payment of taxes on inherited assets. Once the inherited assets enter the heir's country of residence, estate tax or inheritance tax may be triggered — this is particularly common in common law jurisdictions, including the United States, the United Kingdom, and Ireland. In the United States, for instance, estate tax must be reported and paid within nine months of the decedent's death.

It is advisable for overseas heirs to begin researching foreign exchange and tax policies concurrently with initiating the domestic inheritance proceedings, and to prepare in advance the evidentiary documents required for tax clearance, so as to bridge the preceding and subsequent procedures and mitigate tax risks.

(IV) Inheritance of Domestic Company Equity by Foreign Heirs

Where a foreign heir inherits equity in a domestic Chinese company, the matter involves — in addition to the general cross-border inheritance procedures outlined above — several special considerations arising from the unique dual nature of equity (which embodies both shareholder personal rights and property rights), including changes to the company's legal nature, foreign exchange controls, and tax compliance.

1. Whether the Company's Legal Nature Changes

Under Article 55 of the Provisions on Foreign Investors' Merger with or Acquisition of Domestic Enterprises, a change of nationality by a natural person shareholder of a domestic company does not alter the enterprise nature of the company. However, in practice, the regulatory trend at the industrial and commercial registration level has become stricter. According to responses from market supervision authorities in several regions, once a shareholder becomes a foreign national, the company's registration type may need to be amended accordingly. It is recommended to consult the local market supervision authority before proceeding.

2. The Negative List for Foreign Investment Access

Although the company's legal nature may not change, the change in a shareholder's nationality may affect the company's future ability to enter certain specific industries. Therefore, it is necessary to verify whether the company's actual business scope falls within the sectors prohibited or restricted for foreign investment under the Special Administrative Measures (Negative List) for Foreign Investment Access:

• If the business scope does not involve the Negative List, the equity change registration may proceed normally.
• If the business scope involves a prohibited sector, the shareholder qualification cannot be inherited. The foreign heir may only obtain the property rights corresponding to the equity (such as the transfer proceeds), and the company must repurchase the equity through a buyback by other shareholders or a capital reduction.
• If the business scope involves a restricted sector, the equity ratio or senior management requirements under the Negative List must be satisfied. The company may undergo corresponding rectification before completing the equity change registration.

To mitigate the risk of inheritance-related disruption to the company's operations, it is advisable to, prior to inheritance, transfer the company equity into a domestic limited company or limited partnership as a holding vehicle, or to hold the company equity through a family trust, such that the heirs merely inherit the equity of the holding vehicle or enjoy the beneficial rights under the family trust, thereby avoiding triggering foreign investment restrictions and eliminating the need to amend the company's shareholder registration during the inheritance process.

3. Foreign Exchange Controls on Remittance of Dividends

After a foreign heir inherits domestic equity, any outward remittance of dividends is classified as a current account payment and is subject to foreign exchange controls:

• If the dividend amount is USD 50,000 or less: the remittance may be processed directly at a bank, supported by the tax clearance certificate and the board dividend resolution, without the need for advance tax filing.
• If the dividend amount exceeds USD 50,000: a foreign payment tax filing must first be made with the tax authority. Once the stamped Filing Form is obtained, the foreign exchange purchase and remittance may be processed at the bank. In addition to the tax clearance certificate, the bank will require documentation evidencing the authenticity of the dividend (such as a shareholders' resolution).

If the foreign heir plans to sell the equity and remit a substantial sum in one or more installments, this falls under the capital account and must be processed through SAFE's dedicated inheritance asset transfer channel, as described in Part III above.

4. Double Taxation Risk

The tax liabilities arising from a foreign heir's inheritance of domestic equity are primarily incurred at three stages: acquisition, dividend receipt, and sale.

China currently does not impose an inheritance tax, so at the stage of inheriting the equity itself, typically only stamp duty on the equity change registration is payable.

At the subsequent dividend receipt stage, under the Individual Income Tax Law, dividends and bonuses received by a foreign individual from sources within China are in principle subject to individual income tax at a rate of 20%. However, pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation on Several Policy Issues Concerning Individual Income Tax (Cai Shui Zi [1994] No. 20), dividends and bonuses received by a foreign individual from a foreign-invested enterprise are temporarily exempt from individual income tax. This means that if, upon completion of the inheritance, the company's nature is altered to a "foreign-invested enterprise" (i.e., it contains a foreign capital element), the dividends received by the foreign shareholder may enjoy a tax exemption; if the company retains its "domestic enterprise" status, the dividends will be subject to tax at 20%.

When the equity is subsequently sold, individual income tax at a rate of 20% is payable on the "income from asset transfer," with the tax base being the transfer proceeds less the cost at which the decedent originally acquired the equity, or the fair market value assessed at the time of inheritance, plus relevant reasonable expenses.

Since a foreign heir is subject to the dual tax jurisdiction of both China and the heir's country of residence, income derived at the dividend receipt or equity sale stage may be subject to reporting and taxation in both countries, giving rise to a risk of double taxation. It is therefore advisable for foreign heirs to familiarize themselves in advance with the applicable tax treaty between China and their country of residence and to engage in appropriate tax planning.

V. Conclusion and Recommendations

The core of the process for an overseas heir to inherit assets in China lies in "bridging the domestic and the foreign": foreign documents must be "converted" through authentication into a form recognized within China, and domestic procedures and the outward remittance of assets must strictly comply with Chinese law. Each step is closely interconnected, and the requirements for document compliance and procedural accuracy are exceptionally high. The assistance of qualified legal counsel is often indispensable.

In light of the legal difficulties and complex procedures involved in cross-border inheritance, and with a view to effectively mitigating legal risks and ensuring the smooth transmission of family wealth, the following is recommended:

• Develop an early awareness of wealth succession planning and, under the guidance of professionals, implement advance planning through tools such as wills and family trusts.
• For parties who have long resided overseas, pay particular attention to the asset status of parents and grandparents in mainland China.
• Where heirs are numerous and geographically dispersed around the world, establish and dynamically update the valid contact information of all heirs. The loss of contact with some heirs can result in a situation where, despite all heirs having confirmed their respective shares, the estate (particularly real estate and company equity) cannot be effectively divided or disposed of for an extended period due to the inability to reach consensus or complete notarial/litigation service of process, leading to a deadlock of "paper wealth" that cannot be realized.

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This article is general information only, not legal advice for your matter. For professional assistance, consult a PRC-licensed lawyer at Zhang&Partners.