Is it necessary to pay personal income tax when inheriting real estate according to a will or legal regulations in Vietnam?

Is it necessary to pay personal income tax when inheriting real estate according to a will or legal regulations in Vietnam?

According to Point c, Clause 9, Article 2 of Circular 111/2013/TT-BTC, the taxable incomes are stipulated as follows:

Taxable Incomes

According to Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP, taxable incomes for personal income tax include:

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9. Income from inheritance

Income from inheritance is the income that an individual receives according to a will or in accordance with the legal provisions on inheritance. Specifically:

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c) For inheritance being real estate including: land use rights; land use rights with assets attached to the land; house ownership rights, including future-formed houses; infrastructure and construction projects attached to the land, including future-formed construction projects; land lease rights; water surface lease rights; other incomes received from real estate inheritance in any form; except for incomes from real estate inheritance as guided at Point d, Clause 1, Article 3 of this Circular.

Based on Point d, Clause 1, Article 3 of Circular 111/2013/TT-BTC, income from inheritance between the following individuals is not subject to personal income tax:

- Between husband and wife;

- Biological parents and biological children;

- Adoptive parents and adopted children;

- Parents-in-law and daughters-in-law;

- Parents-in-law and sons-in-law;

- Paternal grandparents and grandsons;

- Maternal grandparents and granddaughters;

- Siblings.

If an individual has income from inheritance that does not fall into the above cases exempt from personal income tax, the individual receiving it according to a will or in accordance with the legal provisions on inheritance concerning: land use rights; house ownership rights; infrastructure and construction projects attached to the land, including future-formed construction projects, must pay personal income tax as per the legal regulations.

Is it necessary to pay personal income tax when inheriting real estate according to a will or legal regulations in Vietnam? (Image from the Internet)

When is the tax period for personal income tax determined in the case of inheritance in Vietnam?

Based on Clause 6, Article 3 of the Law on Tax Administration 2019, the personal income tax period is understood as the period for determining the amount of tax payable to the state budget according to the legal provisions on tax.

According to Article 7 of the Law on Personal Income Tax 2007, as amended by Clause 3, Article 1 of the Amended Law on Personal Income Tax 2012, the personal income tax period is determined as follows:

tax period

1. The tax period for resident individuals is specified as follows:

a) Annual tax period applies to income from business; income from wages and salaries;

b) tax period for each occurrence of income applies to income from capital investment; income from capital transfer, except income from securities transfer; income from real estate transfer; income from winnings; income from copyright; income from franchising; income from inheritance; income from gifts;

c) tax period for each securities transfer or annually for income from securities transfer.

2. The tax period for non-resident individuals is calculated for each occurrence of income for all taxable incomes.

The personal income tax period for inheritance is determined for each occurrence of income.

What are bases for determining taxable income from inheritance for resident individuals in Vietnam?

According to Article 18 of the Law on Personal Income Tax 2007 as follows:

Taxable Income from Inheritance, Gifts

1. Taxable income from inheritance and gifts is the value of inherited property and gifts exceeding 10 million VND that the taxpayer receives for each occurrence.

2. The time of determining taxable income is specified as follows:

a) For inheritance income, it is the time when the taxpayer receives the inheritance;

b) For gift income, it is the time when the organization or individual gives the gift to the taxpayer or when the taxpayer receives the gift income.

The tax base for resident individuals with taxable income from inheritance is determined as the portion of the inheritance value exceeding 10 million VND received for each occurrence.

Moreover, the time to determine taxable income is the time when the taxpayer receives the inheritance.