Vietnam: Is inherited property subject to PIT? What are the procedures for declaration of Inheritance?

Thank you for your question. Lawnet would like to answer your questions as follows:

1. Is inherited property subject to PIT?

Article 2 of Circular 111/2013/TT-BTC stipulates amounts subject to PIT, in which Clause 9 refers to income from inheritance, including:

- Inherited securities: shares, call options on shares, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities; shares of the person in the joint-stock company according to the Law on Enterprises.

- Inherited capital in economic organizations and businesses: capital contribution to limited liability companies, cooperatives, partnerships, business cooperation contracts; capital in private enterprises and businesses of the person; capital in associations and funds established within the law, or the entire business if the private enterprise or business is under the ownership of the person.

- Inherited real estate: rights to use land, rights to use land and property thereon; ownership of houses, including future houses, infrastructure and constructions on land, including off-the-plan constructions; rights to rent land or water surface; other incomes from inheritance being real estate in any shape or form, except for incomes from the inherited real estate in any form

- The ownership and use rights of other inherited assets (cars, motorbikes, ships, barges, speedboats, towboats, yachts, airplanes, hunting guns, sporting guns) must be registered with state agencies.

In addition, according to Clause 4, Article 4 of the Law on Personal Income Tax 2007, income from  receipt of inheritances or gifts that are real estate from the following subjects will be exempt from tax:

- Spouses;

- Parents and their children;

- Adoptive parents and their adopted children;

- Fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law;

- Grandparents and their grandchildren;

- Among blood siblings.

Thus, assets acquired through inheritance, including securities, capital in economic organizations, business establishments, real estate and other assets, must be registered for ownership or use, except for The provisions of Clause 4, Article 4 of the Law on Personal Income Tax 2007 are all subject to tax.

2. Procedures for declaration of Inheritance

2.1. Profile composition

An application for declaration of Inheritance includes:

- Death certificate of the person leaving the estate;

- A copy of the will (in case of inheritance according to the will);

- Papers on the identity of the heirs (household registration, CMNC/CCCD,...);

- Papers proving the personal relationship between the recipient of the estate and the person leaving the estate (in case of legal inheritance);

- Documents proving the property left behind (Certificate of land use right, ownership of house and other assets attached to land; certificate of shares,...);

- Other documents (certificate of marital status, marriage registration certificate, ...)

2.2. Declarations for acceptance of estate

Inheritance declaration shall be made in accordance with Articles 57 and 58 of the Law on Notary 2014, whereby:

The heirs at law or under a testament which does not specify the portion of the estate to be enjoyed by each heir may request notarization of their written agreement on the division of the estate.

A notary shall verify whether an estate leaver is the person having land use rights or asset ownership and the notarization requesters are estate heirs; if suspecting or having grounds to believe that the leaving and inheritance of the estate are unlawful, the notary may reject the notarization request or conduct verification or solicit assessment at the request of the notarization requester.

If the application is completed and in accordance with the provisions of law, the notary agency shall accept the notarization of the agreement on division of the estate, the document declaring the inheritance.

- The reception of orders for notarization of agreements on division of inheritance, declaration of inheritance reception must be posted for 15 days. The document shall be posted by the notary organization at the People’s Committee of the commune where the last permanent residence of the inheritance leaver; if such residence is not identifiable, the document shall be posted where the last temporary residence of such person is located or where the estate is located.

- After 15 days of posting, if there is no complaint or denunciation, the notary agency shall certify the inheritance document. The co-heirs can make a written agreement on the division of the inheritance or a written declaration of inheritance.

After completing the above procedures for declaration of inheritance, the inheritor must carry out the procedures for registration of property rights to the property subject to registration of ownership according to the provisions of law:

- For assets being land and houses, the heirs shall carry out registration procedures at the district-level land use right registration office in the locality where the land is located.

- For assets being cars and motorbikes, the heirs shall carry out registration procedures at the Vehicle Registration Office.

Best regards!

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