Question: Please ask, the current law stipulates which types of inheritance must pay personal income tax? How to calculate personal income tax on inherited assets?

Reply:

Which inheritance assets must pay personal income tax?

According to Clause 9, Article 2, Circular No. 111/2013/TT-BTC, income from inheritance must pay personal income tax (PIT), including:

• For inheritance, securities include: stocks, stock purchase rights, bonds, treasury bills, fund certificates and other types of securities according to the provisions of the Securities Law 2019; Individual shares in joint stock companies according to the provisions of the Enterprise Law 2020.
• For inheritance, it is capital in economic organizations and business establishments, including: capital contributions in limited liability companies, cooperatives, partnerships, business cooperation contracts; capital in private enterprises and individual business establishments; capital in associations and funds allowed to be established according to the provisions of law or the entire business establishment if it is a private enterprise or an individual's business establishment.
• For inheritance of real estate, including: land use rights; land use rights with assets attached to the land; home ownership, including housing formed in the future; infrastructure and construction works attached to land, including construction works formed in the future; land lease rights; water surface lease rights; Other income received from inheritance is real estate in any form;
• For inheritance, other assets must have their ownership or use rights registered with state management agencies such as: cars; motorbikes, motorbikes; Ships, including barges, canoes, tugboats, and pushboats; boats, including yachts; Airplane; hunting guns, sporting guns.

Note: Exemption from personal income tax for income from inheritances and gifts of real estate (including houses and construction projects formed in the future according to the provisions of law on real estate business) between:

• Wife and husband;
• Biological father, biological mother and biological children;
• Adoptive father, adoptive mother and adopted child;
• Father-in-law, mother-in-law and daughter-in-law;
• Father-in-law, mother-in-law and son-in-law;
• Grandfather, grandmother with grandchildren, maternal grandfather, grandmother with grandchildren;
• Brothers and sisters.

How to calculate personal income tax on inherited assets

According to Article 16, Circular No. 111/2013/TT-BTC (amended and supplemented in Circular No. 92/2015/TT-BTC), the tax payable is calculated according to the following formula:

Personal income tax payable = Taxable income X Tax rate 10%

In which: Taxable income from inheritance and gifts is the value of the property received as inheritance or gift exceeding 10 million VND each time it is received. The value of property received as inheritance or gift is determined for each case, specifically as follows:

- For inheritances and gifts of securities: the value of the inherited assets is the value of the inherited assets or gifts exceeding 10 million VND on all securities received without any deductions. any expenses at the time of registering the transfer of ownership. As follows:

+ For securities traded on the Stock Exchange: the value of the securities is based on the reference price on the Stock Exchange at the time of registration of securities ownership.

+ For securities other than the above cases: the value of the securities is based on the accounting book value of the company issuing that type of securities at the time of preparing the most recent financial statement according to the provisions of law. Accounting laws before the time of registering securities ownership.

- For inheritances and gifts that are capital contributions in economic organizations and business establishments: income for tax calculation is the value of the capital contribution determined based on the company's accounting book value. at the latest time before the time of registration of ownership of the capital contribution.

- For inheritance and gifts that are real estate: the value of real estate is determined as follows:

+ For real estate that is the value of land use rights, the value of land use rights is determined based on the Land Price List prescribed by the Provincial People's Committee at the time the individual carries out the procedures to register the rights. real estate use.

+ For real estate that is houses and architectural works on land, the real estate value is determined based on the regulations of the competent State management agency on house value classification; regulations on basic construction standards and norms promulgated by competent State management agencies; The remaining value of the house or architectural work at the time of carrying out ownership registration procedures.

In case it cannot be determined according to the above regulations, it is based on the registration fee calculation price prescribed by the Provincial People's Committee.

- For inheritances and gifts of other assets that must have their ownership or use rights registered with the State management agency: the asset value is determined on the basis of the registration fee calculation price list issued by the Commission. Provincial People's Committee regulations at the time individuals carry out procedures to register ownership and use rights of inheritance and gifts.

In case the individual receiving an inheritance or gift is imported property and the individual receiving the inheritance or gift must pay taxes related to the import of property, the value of the property will serve as the basis for calculating personal income tax for the property. For gift inheritance, it is the registration fee calculation price set by the Provincial People's Committee at the time of carrying out procedures for registering ownership and use rights of property minus (-) taxes at the import stage. Individuals submit according to regulations.

Tax rate: Personal income tax rate for inheritance and gifts is applied according to the Full Tax Schedule with a tax rate of 10%.