Heirs should report inheritance tax to the National Tax Bureau at the place of residence of the deceased within six months from the day following the death of the deceased. Before the inheritance tax is fully paid, the inheritance may not be divided, bequests delivered, or transfer registration processed.

According to Article 13 of the Inheritance and Gift Tax Act: "Inheritance tax is levied on the net taxable estate, which is the total amount of the estate calculated according to the provisions of this Act at the time of the death of the deceased, minus the various deductions stipulated in Articles 17 and 17-1 and the exemption amount stipulated in Article 18, according to the following tax rates:

For amounts up to 50 million NT dollars, the tax rate is 10%.
For amounts exceeding 50 million NT dollars up to 100 million NT dollars, a tax of 5 million NT dollars is levied, plus 15% on the portion exceeding 50 million NT dollars.
For amounts exceeding 100 million NT dollars, a tax of 12.5 million NT dollars is levied, plus 20% on the portion exceeding 100 million NT dollars."

[Details: ：How is inheritance tax calculated and reported?]

Case Background

Xiao De and Xiao Yi are brothers. One day, after their elderly father passed away, they prepared to handle the inheritance and discovered that their father had left a large inheritance. Unfortunately, due to poor economic conditions, neither brother had enough money to pay the inheritance tax. The elder brother, Xiao De, who was in a slightly better financial situation, investigated the regulations on his own and considered applying to pay the inheritance tax according to his share of the inheritance. He thought he could pay the inheritance tax and inherit his share of the estate. However, Xiao Yi felt that Xiao De was only looking out for himself.

Our Practical Experience

According to Article 23 of the Inheritance and Gift Tax Act: "When a person dies leaving property, the taxpayer shall file an inheritance tax declaration with the competent tax authority at the place of residence within six months from the date of death. However, if an estate administrator is appointed by the court upon the application of the tax authority according to Article 6, paragraph 2, the six-month period starts from the date the estate administrator is appointed by the court." Xiao De could indeed pay the inheritance tax according to his statutory share of the inheritance under Article 41-1 of the Inheritance and Gift Tax Act and then proceed with the registration of joint inheritance of the real estate, to avoid violating the regulation by failing to handle inheritance registration on time.

However, according to Article 1151 of the Civil Code: "When there are multiple heirs, before the inheritance is divided, each heir holds the entire estate in joint ownership." For this "joint ownership" property, according to the latter part of Article 12 of the Tax Collection Act, the tax liability is borne by all joint owners, meaning all heirs are taxpayers, and each heir is obligated to pay the entire inheritance tax. This differs from the situation co-owned property is divided, with each co-owner bearing tax liability according to their share. Additionally, the Supreme Administrative Court's decision No. 1037 of 2004 states: "According to Article 6 of the Inheritance Tax Act, the taxpayer of the inheritance tax is all heirs, and the inheritance tax debt should be a joint debt..." Furthermore, decisions No. 535 of 1988 and No. 2610 of 1992 also confirm that if all heirs are taxpayers of the inheritance tax, each heir is obligated to pay the entire inheritance tax and not according to their share. Article 41-1 of the Inheritance and Gift Tax Act only stipulates that heirs can pay the inheritance tax according to their statutory share for joint registration of real estate inheritance, considering that failing to handle inheritance registration on time does not exempt heirs from joint debt responsibility. Moreover, according to the latter part of this article, before all due amounts are paid, no inheritance division registration or disposition, alteration, or burden setting registration of jointly owned real estate rights is allowed. Therefore, even if Xiao De applies to pay the inheritance tax according to his share, he still has joint liability for Xiao Yi’s inheritance tax. Additionally, neither brother can dispose of, alter, or set burdens on the entire inherited land before Xiao Yi fully pays the inheritance tax.

At this point, the brothers may consider providing cash, marketable securities, or other assets approved by the National Tax Bureau as tax guarantees, or using part of the inherited land as a tax guarantee. They can apply to the National Tax Bureau for a certificate of consent for transfer of the remaining land and sell or liquidate these lands to pay off the inheritance tax, then proceed with the transfer registration of the part of the land used as a tax guarantee.