First, when a marriage is dissolved, Taiwanese law provides that husband and wife are equally entitled to the “remainder” of marital property (excluding property acquired through inheritance, gifts, and compensation for pain and suffering) that subsists after payment of all debts incurred during the marriage. Therefore, in the event of an estate, the surviving spouse receives half of the “balance”. The other half is contained in the genome. When it comes to whether it`s a good idea to divide properties over your lifetime, the answer lies in whether the value of existing properties exceeds the tax abatement and deductibles that apply to future inheritance tax. As a reminder, in the event that the applicant has passed from the initial applicant to his spouse, a direct relative by blood of the younger generations or his spouse, a parent, a brother or sister or his spouse or grandparent in the two years preceding his death, the new applicant is required to consolidate the value of the insurance policy in that of the estate on the estate tax return. Alternatively, penalties may be imposed if a proper report is not filed on the estate tax return. Amendments shall enter into force three days after their promulgation by the President. Once the changes come into effect, the inheritance tax exemption will increase from NT$7 million to NT$12 million. According to Taiwanese tax laws, the value of the land is determined by its publicly disclosed value, while the value of the house is determined by its estimated standard value in the case of the donation of a property.
Since the value of land and homes is much lower than their market value due to such valuation mechanisms, people often give real estate as a tax-saving measure. In addition, the tax authority has indicated whether an underlying loan is tax deductible from the gift value of a donated property. According to the tax office, a loan is tax deductible if it becomes the obligation of the person who receives the donated property. When people decide to buy a property as a gift, the loan can be used as a tax deductible to reduce the value of the gift. For example, Mr. A died in 2020, but as a plaintiff, he had purchased four life insurance policies prior to his death by naming his wife, Mrs. B, as insured. Two months before Mr.
A`s death, he changed the applicant of himself to Ms. B, so that the total value of those insurance policies was NT$4,000,000 on the day of that change. Although Taiwanese tax laws remove gifts between couples as taxable gifts, Mr. A had died, leaving insurance policies worth NT$4,000,000 after changing the applicant of himself to Mrs. B in the two years prior to his death. This means that insurance policies worth NT$4,000,000 will form part of Mr. A`s estate, which is subject to inheritance tax. To test the inheritance tax calculation, you can try it out on the portal on the Ministry of Finance website and check with the relevant local tax authority for your household if you have any further questions. Inheritance tax is levied at a flat rate of 10% on the transfer of the estate in the event of death. In the case of real estate, the taxable amount is the market value of the property.
Inheritance tax taxpayers are, in order of priority: the executor, the heir(s), the legatee or the administrator of the estate. The tax base is the fair value of the assets at the time of death. The law provides for an exemption of NTD 12 million for each taxpayer. If the taxpayer is a long-time resident of Taiwan, other related deductions are available when determining the taxable estate. If an heir investing in Taiwan qualifies under China`s Foreign Investment Law, the verified portion of the investment can be valued on the basis of the Inheritance and Gift Tax Law, in which case only 50% of the value of the investment is taxed. Taiwanese inheritance tax is based on all assets transferred upon death. Taiwanese inheritance tax includes the following: Under Taiwanese tax law, a gift to another person is subject to gift tax based on the determined value of the gift, in the case of a property, the publicly disclosed property value for the land, and the estimated default value of the house. As with other properties (e.g. stocks), values are then determined by available buy/sell prices. Because publicly disclosed property values and default home values are far lower than market values, people often buy real estate and give it to children to save taxes.
If you would like to know the amount of tax when transferring a property, please visit the Ministry of Finance web portal for a test calculation. For example, Mr. Wang owns a house valued at NT$30,000,000 in market value, with the current value of the land being NT$20,000,000 and the house at NT$1,200,000. To give it to his children, Mr. Wang had to transfer NT$2,200,000 every year for six years to avoid gift tax. However, a land appreciation tax would be levied on each annual transfer. Even though the property appreciation tax would not apply if it is transferred through inheritance tax to a family of four whose assets are valued at less than NT$20,000,000. All Taiwanese inheritance tax is assessed based on the value of the property in effect at the time of death and is subject to a flat rate of 10%. However, there is an exemption limit of TWD 12 million, and transfers of real estate below this value are not subject to Taiwanese inheritance tax.
Second, if one of the heirs received a gift of property from the deceased before the testator`s death for the purposes of marriage, withdrawal from the testator`s domicile or business commencement, the value of those gifts is added to the inheritance at the time of the testator`s death. and thus becomes an integral part of the succession. This rule does not apply if, at the time of the gift, the testator has made a statement to the contrary, according to which the value of the gift should not be returned to the estate after the death of the testator. “); } Taxpayers who inherit foreign inheritances and pay inheritance tax in a foreign country may increase them by the amount of inheritance tax payable in our country in the limited country. The Taipei National Tax Office of the Ministry of Finance has stated that if a national who is lawfully resident in our country dies, The heir must declare all assets left by the testator in the country and abroad for inheritance tax. However, for foreign inheritances, inheritance tax already paid under the law of the country in which the property is located may be deducted by the taxpayer from inheritance tax due in that country, subject to supporting documents. However, the amount of the deduction may not exceed the amount of tax payable by the addition of the foreign estate, but must be calculated at the applicable domestic tax rate. The office said the taxpayer must declare and deduct the inheritance tax paid for the foreign property in accordance with the laws of the country in which it is located. Upon presentation of the tax payment certificate issued by the tax authority of the country where the property is located, the taxpayer is exempted from attaching the verification documents of the Embassy and Consulate of the Republic of China or other authorities recognized by the Government of the Republic of China.