Inheritance Tax: who pays, when and how it works

Receiving an inheritance involves more than simply accepting the assets left by a family member. There are tax obligations to fulfil, namely the submission of list of assets in the inheritance and the eventual payment of Stamp duty, when applicable. One of the most common questions is: Stamp duty on inheritance: who pays?

The answer depends on who the heirs are, what type of assets are being passed down, and how the division is made. Although there are exemptions in many cases, especially when it comes to direct heirs, it is essential to know the law to avoid errors, delays, or penalties.

This article explains what stamp duty is on inheritances, who is exempt, who has to pay, how the amount is calculated and what the role of Solicitor in divisions and inheritances in the correct fiscal regularization of the succession.

Inheritance tax (often called Stamp Duty on inheritance) is a tax levied on the value of assets passed on to beneficiaries after someone's death.

O imposto de selo sobre herança é um tax on gratuitous transfers of goods, specifically in the event of death. It is a one-off tax, charged only once, on the value of the assets that pass from the deceased to the heirs.

This tax is regulated by Stamp Duty Code, specifically in item 1.1 of the General Table, and applies to transmissions upon death of:

• Property

• Securities

• Bank balances

• Company participations

• Quotas in companies

• Other assets of patrimonial value

It is important to note that stamp duty Does not apply to transmissions originating from onerous contracts, only to those that are free, such as those arising from inheritance or donation.

Inheritance tax: who pays?

The obligation to pay inheritance tax falls Regarding heirs or legatees who receive assets subject to taxation. However, not all heirs are obliged to pay, as there are exemptions provided for in the law.

Who is exempt?

Are exempt from paying stamp duty on inheritance:

• The spouse or civil partner

• Children and descendants (grandchildren, great-grandchildren)

• Parents and ascendants (grandparents, great-grandparents)

In other words, the forced heirs are exempt from payment, even if the inherited assets are of high value.

Who has to pay?

You must pay stamp duty:

• Brothers, nephews, uncles, cousins and other collateral relatives

• Beneficiaries other than direct family members

• Friends or institutions named in a will

• Unregistered partners as de facto unions with legal proof

In these situations, the tax is 10 per cent regarding the value of the goods received. In the case of real estate, one must also consider the taxable asset value as a basis for calculation.

How is stamp duty calculated?

Stamp duty on inheritance is levied on the net value of inherited assets. The formula is simple:

Tax = Taxable amount × 10%

The taxable value is determined based on the list of assets in the inheritance, using:

• The property value of real estate (VPT)

• The balance of the bank accounts at the date of death

• The market value of shares or movable assets

If the inheritance is divided among several non-exempt heirs, the tax is calculated individually, according to the quota each one receives.

Example: If a cousin inherits property with a book value of 100,000 euros, they will pay 10,000 euros in stamp duty.

When should the tax be paid?

Stamp duty must be declared and paid within three months from the date of the death of the testator.

The executor is responsible for presenting the Stamp Duty Model Declaration 1, accompanied by Annex I (list of assets), through the Public Finance Portal or in person.

Following submission, the Tax Authority proceeds with the assessment and notifies the taxpayer for payment. Failure to meet the deadline may result in:

• Late payment interest

• Administrative fines

• Obstruction of the sharing of assets

• Inability to register inherited properties

Who submits the declaration to the Tax Office?

The responsibility for submitting the declaration lies with Widow's house, in other words, the designated heir to administer the assets until the partition. This person can be:

• The surviving spouse

• One of the children or descendants

• The executor, if designated

• A judicial administrator, when applicable

The head of the household must declare all assets left by the deceased, regardless of whether they are taxable or not. The omission of assets may result in tax penalties and challenges to the division by other heirs.

What if the heir renounces the inheritance?

Quando há Repudiation of inheritance or formal resignation, the heir ceases to be subject to any tax obligation associated with the succession. This includes stamp duty, as well as responsibility for debts or encumbrances.

However, if the heir tacitly accepts the inheritance (for example, by withdrawing bank balances or occupying a property), they may be considered liable for the tax, even if they have not made a formal acceptance.

Therefore, it is advisable to consult a lawyer specialising in inheritance and property division before taking any action that could be interpreted as acceptance.

Can stamp duty be challenged?

In certain situations, it is possible to present complaint or challenge from the settlement of taxes, specifically when:

• The value of the goods was incorrectly assessed

• There is double taxation

• There is an error in the identification of the heirs.

• Good should not be taxed

The complaint must be submitted to the Tax Authority within the legal deadlines, accompanied by supporting documentation. A lawyer can help draft the request, substantiate the claim, and follow the tax decision.

The role of a solicitor in probate and inheritance cases

O Solicitor in divisions and inheritances plays a fundamental role in the correct management of tax obligations associated with inheritances, particularly concerning stamp duty. Its functions include:

• Check who the exempt and taxable heirs are

• Calculate the taxable value of each share

• Prepare and submit the model 1 declaration

• Prevent errors or omissions in the list of assets

• Representing the heir in case of tax challenge or dispute

• Liaise with accountants and registries for property registration

Legal support prevents penalties and ensures that the sharing takes place safely and in compliance with tax regulations.

Conclusion

The question Inheritance tax: who pays It is fundamental for any heir or head of household involved in inheritance proceedings. Although there are important exemptions, especially for direct relatives, failure to comply with declaration obligations can have serious tax consequences.

Knowing who is exempt, when and how to pay, and ensuring that list of assets in the inheritance thorough and rigorous are essential steps for a legally secure inheritance.

The support of an experienced lawyer is the best way to comply with the law, protect assets and avoid disputes with the tax authorities.