Text file: 11793.txt
author: Vili S
downvotes: 6
end consideration date: 2020-07-28
id: '11793'
number comments: 2
number views: 1159
proposal type: Competent authority response
response: "Response from the Ministry of Finance\nWith regard to the above proposal,\
  \ we would like to start by clarifying that in the case of inheritance of immovable\
  \ property, the ownership of the immovable property is transferred from the deceased\
  \ to the heir(s), which means that the immovable property has been disposed of to\
  \ another person in the broad sense of the word.  \nIn general, capital gains realised\
  \ on the disposal of capital (which includes immovable property) are subject to\
  \ income tax. However, the legislator has made exceptions for certain situations\
  \ in life, including transfers of capital from the testator to heirs. Accordingly,\
  \ under Article 95(1) of the Income Tax Act, the transfer of capital of a deceased\
  \ person to an heir, legatee or person substituted for them under the rules on succession,\
  \ or to another person claiming a right under the estate, by reason of the death\
  \ of a natural person, is not considered a disposal of capital under Chapter III.6.3\
  \ of the Income Tax Act. This means that the heirs do not pay income tax on the\
  \ capital gains that the deceased would have made on the date of the transfer of\
  \ ownership of the immovable property to the heirs.\nIt should also be pointed out\
  \ that the person liable for income tax under ZDoh-2 is the individual natural person.\
  \ Thus, the tax base on which income tax is levied is determined for each natural\
  \ person in each individual case. In the case of a disposal of immovable property,\
  \ the tax base is determined in accordance with Article 97(1) ZDoh-2 and is equal\
  \ to the difference between the capital value at the time of disposal and the capital\
  \ value at the time of acquisition. Where the difference between the value of the\
  \ capital at the time of disposal and the value of the capital at the time of acquisition\
  \ is positive, the tax base shall be the difference less the normal costs associated\
  \ with the acquisition and disposal of the capital, which shall be recognised in\
  \ accordance with the conditions and to the extent provided for in the aforementioned\
  \ provision of ZDoh-2. The cost of the capital at the time of acquisition includes,\
  \ in accordance with Article 98(1) of the Income Tax Code, the acquisition cost\
  \ of the capital and the costs specified in that Article.\nHowever, in determining\
  \ the cost of the capital at the time of acquisition, in cases where the capital\
  \ is acquired in the manner referred to in paragraph 95(1) of Article 95(1) of the\
  \ VAT Code, the cost of the capital at the time of acquisition shall be taken into\
  \ account. Article 95(1) of ZDoh-2 (i.e. by transfer of the capital of a deceased\
  \ person to an heir, legatee or a person substituted for them under the inheritance\
  \ regulations, or to another person claiming any right from the estate, as a result\
  \ of the death of a natural person), the cost of the capital shall be deemed to\
  \ be the value on which inheritance and gift tax has been levied, and, if no such\
  \ tax has been levied, the comparable market price of the capital at the time of\
  \ acquisition, as evidenced by the taxpayer by means of appropriate evidence.\n\
  In the light of the above, heirs are also placed in a comparable position to other\
  \ acquirers of capital with regard to the determination of the time of acquisition\
  \ of capital in subsequent disposals of capital. This means that, in accordance\
  \ with Article 101(1) ZDoh-2, the time of acquisition of capital is the date of\
  \ conclusion of the contract or other legal transaction or the date of the final\
  \ court decision or the final decision of the administrative authority on the basis\
  \ of which the natural person acquired the capital (i.e., in the case of inheritance,\
  \ the final decision on inheritance - Brochure of the Financial Administration of\
  \ the Republic of Slovenia on the taxation of immovable property). Thus, in terms\
  \ of the timing of the acquisition of the capital, the legal status of the inheritors\
  \ is independent of the deceased person's period of holding the capital subject\
  \ to inheritance.\nThe legislator has therefore already taken into account the specific\
  \ nature of inheritance law relations by providing for a more favourable tax treatment\
  \ of the situations listed above. Thus, no income tax is payable on the capital\
  \ gains realised up to the time of the transfer of ownership of the immovable property\
  \ from the deceased to the heir. Also, in accordance with the principle of equal\
  \ tax treatment, there is no justifiable reason why capital gains realised by an\
  \ heir on the disposal of inherited immovable property should be treated differently\
  \ from capital gains realised on the disposal of immovable property acquired on\
  \ some other legal basis (e.g. purchase).\nWe would also like to add that under\
  \ the Inheritance and Gift Tax Act (Official Journal of the Republic of Slovenia,\
  \ No 117/06 and 36/16 - Decree-Laws of the European Union; hereinafter: \"ITA\"\
  ), inheritances, which include immovable property received by an heir or heiress\
  \ of the first order of succession, are exempt from tax under Article 9 ITA. This\
  \ Article also includes a son-in-law, daughter-in-law, stepchild and an heir who\
  \ lived with the deceased in a registered same-sex partnership. Here again, the\
  \ legislator has taken into account the specific nature of the relationship between\
  \ the deceased and certain heirs and has provided for a tax advantage for the transfer\
  \ of property (immovable property) in the context of inheritance.  \nFinally, we\
  \ would like to clarify that, according to the Act on the Tax on Real Estate Turnover\
  \ (Official Gazette of the Republic of Slovenia, No 117/06 and 25/16 - Decree-Laws\
  \ of the US), which regulates the taxation of real estate turnover, any transfer\
  \ of the ownership right to real estate for consideration is subject to taxation.\
  \ Thus, the sale of an inherited property also constitutes a turnover of immovable\
  \ property under this Law and the taxable person - the seller of the property -\
  \ is liable to pay 2% real estate turnover tax on the sale price of the property."
response date: 2020-08-06
response due date: null
sent date: 2020-06-28
title: Inheritance and taxes
upvotes: 28
url: https://predlagam.vladi.si/predlog/11793
