Text file: 11845.txt
author: JazPravim
downvotes: 4
end consideration date: 2020-08-08
id: '11845'
number comments: 3
number views: 351
proposal type: Competent authority response
response: 'Response from the Ministry of Finance

  Inheritance tax is governed by the Inheritance and Gift Tax Act (Official Gazette
  of the Republic of Slovenia, No 117/06 and 36/16 - Decree of the European Court
  of Justice, hereinafter: the ITA). The subject matter of taxation is property (in
  the nature of immovable and movable property, as well as property and other rights
  in rem) received by taxable persons as an inheritance or a gift, with the exclusion
  of certain property taxed under the Income Tax Act or the Corporate Income Tax Act
  (hereinafter: the CIT Act). Bequests are also considered as gifts, and securities
  and money are considered as movable property.

  Taxable persons are natural persons and certain legal persons governed by private
  law. The taxable amount is the market value of the property received at the time
  when the tax liability arises, after deduction of certain debts, costs or burdens
  falling thereon. In the case of movable property, the tax base is reduced by an
  amount of EUR 5 000.

  The tax rates are reasonably comparable to the income tax rates under the Income
  Tax Act (Official Journal of the Republic of Slovenia, No 13/11 - Official consolidated
  text, 9/11 - ZUKD-1, 9/12 - Decree of the US, 24/12, 30/12, 40/12 - ZUJF, 75/12,
  94/12, 52/13 - Decree of the US, No 52/13 - Decree of the Council of Ministers,
  No 52/13 - Decree of the European Parliament and No 52/13 - Decree of the Council
  of Ministers). US, 96/13, 29/14 - Decree of the US, 50/14, 23/15, 55/15, 63/16,
  69/17, 21/19, 28/19 and 66/19), i.e. they are progressive depending on the amount
  of the tax base, but they also vary depending on the distance of the heir or donee
  from the ancestor. They range from 5% to 14% for the second succession, from 8%
  to 17% for the third succession and from 12% to 39% for other unrelated beneficiaries.
  The first succession is exempt from tax.

  In determining the order of succession, the ITA refers to the legal orders of succession
  under the Inheritance Act (hereinafter referred to as the "I.A."; Official Journal
  of the SRS, No 15/76, 23/78, Official Journal of the RS, No 13/94 - ZN, 40/94 -
  Decree-Law of the US, 117/00 - Decree-Law of the US, 67/01, 83/01 - CC, 73/04 -
  ZN-C, 31/13 - Decree-Law of the US and 63/16), while also taking into account the
  more or less close and interdependent economic links. Only the descendants and the
  spouse of the deceased are included in the first order of succession. A person who
  has lived with the deceased or the donor in a long-standing common-law relationship
  or in a partnership which is equivalent to a marriage shall be treated as an heir
  or donee of the first order of succession, unless otherwise provided by law. These
  are therefore persons who have lived with the deceased or the donor in the economic
  relationship of a joint household or immediate family. The PPLA extends the first
  order of succession to stepchildren, as well as to sons-in-law and daughters-in-law,
  i.e. persons who become part of an economically connected community through a link
  with a descendant.

  The rationale behind the exemption from the first inheritance order is that, at
  least during part of the life cycle, the persons thus linked have created wealth
  together, either directly by contribution or by renunciation, and that, although
  it formally belongs to the first generation, its value also includes the contribution
  of the descendants. At the same time, this supports the preservation of wealth within
  the family. The institution of the necessary share has a similar function under
  the FD, in particular by limiting the freedom of testamentary disposition if the
  testator, by his will, prevents the inheritance of persons who would otherwise be
  entitled to inherit from him according to the lawful order of succession. At the
  same time, the institution also stifles the testator''s freedom to dispose of his
  property inter vivos, since the testator cannot exclude legitimate heirs from inheritance,
  even by disposing of his property gratuitously by means of dispositions made during
  his lifetime. Thus, there can be no complete disregard of the legitimate order of
  succession by reason of the institution of the necessary share.

  The second order of succession shall further include parents, brothers, sisters
  and their descendants. This is a relationship in which the property belonging to
  one of the descendants, which he or she has, as a rule, created or acquired himself
  or herself or in the context of an independent economic community of his or her
  own, passes to his or her next of kin in the absence of heirs of the first order
  of succession. Such heirs, although closely related to the deceased or donor, acquire
  property to which they have not, as a rule, contributed directly, and are therefore
  subject to a moderate level of taxation under the ITA. This assumption applies even
  more so to the third order of inheritance (heirs and grandparents) and, of course,
  most of all to unrelated heirs or legatees, and the tax rates for them are increased
  accordingly.

  The proposal put forward by the sponsor that ''inheritance tax should be abolished
  irrespective of the order of succession'' in fact means that inheritance tax should
  be abolished. It should be clarified that inheritance and gift tax is a one-off
  liability which arises on the occasion of certain events which result in the gratuitous
  receipt of property which enriches the recipient. It is therefore an extraordinary
  income not based on the work of the taxable person. Inheritance and gift tax is
  also one of the most commonly used wealth taxes, known in most EU countries, and
  its regulation is a matter for individual countries to decide on the scope of taxable
  persons, the tax base, the subject matter of taxation, the tax rates, the valuation
  of assets and the assessment of the tax. Furthermore, in most countries, the level
  of taxation of transfers of property between individuals depends on the relationship
  between the testators and the heirs, with the most common exemptions being those
  in the first line of succession (and even then only up to a certain threshold in
  some systems), while in other lines they are generally taxable. In view of the above,
  we therefore consider that the system of inheritance taxation in Slovenia is internationally
  comparable and, in view of its purpose, fair and proportionate.'
response date: 2020-09-07
response due date: null
sent date: 2020-07-09
title: Inheritance and gift tax
upvotes: 25
url: https://predlagam.vladi.si/predlog/11845
