Inheritance is the inheritance of the surviving people’s inheritance of property left by the deceased. The land is also a type of property, so it can still be inherited. However, certain types of property such as land are subject to tax upon inheritance. Here, let’s find out with Lawyer X about the issue of “How is land inheritance tax in Vietnam calculated?” through the following article!
Legal grounds
Civil Code 2015
Land inheritance tax in Vietnam
According to the law, in order to receive an inheritance, the heir must carry out the procedures for declaring the inheritance at a notary public organization or the People’s Committee of the commune where the land is located. Then carry out the procedures for registration of changes in land use rights at the Land Registration Office, to transfer the land use rights from the deceased to the name of the beneficiary.
Personal income tax (PIT)
Point c, Clause 9, Article 2 of Circular No. 111/2013/TT-BTC of the Ministry of Finance clearly stipulates 7 cases where PIT must be paid when earning income from inheritance as immovable property (real estate value more than 10 million VND), including:
– Land use rights
– The right to use land with assets attached to the land
– Ownership of houses, including houses to be formed in the future
– Infrastructure and construction works attached to the land, including construction works to be formed in the future
– Right to lease land
– Right to rent water surface
Other incomes received from inheritance are real estate in any form (except income from inheritance which is immovable under the guidance at Point d, Clause 1, Article 3 of this Circular).
In exceptional cases, incomes from inheritance among the following persons are not subject to PIT: Between husband and wife, between natural parents and natural children, between adoptive parents and adopted children, between parents between husband/daughter-in-law, between father/mother-in-law and son-in-law, between grandfather/grandfather and grandchild, between grandparent and grandchild, between brother/sister.
If the heirs do not fall into the above exceptions and the inherited property value is more than 10 million VND, the heir will have to pay PIT, calculated according to the formula:
Payable personal income tax = Taxable income x 10% tax rate
In which, taxable income is the value of inherited property exceeding 10 million VND each time. For example, if Mr. A inherits from his aunt (no children) a piece of land worth 500 million VND, the personal income tax he has to pay is 490,000 VND.
Registration fee
Clause 10, Article 9 of Decree No. 140/2016/ND-CP stipulates 8 cases of exemption from registration fee when the house or land is an inheritance or a gift between:
– Wife with husband
– Natural parents with natural children
– Adoptive parent with adopted child
– Father/mother-in-law with daughter-in-law
– Father/mother-in-law with son-in-law
– Grandparents with grandsons
– Grandparents with grandchildren
– Siblings with each other
If not in 1 of these 8 cases, the recipient who admits real estate when making a certificate (red book) will have to pay a registration fee, which is equal to 0.5% of the value of that real estate. For example, in the case of Mr. A, when inheriting the land from his aunt worth 500 million VND, the registration fee he has to pay is 500,000 VND.
Procedures for transferring the name of the Red Book when receiving inheritance
Step 1, submit application
According to Clause 2, Article 9 of Circular 24/2014/TT-BTNMT (amended by Clause 2, Article 7 of Circular 33/2017/TT-BTNMT), the heir must prepare 01 set of documents, including:
1 – Original Certificate.
2 – Papers on inheritance rights.
Case 1, inheriting according to the will.
- Legal will.
- Minutes of opening the will witnessed by witnesses and certified by the People’s Committee of the commune where the land is located;
Case 2, inherit according to law.
- Judgment and decision of the Court.
- Written agreement of the co-heirs, certified by the commune-level People’s Committee or the Notary Office/Department of inheritance.
Note:
- In case the heir is the only person, an application for registration of inheritance of land use rights and ownership of property on land of the heir must be submitted;
In case there are many people sharing the inheritance of land use rights, ownership of houses and other land-attached assets, but refuse to enjoy them, a written refusal of inheritance must be made.
Place of submission:
– The land user submits the application at the Land Use Right Registration Office under the Division of Natural Resources and Environment or the application-receiving agency according to the regulations of the Provincial People’s Committee;
– Households, individuals and communities shall submit dossiers to the commune-level People’s Committees if they wish.
Note, if the inherited property is a part of the land plot, the land user should request the land use right registration office to measure and separate the parcel of land to be inherited before submitting the dossier.
Step 2, receive the application
Case 1, if the application is incomplete or invalid
Within a maximum of 03 days, the application-receiving and processing agency must notify and guide the applicant to supplement and complete the application as prescribed.
Case 2, complete application
The application-receiving agency shall record all information in the application-receiving book, return the results, and hand over the application-receiving slip to the applicant.
If the application is submitted at the People’s Committee of the commune, within 03 working days from the date of receipt of the complete application, the People’s Committee of the commune must transfer the application to the Office for registration of land use rights.
Step 3, process the request
The land use right registration office is responsible for examining the dossier, and if it is eligible to exercise the rights as prescribed, it shall perform the following tasks:
- Send cadastral information to tax authorities to determine and notify collection of financial obligations in case financial obligations must be fulfilled as prescribed;
- Confirm the content of changes in the issued Certificate;
- In case a Certificate is required, a dossier shall be made and submitted to a competent agency for granting the Certificate to the land user.
- Edit and update changes in cadastral records and land databases.
– Handing over the certificate to the land user or sending it to the commune-level People’s Committee for handing in case the application is submitted at the commune level.
According to Clause 40, Article 2 of Decree No. 01/2017/ND-CP, the time limit for carrying out the procedures for transferring the name of the Red Book upon receiving an inheritance is as follows:
– No more than 10 days from the date of receipt of valid dossiers.
– The period of 10 days does not include the time of holidays and holidays as prescribed by law; does not include the time to receive the dossiers at the commune, the time to fulfill the financial obligations of the land users; does not include the time to consider and handle the case of land use in violation of the law, the time to solicit expertise.
For communes in mountainous, island, deep-lying and remote areas, areas with difficult socio-economic conditions, and areas with extremely difficult socio-economic conditions, the implementation time is increased. 10 days.
The results of the settlement of administrative procedures must be returned to the land users and owners of land-attached assets within 3 working days from the date of the settlement results.
How much is the estate inheritance tax rate?
Houses, apartments, etc., collectively referred to as real estate, are an inherited property. Unlike securities, individuals who are relatives when inheriting real estate will not be subject to PIT as prescribed in Clause 4, Article 4 of the Law on Personal Income Tax 2007:
Article 4. Tax-exempt income
- Income from real estate transfer between husband and wife; biological father, natural mother with natural child; adoptive father, adoptive mother with adopted child; father-in-law, mother-in-law with daughter-in-law; father-in-law, mother-in-law with son-in-law; grandfather, grandmother with grandson; grandparents, grandmothers with grandchildren; brothers, sisters, siblings together.
- Incomes from the transfer of houses, residential land use rights and properties attached to residential land of individuals in cases where the individual has only one house or residential land.
- Income from the value of land use rights of individuals allocated land by the State.
- Income from inheritance, gifts being real estate between husband and wife; biological father, natural mother with natural child; adoptive father, adoptive mother with adopted child; father-in-law, mother-in-law with daughter-in-law; father-in-law, mother-in-law with son-in-law; grandfather, grandmother with grandson; grandparents, grandmothers with grandchildren; brothers, sisters, siblings together.
In addition, when transferring to the owner’s name, the family members receiving the inheritance are also exempted from registration fee according to the provisions of Decree 140/2016/ND-CP:
Article 9. Exemption from registration fee
- House, land inherited or as a gift between: husband and wife; biological father, natural mother with natural child; adoptive father, adoptive mother with adopted child; father-in-law, mother-in-law with daughter-in-law; father-in-law, mother-in-law with son-in-law; grandfather, grandmother with grandson; grandparents, grandmothers with grandchildren; Brothers, sisters and brothers are now granted certificates of land use rights and ownership of houses and other land-attached assets by a competent state agency.
In the case of receiving an inheritance but not a family member, not in the case of PIT exemption, the tax rate of 10% of the property value will be payable. The property value is subject to the land compensation bracket price instead of the market price as prescribed in Document 68/VBHN-BTC:
c.1) For real estate that is the value of land use rights, the part of the value of land use rights shall be determined based on the land price list prescribed by the provincial-level People’s Committee at the time the individual carries out the procedures. Register the right to use real estate.
Please see more:
- Transfer of investment projects associated with the transfer of land use rights in Vietnam
- Guidance on procedures for transferring land use rights in Vietnam
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Frequently asked questions
Clause 10, Article 9 of Decree No. 140/2016/ND-CP dated October 10, 2016 of the Government (still valid), cases where registration fee is not required include: House, land received as inheritance or is a gift between: Wife and husband; biological father, natural mother with natural child; adoptive father, adoptive mother with adopted child; father-in-law, mother-in-law with daughter-in-law; father-in-law, mother-in-law with son-in-law; grandfather, grandmother with grandson; grandparents, grandmothers with grandchildren; Brothers, sisters and brothers are now granted certificates of land use rights and ownership of houses and other land-attached assets by a competent state agency.
Certificate of land use right/other property ownership;
Death certificate of the person leaving the estate;
Identity papers of the heirs: identity card, household registration book;
Other documents (such as: birth certificate of your brother/sister; death certificate of your grandparents; marriage certificate of your parents…).
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