Headline: Taxpayers who inherit foreign inheritance and pay estate tax in a foreign country may deduct it from the amount of estate tax payable in our country within the limit
The National Taxation Bureau of Taipei of the Ministry of Finance stated that, when a national who regularly resides in our country dies, the heir should declare all the property left by the deceased at home and abroad for estate tax. For foreign estates, however, the estate tax already paid following the laws of the country where the property is located may be deducted from the estate tax payable in this country by the taxpayer with relevant supporting documents. Yet, the deduction amount shall not exceed the amount of tax owed due to the addition of the foreign inheritance but shall be calculated at the applicable domestic tax rate.
The Bureau indicated that the taxpayer shall declare and deduct the estate tax paid for the foreign property following the laws of the country where it is located. When presenting the tax payment certificate issued by the tax authority of the country where the property is located, the taxpayer is exempt from attaching the verification documents of the embassy and consulate of the Republic of China or other agencies recognized by the government of the Republic of China. However, when the tax collection authority conducts an investigation, the taxpayer shall prepare sufficient documents to prove the fact of paying the foreign income tax, estate tax, or gift tax for review and confirmation if necessary.
The Bureau cites the example of a decedent who died on April 5, 2019. Heir A declares the decedent's domestic property of NTD 30 million and foreign property of NTD 40 million. After calculation, the tax payable of the decedent's domestic property is NTD 1.3 million [(NTD 30 million for domestic property－NTD 12 million for tax exemption－NTD 5 million for deduction) × tax rate of 10%]. The taxable amount of the decedent’s entire property at home and abroad is NTD 5.45 million [(NTD 30 million for domestic property + NTD 40 million for foreign property－NTD 12 million tax exemption－NTD 5 million deduction) × tax rate of 15% - progressive difference NTD 2.5 million]. The additional tax payable based on the domestic applicable tax rate due to the addition of foreign property is NTD 4.15 million (NTD 5.45 million－NTD 1.3 million). The heir presents the tax certificate issued by the tax authority of the country where the foreign property is located to show that NTD 10 million has been paid in inheritance tax in that country. The deductible amount of inheritance tax paid for this foreign property is NTD 4.15 million.
The Bureau calls on taxpayers to declare estate tax on all property left by the deceased. Among them, if the property of the deceased abroad is subject to the estate tax paid according to the tax act of the country where the property is located, the heir may submit a supporting document following Paragraph 1, Article 11 of the Estate and Gift Tax Act, so that the heir can deduct it from the tax payable for our country and not affect their rights and interests.
(Contact person: Assessor Wu of the Second Legal Affairs Division;
Telephone 2311-3711, ext. 1906)
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=dcad6cd69e1b414a8135173a6d4578db