The so-called property inheritance refers to the relationship of civil rights and obligations arising from the death of a citizen who inherits his personal property. Considering that property inheritance does not belong to business behavior and is non-compensable, most of the current tax policies stipulate that property inheritance is exempt or not taxed, but there are certain differences among various tax provisions.

1. Relevant provisions of the Inheritance Law

According to the relevant provisions of the Inheritance Law of the People's Republic of China (hereinafter referred to as the "Inheritance Law"), the inheritance of property includes statutory inheritance, testamentary inheritance and legacy.

(Note: The Civil Code is in2021years1month1The effective date of the Succession Law of the People's Republic of China is2020years12month31Date, when it will be replaced by the Civil Code.)

(1) Legal succession

Statutory succession corresponds to testamentary succession, also known as intestate succession, which refers to the system of succession in accordance with the scope of heirs, succession sequence and inheritance distribution share stipulated by law. Legal inheritance is based on a certain personal relationship, that is, according to the marriage and blood relationship between the heir and the decedent. The scope of the legal heir, the order of succession and the share of the estate distribution are mandatory norms, and no one has the right to change them except by the manner of the will in accordance with the law before the death of the deceased. The scope of legal heirs includes: spouse, children, parents (first-order heirs) and siblings, grandparents, maternal grandparents (second-order heirs). According to the provisions of the "Inheritance Law", other than the legal heir who relies on the decedent to support the person who lacks the ability to work and has no source of livelihood, or other than the legal heir who supports the decedent more, they can be allocated appropriate inheritance, such inheritance also belongs to the category of legal inheritance.

(2) testamentary succession

Testamentary inheritance, also known as "designated inheritance", is a kind of inheritance system in which the heir inherits the estate of the decedent according to the legal and valid will made before the life of the inheritor. The decedent has a legal and valid will before his death and the testator's death are the facts of testamentary succession. The scope of testamentary successor and legal successor is the same, but testamentary succession is not subject to the legal succession order and the share should be inherited, the effect of testamentary succession is superior to that of legal succession.

(3) legacy

Legacy refers to the system in which the state, collective organization, social group or an individual other than the legal heir inherits the testator's property rights after his death according to the citizen's will.

2. Current tax policy provisions

(1) Value-added tax

Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Promoting the Pilot Project of Replacing Business Tax with Value-added Tax (2016:36Regulation: Involving the division of family property, the individual transfer of real estate and land use right free of charge is exempt from VAT.

Family property division, including the following cases: divorce property division; Free gift to spouse, parents, children, grandparents, maternal grandparents, grandchildren, grandchildren, brothers and sisters; Make a gratuitously donation to a foster or support person who bears the obligation of direct support or support for him; When the owner of the property right dies, the legal heir, testamentary heir or legatee shall acquire the property right of the house according to law.

(2) Individual income tax

Ministry of Finance Announcement of the State Administration of Taxation on the Items of Taxable Income Subject to Individual Income Tax when Individuals Obtain Relevant Income (Ministry of Finance Announcement of the State Administration of Taxation2019Annual regulation74(No.) Provisions: If the owner of the property right of the house donates the property right of the house to others without compensation, the donee shall calculate and pay individual income tax on the donated income obtained by the donee for the free donation of the house according to the "accidental income" item. According to the Ministry of Finance Notice of the State Administration of Taxation on the Issue of Individual Income Tax on Houses Received Free of Charge (2009:78As stipulated in Article 1, no individual income tax shall be levied on either party under the following circumstances:... (3) The legal heir, testamentary heir or legatee who has acquired the property right of the premises according to law when the owner of the property right of the premises dies. ...

(3) deed tax

According to the "State Administration of Taxation on inheritance of land, housing ownership related deed tax approval" (State tax letter [2004:1036No.), for the "inheritance Law" provisions of the legal heir to inherit land, housing ownership, no deed tax; According to the "inheritance law" provisions, the non-legal heir according to the will to bear the deceased before the death of the land, housing ownership, belongs to the gift behavior, should be levied deed tax. According to the above provisions, no deed tax shall be levied on the land and house ownership inherited by legal heirs (including legal inheritance and testamentary inheritance), while deed tax shall be levied on the land and house ownership inherited by non-legal heirs through legacy.

(4) Land value-added tax

According to the "Rules for the Implementation of the Provisional Regulations of the People's Republic of China on Land Value-added Tax", land value-added tax is not levied on the transfer of real estate by inheritance without compensation. The "mode of succession" in the above provisions shall include statutory succession, testamentary succession and legacy as provided for in the Law of Succession.

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