Reporting and declaration obligations
Anyone who acquires something from an estate – be they heirs, legatees, or those entitled to a compulsory share – is obligated to notify the tax office within three months of becoming aware of the inheritance. This notification requirement also applies to assets abroad. ” An inheritance tax return is not initially mandatory, but it can be advisable if tax-relevant circumstances make it sensible, ” says lawyer István Cocron.
In addition to the obligations under inheritance tax law, the heir also has income tax obligations. As the universal successor, they assume the deceased’s tax obligations and are responsible for outstanding income tax returns and any potential tax debts. If the heir becomes aware of discrepancies or errors in the deceased’s previous tax returns, they must correct them immediately.
Risks of disregarding risks
Failure to report an inheritance to the tax office can be considered negligent tax evasion or even tax fraud. Exceptions exist if third parties such as courts, notaries, or authorities have already fulfilled their own reporting obligations. Failure to file income tax returns can also lead to tax consequences, particularly if undeclared assets abroad or previously unreported income are involved. In certain cases, an heir can avoid tax and criminal consequences by filing a voluntary disclosure.
Advantages of prompt reporting
Reporting an inheritance to the tax office in a timely manner offers several advantages: Firstly, the heir can avoid potential interest charges that can arise from late reporting. Secondly, it allows for the flexible handling of untaxed assets, for example, in the case of planned transfers or gifts to relatives. Furthermore, liabilities or legacies of the deceased can be claimed, and business expenses included in the deceased’s last income tax return can reduce the tax burden. The heir also benefits from potential tax refunds and can deduct consulting fees.
