Late penalty charge and tax increase in inheritance taxation

If you submit the estate inventory deed or information related to the deed late, you might have to pay a late penalty charge or become subject to a tax increase. The type of penalty is determined by the number of days the deed or information is delayed.

You might have to pay a late penalty charge if the decedent died on of after 1 May 2018. The provisions on tax increases were also amended as of 1 May 2018.

deliver a photocopy of the estate inventory deed to the tax adminstration

The inventory meeting must be held within3 months of the death.

Submit a copy of the estate inventory deed to the Tax Administration within1 month of the inventory meeting (due date).

How to file an inheritance tax return with the Tax Administration

Number of delay days affects the charge amount

If you submit your estate inventory deed late, you have to pay either a late penalty charge or a penal tax increase. The Tax Administration will determine the charge based on the number of days the deed is delayed.

If you submit the copy of the estate inventory deed up to 60 days after the due date, you have to pay a late penalty charge. It makes no difference if you were prompted to deliver the estate inventory deed or if you acted on your own initiative.

The Tax Administration will impose the late penalty charge also if you correct the estate inventory deed or add new information to it on your own initiative and to your own detriment.

The Tax Administration does not impose the late penalty charge in the following cases, for example:

  • you are declaring a deduction or a debt
  • the omission is minor
  • there is a justified reason for the delay, such as sudden illness
  • the case involved a miscalculation, misspelling or misunderstanding
  • you have received extra time for delivering the estate inventory deed, and you submit it within the new due time.

Only one late penalty charge is issued for each estate inventory deed, even if it contains several instances of omission. The late penalty charge appears on the tax decision. The Tax Administration sends a separate hearing letter only in exceptional cases.

A tax increase will be imposed in the following cases, for example:

  • You fail to deliver the estate inventory deed to the Tax Administration.
  • You submit the estate inventory deed more than 60 days after the due date, either on your own initiative or after a request from the Tax Administration.
  • You correct the estate inventory deed or add new information to it to your own detriment more than 60 days after the due date.

The Tax Administration does not impose the tax increase in the following cases, for example:

  • You are declaring a deduction or a debt.
  • The omission is minor.
  • There is a justified reason for the delay, such as sudden illness.
  • Imposing the tax increase would be unreasonable.

The reason for the omission affects the amount of tax increase

The Tax Administration will calculate the tax increase on the basis of the increased tax amount (according to the scale of the first tax bracket).

Table indicating the tax increase amounts as percentages
Tax increase
10%
Tax increase
15–50%
Tax increase
5%
Tax increase 25%Tax increase
2%
Basic tax increase level if there is no reason to impose a lower or higher tax increase. The omission is recurring or
the actions demonstrate complete indifference. 
The matter is subject to interpretation or unclear or
a tax increase of 10% would be unreasonable.
The Tax Administration has to set the tax based on its own assessment if, for example, the taxpayer has not submitted the estate inventory deed. You request the Tax Administration to correct an error on your own initiative more than 60 days after the due date.

However, the minimum amount of tax increase is EUR 75 for private individuals.

The Tax Administration always sends a hearing letter to the customer in the case of tax increases.

Tax increase can also be imposed in cases of other types of omission

In addition to delays, a tax increase can be imposed if the estate inventory deed is incomplete or contains errors.

The late penalty charge and penal tax increase do not apply to complementary deeds of estate inventory that are delivered on time

In the case of complementary deeds of estate inventory, the Tax Administration collects a late penalty charge and imposes a tax increase following the same principles as with estate inventory deeds.

For example, if the decedent had a bank account that is discovered one year after the inventory meeting, the estate inventory deed must be complemented. The complementary deed must be prepared within1 month of becoming aware of the new property. The complementary deed of estate inventory must be delivered to the Tax Administration within1 month.

How to file an inheritance tax return with the Tax Administration

Example: The decedent died on 5 June 2018. The inventory meeting is held on 15 August 2018 and the estate inventory deed must be delivered to the Tax Administration by 15 September 2018. New property is discovered and added to the estate on 15 March 2021. A complementary deed of estate inventory is prepared on the basis of the new property, and the person declaring the inheritance delivers the document to the Tax Administration late, two months after the deed was prepared. As the complementary deed of estate inventory is 30 days late, the Tax Administration imposes a late penalty charge on the person who declared the estate.

The late penalty charge or tax increase can also be imposed on a person who is not a party to the estate

By way of derogation from earlier taxation practice, the late penalty charge or tax increase can also be imposed on a person who is not liable to pay inheritance tax but who is required to declare the inheritance.

Example: The inventory meeting was held on 1 June. The estate inventory deed should be delivered to the Tax Administration by 1 July. The estate is declared by the widow, who is required to deliver the estate inventory deed to the Tax Administration. The widow is not liable to pay tax. The widow delivers the estate inventory deed to the Tax Administration on 15 August, which is 60 days after the due date. The Tax Administration imposes a late penalty charge.

 

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