The inheritance taxation. What do you need to know about it?

The inheritance taxation. What do you need to know about it?

Unfortunately, or fortunately, each of us may receive an inheritance from relatives at some point. The state should withdraw tax from such “income”. It’s like a legacy from the state. The question is what exactly will be the taxation of inheritance. The amount will depend primarily on the degree of kinship between the testator and the heir, as well as what kind of resident status these persons have.

For example, if the inheritance passes to the closest family members of the testator, then taxation will be at a zero rate. But if the heir is not a member of the family of the testator of the first or second degree, then in this case any heritage object should be taxed at a rate of 5% or 18%. If the inheritance is not received by the closest relative and these people are residents of Ukraine, then the income tax rate of 5% is applied upon inheritance, as well as the military duty of 1.5%. The rate of 18% is used if the testator or heir is not a resident of Ukraine.

It is important the inheritance of property is a person’s income. This fact must be indicated in the annual declaration. The only exception is the heirs who inherited the inheritance at a zero tax rate. It means persons who inherited property from immediate family members such as wife/husband or father/mother. These inheritors do not owe the inheritance as total annual taxable income.

Those who paid 5 or 18 percent must add the amount of such income to the total taxable income for the year. Such a tax return must be filed by May 1, 2021. Personal income tax and military tax must be paid by August 1, 2021.

There are several ways of filing a declaration at the place of tax address at the Payer Service Center. For example, it is possible to deliver a document to the office. It is possible to transfer documents through an authorized person also. A popular option is to send the declaration by mail or electronically. Non-contact methods of transferring the declaration are especially beneficial during a pandemic.