An heir claims that she does not owe any tax interest on the inheritance tax due. After all, the return was submitted on time and the tax inspector allowed more than two years to pass before issuing an assessment. She also points out that the actual return on the assets amounts to approximately 1%, whilst the interest amounts to 7.5%. The tax inspector stands his ground. The statutory exception applies only if the assessment corresponds to the tax return. That is not the case here.
An insufficient balance
The tax return was submitted in December 2022 and states a net balance of the estate of €1.6 million. The wife’s share of the estate is subject to inheritance tax of just over €16,000. Correspondence with her authorised representative from May 2024 onwards paints a very different picture. The net balance amounts to almost €2.3 million, and the shares of the estate are also determined differently. The tax assessment, including €11,000 in tax interest, follows in April 2025.
Only where a tax return has been filed
The court agrees with the inspector. In the case of an inheritance tax assessment, interest is calculated from eight months after the date of death. The exceptions in the law apply exclusively to an assessment determined in accordance with the tax return. In this case, the assessment differs in several respects. The fact that the return was submitted on time does not alter this. Nor is the criticism that the inspector failed to issue an assessment within three months valid. That time limit is merely a target. The law allows him three years. The tax interest does not arise from slowness on the part of the Tax and Customs Administration, but from errors in the tax return itself. Anyone who correctly determines the balance and the shares of the estate straight away keeps the interest counter at zero.