The Tax Authority will be required to refund thousands of euros in income tax as inheritance shares will no longer be subject to this tax. This follows a decision by the Supreme Administrative Court, which prohibits the tax office from charging capital gains tax on the sale of hereditary shares of real estate.
What changes?
In practice, when multiple children inherit a house, often one buys the shares from their siblings and pays them the difference. Previously, the tax office required everyone to pay income tax on that amount, but the Supreme Court ruled that this is illegal.
This means that individuals who have paid can request a refund.
The inheritance share refers to the portion or quota of the inheritance to which the heir is entitled. When children inherit a house, they receive what is known as an inheritance share, which corresponds to their portion of the property, whether it be half, one-third, or another fraction.
Historically, when someone bought this inheritance share, the tax office treated it as if the entire house was sold and demanded thousands of euros in capital gains tax over many years.
Can taxpayers request their money back?
Paula Franco, the head of the Order of Certified Accountants, advises taxpayers who have sold an inheritance share to file a formal complaint with the tax office to recover improperly paid taxes.
“I advise that in this situation, and while the law stands, anyone with sales of undivided inheritances should file a formal complaint. If it is not accepted, because it doesn’t fully fall under the court’s unifying decision, they should take it to court – the arbitral court is very quick – to resolve these matters. The basis is the same. When properties are in an undivided inheritance, the heirs do not have real rights over them,” Paula Franco stated.
She further explained that “this has been a longstanding issue in the courts, and we finally have this unifying decision.”
There are several costs associated with inheritances, which “are related to bureaucracies and other necessary expenses to resolve succession issues.” Get to know some of the values involved and learn what to expect.
Notícias ao Minuto | 09:11 – 03/07/2025
“The issue is that the income tax code provisions for taxing the transfer of property rights, and the transfer of an inheritance share is not the transfer of a real right, something the tax authority never admitted. Taxes were levied for years on something not stipulated in the income tax code, and now the jurisprudence has clarified this,” she concluded.
Paula Franco also noted, “We have already seen an internal administrative instruction from the tax authority to accept complaints when filed.”
“Therefore, any taxpayer with such a situation in their 2024 income tax, if they file a formal complaint, at first it is directly accepted and doesn’t even need to go to court. They can also do this in situations where it is still possible to request a review of the past years,” recommends Paula Franco, head of the Order of Certified Accountants.
