There can be a lot of bureaucracy in certain situations, such as when you receive an inheritance. In France, a retired man who met all the requirements to receive an inheritance from his sister without paying inheritance tax ended up paying 305 thousand euros due to a simple address error.
According to the Spanish digital newspaper Noticias Trabajo, the case occurred in the south of France, where a man and his sister decided to retire in a house inherited from their parents.
They lived together for around a decade and, when the sister died without children, the brother believed he was exempt from inheritance tax, under French law that grants this benefit to cohabiting siblings.
Coexistence did not reach the records
The French General Tax Code provides for exemption from inheritance tax between siblings when three conditions are met: being over 50 years old or disabled, being single or widowed and living continuously with the deceased for at least the five years prior to death.
However, despite sharing the same home for ten years, the sister never made their new tax residence official. For the French tax administration, he continued to officially reside in Paris, and this detail was enough to cancel the exemption.
Cost of a forgotten detail
Without the proof of cohabitation required by law, the French tax authorities applied the normal inheritance tax rates. The heir, already retired, was then forced to pay 305 thousand euros on a net worth of 700 thousand euros, the total of the inheritance, after applying a legal deduction of 15,932 euros and a rate of 45%.
Without the liquidity to support the amount, the man, already retired, had to sell the Paris studio he received as an inheritance from his sister, illustrating how a small administrative lapse can transform a peaceful inheritance into a heavy tax burden, according to the same source.
A warning to all taxpayers
The case became a clear example of the importance of keeping tax and administrative records always up to date. French experts, cited by , point out that a simple delay in updating the residence can have very significant financial consequences, especially in situations of inheritance or sharing.
The situation is often used as a warning in tax training actions in France, precisely because it shows how strict the law can be when formal requirements are not met to the letter.
And in Portugal, would it be different?
In Portuguese territory, the framework is quite different. Stamp Tax replaces the old inheritance tax, but since 2004 direct heirs, such as spouses, descendants and ascendants, are exempt from this charge, in accordance with article 6, no. 1, paragraph e) of the Stamp Tax Code.
Other family members, such as brothers, nephews or uncles, do not benefit from this exemption and are subject to payment of 10% of the value of the inherited assets, in accordance with article 17, paragraph 1 of the same code, after deducting any debts or associated charges.
Importance of tax residence
In Portugal, the tax domicile must always be updated with the Tax and Customs Authority, as provided for in article 19 of the General Tax Law and article 43 of the Complementary Regime for the Registration and Update Procedure for Natural and Legal Persons.
Anyone who does not communicate the change of address within the legal period of 60 days risks fines that can vary between 75 and 375 euros, in accordance with article 118 of the General Regime for Tax Offenses.
Even though, in Portugal, domicile does not directly determine the right to stamp duty exemption, the lack of updating can lead to erroneous notifications, delays in processes and additional complications in inheritances.
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