Property received as estate, such as real estate or money (including foreign currency, precious metals, etc.) inherited in Estonia are not subject to taxation upon receipt thereof. The exchange of inherited foreign currency into euros does not give rise to income tax liability either.
However, if you transfer inherited property (e.g. real estate, precious metals), you will have to pay income tax on the gains. Upon the transfer of inherited real estate, the successors will receive some tax exemptions, which you can get more information about on the page “Transfer of immovable property”.
In order to identify successors, an application for initiation of succession proceedings must be submitted to a notary. The application for initiation of succession proceedings may be submitted by a person entitled to succeed, a creditor of the bequeather or another interested person.
A notary must also be submitted an application by a person who, although he or she is entitled to succeed, wishes to renounce a succession. The term for renouncing a succession is limited. It can only be done within 3 months from the date on which the successor became or ought to have become aware of the death of the bequeather and of his or her right of succession. If a person entitled to succeed fails to submit an application for renunciation of the succession to a notary during this period, the person will be deemed to have accepted the succession and the person will become a successor.
Inheritable tax liabilities
Inheritable liabilities to the Tax and Customs Board include tax arrears, interest arrears, claims for damages and civil claims.
The Tax and Customs Board does not require a successor to fulfil the obligations included in the estate before a succession certificate, which is evidence of who are the successors and the size of the share of each successor, has been issued in the succession matter.
Inherited tax liabilities will remain the liabilities of a bequeather in the accounting system of the Tax and Customs Board until they are transferred to a successor (on the basis of the succession certificate). The tax liabilities of a bequeather will not be automatically transferred to the tax accounting of the successor.
The successor can also perform the tax liabilities of the bequeather voluntarily before the succession certificate is issued.
The inherited tax liabilities can also be paid in instalments on the basis of a payment schedule. For this, an application for payment of tax arrears in instalments must be submitted to the Tax and Customs Board. More information can be found on the web page “Payment of tax liabilities in instalments”.
If there is a doubt that an estate is not sufficient for the performance of all the tax liabilities of a bequeather, the successor may file a claim for inventory of the estate to a notary. In the course of an inventory, an enforcement agent appointed by the notary will ascertain all the rights and obligations encumbering the estate.
In addition, the conduct of the inventory limits the liability of the successor to perform the obligations the estate is encumbered with. This means that the successor does not have to fulfil the obligations included in the estate at the expense of his or her property.
If a person with restricted active legal capacity, a local government or the state is a successor, an inventory of the estate is obligatory.
Bankruptcy of estate
If it becomes evident in the course of an inventory of an estate that the estate is not sufficient for performance of the bequeathed tax liabilities and a successor does not agree to pay such liabilities at the expense of his or her property, the successor must immediately submit an application to the county court of the residence of the bequeather for declaration of bankruptcy of the estate.
Write-off of inherited tax liabilities
After termination of bankruptcy proceedings of an estate, the Tax and Customs Board will write off the inherited tax liabilities which have not been performed in the course of the bankruptcy proceedings.
In order to write off inherited tax liabilities, an application in Estonian, in free form and signed must be submitted to the Tax and Customs Board by e-mail (email@example.com) or post (Lõõtsa 8a, 15176 Tallinn), to which we ask that you add:
- a copy of the succession certificate,
- a copy of the inventory of estate prepared in the course of the inventory,
- if any, a copy of the agreement on division of the estate.
In certain cases, the Tax and Customs Board can also write off the inherited tax liabilities before the estate is put through bankruptcy proceedings. For example, when the Tax and Customs Board is the sole creditor in the succession matter.
Last updated: 23.09.2022