Beruflich Dokumente
Kultur Dokumente
the Philippines not residing in that foreign country, or (b) if the laws of the
foreign country of which the decedent or donor was a citizen and resident
at the time of his death or donation allows a similar exemption from
transfer or death taxes of every character or description in respect of
Complex Transfer intangible personal property owned by citizens of the Philippines not
More applicable on transfer of shares of stock NOT LISTED AND TRADED residing in that foreign country. ( 104, NIRC)
on the stock exchange; OR LISTED BUT NOT TRADED on the stock
exchange. (For sale of shares of stocks, what usually happens is that the In other words, If the country of the resident alien exempts estate tax of
parties agree that the transfer will be only at par value [the value the citizens of the Philippines in their country then the Philippines will also
appearing in the stocks certificate]) extend such exemptions to the intangible personal property of the alien
who has a situs here in the Philippines.
However, the BIR now strictly implements the ADJUSTED BOOK VALUE
METHOD (looking at the net assets of the corporation) Residents/Citizens NRA without NRA with
Example The assets especially when it involves real property would have Reciprocity Reciprocity
to be adjusted first to its fair market value. Within Without Within Without Within Without
FMV = 1,000,000 PH PH PH PH PH PH
Selling price = 100,000
Gratuitous portion = 900,000 [subject to donors or estate tax] Real YES YES YES NO YES NO
RECIPROCITY RULE
That no tax shall be collected under this Title in respect of intangible
personal property: (a) if the decedent at the time of his death or the donor
at the time of the donation was a citizen and resident of a foreign country
which at the time of his death or donation did not impose a transfer tax
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Illustration TRANSMISSION OF PROPERTY FROM THE FIRST HEIR, LEGATEE, OR
DONEE IN FAVOR OF ANOTHER BENEFICIARY, IN ACCORDANCE WITH
THE WILL OF THE PREDECESSOR (TESTAMENTARY)
X
(Predecessor)
X
(Predecessor)
Y Z
(usufructuary) (Owner of the Naked Title) Y Z
Not subject to estate tax (First Heir) (Second Heir)
(Trustee) (beneficiary)
X, in his last will and testament, transferred the possession of his house
and lot to Y (usufructuary), but the title of such properties were Special Power of Appointment it is specified in the decedents will to
transferred in the name of Z (owner of the naked title). whom the property will go to. In this case, X, in his will and testament,
specifies that the house and lot will go to Z. However, Y will temporarily
Transfer from X (decedent) to Z (owner of the naked title) subject to take care of the properties.
estate tax
Transfer from Y (usufructuary) to Z (naked title owner) not subject to Here, X appoints Y as the trustee of the house and lot but the beneficiary
estate tax of the house and lot is Z. Z will become the ultimate owner of the house
and lot. In this case, Y holds the property temporarily. When Y dies, the
TN: For this exemption to apply, the one who should die first transfer from Y to Z will not be subject to estate tax. In other words, the
should be the USUFRUCTUARY (merger of the Usufruct in the property will not form part of the gross estate of Y. However, when X, the
Owner of the naked title). If the naked title owner dies first (merger predecessor, died, it formed part of his gross estate.
of the Owner of the naked title in the Usufruct), this exemption will not
apply. So if Z will die first, the house and lot will go to his heirs. If Y General Power of Appointment If X did not specify that the house will
(usufructuary) is Zs (naked title owner) heir, then the merger of the naked go to Z upon Ys death, then thats a general power of appointment. If X
owner title to the usufructuary is subject to estate tax. entrusted the house to Y, and Y, upon his death, can appoint anybody
to whom the house will belong to. When Y dies, the property will form
part of the gross estate of Y.
TRANSMISSION OR DELIVERY OF THE INHERITANCE OR LEGACY BY THE
FIDUCIARY HEIR OR LEGATEE TO THE FIDEICOMMISSARY TN: If SPA, the property will not form part of the gross estate of the one
being appointed; in this case, Y. If GPA, the property will form part of the
Illustration gross estate of the one being appointed.
Fiduciary Heir the first heir of the property who is usually a trustee in BEQUESTS, DEVISES, LEGACIES OR TRANSFERS TO SOCIAL WELFARE,
relation to a beneficiary. He is a usufructuary and does not own the CULTURAL AND CHARITABLE INSTITUTIONS
property.
What are the 3 requisites in order to consider that non-taxable?
Fideicommissary the second heir who is the beneficiary of the 1. Transfer to a social welfare, cultural and charitable institution.
property. He is the rightful heir upon reaching the age of majority. His 2. No part of the income inures to the benefit of any individual.
relationship to the fiduciary heir must be one degree of generation such 3. Provided that not more than 30% of the said bequests, devises,
that of a parent and a child or vice versa. He is the owner of the naked legacies or transfers shall be used for administrative purposes.
title.
TN: There should be one-degree relationship between the fiduciary PROPERTIES EXEMPTED BECAUSE NOT OWNED BY THE DECEDENT
heir and the fideicommissary. Proceeds of life insurance policy payable to the beneficiary other than the
estate, executor or administrator of the estate.
Reason for the exemption: To prevent double taxation, the second transfer 1. Designation of the beneficiary must be irrevocable
from the fiduciary heir to the fideicommissary should be exempt from 2. Beneficiary must not be the estate, executor or
estate tax, since the first transfer from the predecessor to the fiduciary administrator of the estate.
heir was already taxed.
Revocable it can be taken back or that it can be impugned. May be changed or altered.
Irrevocable it cannot be impugned, it cannot be questioned, it is permanent.
The fiduciary heir holds the property temporarily while waiting for the
qualifications of the fideicommissary. Ultimately, the property will go to
TN: Proceeds of life insurance are received upon the death of the
the fideicommissary. This usually happens when the fideicommissary is
insured.
still a minor.
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Designation Beneficiary
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