September 2025
Ministry of Finance Issues “Operational Guidelines on Estate Tax Assessment for Property Gifted to a Spouse Within Two Years Before the Decedent’s Death Included in the Total Estate” (Taiwan)
On October 28, 2024, the Constitutional Court rendered Judgment 113-Hsien-Pan-11 (“Judgment”), declaring that Article 15, Paragraph 1, Subparagraph 1 of the Estate and Gift Tax Act (“Act”), which provides that property gifted by the decedent to the spouse within two years before death shall be deemed part of the decedent’s estate, included in the total estate, and taxed under the Act, is partially unconstitutional.
In response to the Judgment, and to ensure consistent taxation practices among the National Taxation Bureaus before the completion of legislative amendments, the Ministry of Finance issued the “Operational Guidelines on Estate Tax Assessment for Property Gifted to a Spouse within Two Years before the Decedent’s Death Included in the Total Estate” (“Guidelines”) on July 28, 2025.
A summary of the Judgment and the Guidelines is provided below:
1. Judgment 113-Hsien-Pan-11 (2024)
The Constitutional Court held that Article 15, Paragraph 1, Subparagraph 1 of the Act, which requires the inclusion of property gifted to the spouse within two years before the decedent’s death (“deemed estate”) into the taxable total estate, is unconstitutional to the following extent:
(1) Unfair allocation of the tax burden among heirs
The current provision fails to clearly define the allocation of tax liability among heirs. As a result, heirs other than the spouse are compelled to bear additional tax burdens arising from the deemed estate received by the spouse, thereby unjustly diminishing the economic value of their inheritance rights. This contravenes the right to equality under Article 7 of the Constitution and infringes upon the property rights protected by Article 15 of the Constitution.
(2) Inequality in deduction mechanism
The current provisions also fail to establish a deduction mechanism equivalent to the right to claim the distribution of the remainder of the property under Article 17-1 of the Act, which may be deducted from the total estate. This omission creates unfavorable treatment for the spouse who receives the deemed estate, likewise violating the constitutional protection of equality under Article 7.
Accordingly, the Constitutional Court instructed the legislature to amend the law within two years from the date of the Judgment. Until the amendment is completed, competent authorities shall implement measures in line with the Judgment.
2. Ministry of Finance Issues the Guidelines
In response to the Judgment, the Ministry of Finance reviewed the tax treatment of deemed estate gifted to the spouse and issued the Guidelines prescribing the method for estate tax collection. The key points are as follows:
(1) Scope of Application and Effective Period
I. Scope: Applicable from October 28, 2024, to inheritance cases that have not yet occurred, as well as to cases where the inheritance has occurred but the estate tax has not yet been assessed or has not become final.
II. Period: From October 28, 2024, until the day before the promulgation and implementation of the amended provisions of the Act.
(2) Where the Spouse Has Not Renounced Inheritance or Forfeits Inheritance Rights (Article 5 of the Guidelines)
I. The spouse and other heirs shall jointly file the estate tax return, based on the total estate (including deemed estate), within six months from the commencement of inheritance.
II. The taxation authority shall assess the estate tax for the total estate (including deemed estate) and issue a tax assessment notice to all heirs (including the spouse).
III. Tax calculation method: The taxation authority shall apportion the total estate tax in proportion to the ratio of the deemed estate and other estate within the total estate, and shall separately calculate and assess the deemed estate tax and other estate tax.
i. Deemed estate tax: A deemed estate tax payment notice shall be issued solely to the spouse.
ii.Other estate tax: An other estate tax payment notice shall be issued to all heirs, including the spouse.
IV. When calculating the deduction amount under Article 17-1 of the Act for the spouse’s right to claim distribution of the remainder of the property, the deemed estate shall be treated as part of the decedent’s existing property and shall not be limited by the scope of claims available to the spouse under Article 1030-1 of the Civil Code. Heirs must actually deliver property equivalent to the claim amount to the spouse, and may not use the deemed estate itself to satisfy such obligation.
(3) Where the Spouse Renounces Inheritance or Forfeits Inheritance Rights (Article 9 of the Guidelines)
If the spouse renounces inheritance or forfeits inheritance rights, and thus is not a taxpayer for estate tax, the taxation authority shall neither levy estate tax on the deemed estate against the spouse or other heirs, nor enforce execution against the estate (including property gifted to heirs by the decedent within two years before death). This ensures compliance with the principle of tax fairness.
In response to the Judgment, and to ensure consistent taxation practices among the National Taxation Bureaus before the completion of legislative amendments, the Ministry of Finance issued the “Operational Guidelines on Estate Tax Assessment for Property Gifted to a Spouse within Two Years before the Decedent’s Death Included in the Total Estate” (“Guidelines”) on July 28, 2025.
A summary of the Judgment and the Guidelines is provided below:
1. Judgment 113-Hsien-Pan-11 (2024)
The Constitutional Court held that Article 15, Paragraph 1, Subparagraph 1 of the Act, which requires the inclusion of property gifted to the spouse within two years before the decedent’s death (“deemed estate”) into the taxable total estate, is unconstitutional to the following extent:
(1) Unfair allocation of the tax burden among heirs
The current provision fails to clearly define the allocation of tax liability among heirs. As a result, heirs other than the spouse are compelled to bear additional tax burdens arising from the deemed estate received by the spouse, thereby unjustly diminishing the economic value of their inheritance rights. This contravenes the right to equality under Article 7 of the Constitution and infringes upon the property rights protected by Article 15 of the Constitution.
(2) Inequality in deduction mechanism
The current provisions also fail to establish a deduction mechanism equivalent to the right to claim the distribution of the remainder of the property under Article 17-1 of the Act, which may be deducted from the total estate. This omission creates unfavorable treatment for the spouse who receives the deemed estate, likewise violating the constitutional protection of equality under Article 7.
Accordingly, the Constitutional Court instructed the legislature to amend the law within two years from the date of the Judgment. Until the amendment is completed, competent authorities shall implement measures in line with the Judgment.
2. Ministry of Finance Issues the Guidelines
In response to the Judgment, the Ministry of Finance reviewed the tax treatment of deemed estate gifted to the spouse and issued the Guidelines prescribing the method for estate tax collection. The key points are as follows:
(1) Scope of Application and Effective Period
I. Scope: Applicable from October 28, 2024, to inheritance cases that have not yet occurred, as well as to cases where the inheritance has occurred but the estate tax has not yet been assessed or has not become final.
II. Period: From October 28, 2024, until the day before the promulgation and implementation of the amended provisions of the Act.
(2) Where the Spouse Has Not Renounced Inheritance or Forfeits Inheritance Rights (Article 5 of the Guidelines)
I. The spouse and other heirs shall jointly file the estate tax return, based on the total estate (including deemed estate), within six months from the commencement of inheritance.
II. The taxation authority shall assess the estate tax for the total estate (including deemed estate) and issue a tax assessment notice to all heirs (including the spouse).
III. Tax calculation method: The taxation authority shall apportion the total estate tax in proportion to the ratio of the deemed estate and other estate within the total estate, and shall separately calculate and assess the deemed estate tax and other estate tax.
i. Deemed estate tax: A deemed estate tax payment notice shall be issued solely to the spouse.
ii.Other estate tax: An other estate tax payment notice shall be issued to all heirs, including the spouse.
IV. When calculating the deduction amount under Article 17-1 of the Act for the spouse’s right to claim distribution of the remainder of the property, the deemed estate shall be treated as part of the decedent’s existing property and shall not be limited by the scope of claims available to the spouse under Article 1030-1 of the Civil Code. Heirs must actually deliver property equivalent to the claim amount to the spouse, and may not use the deemed estate itself to satisfy such obligation.
(3) Where the Spouse Renounces Inheritance or Forfeits Inheritance Rights (Article 9 of the Guidelines)
If the spouse renounces inheritance or forfeits inheritance rights, and thus is not a taxpayer for estate tax, the taxation authority shall neither levy estate tax on the deemed estate against the spouse or other heirs, nor enforce execution against the estate (including property gifted to heirs by the decedent within two years before death). This ensures compliance with the principle of tax fairness.
