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Taxation is one of the most important topics for a citizen of any country, and on that note, we have a similar prevailing topic of significant importance, since it has a profound impact on people and no possibility of avoiding it. The matter in question is Inheritance Tax in the Dominican Republic, we will be addressing this topic for your better understanding, in case you are going through this process.
A succession or inheritance can be defined as the process through which goods, rights, and obligations are transferred, in favor of successors or heirs, from a person who has died (also known as “de cujus”).
The deceased individual whose inheritance will be divided is referred to as “de cujus” and the parties who have the right to receive the inheritance from the “de cujus” are called “heirs, successors or legatees”.
According to the provisions of the law, inheritance can be received by an heir or successor, who would be receiving the goods when the inheritance is distributed, or a legatee who is simply a person who receives goods through a will.
Therefore, according to the information stated above, the right to receive an inheritance can be granted by:
1.- What is established by the law, applying the regular order of succession
2.- A testament
Immediately after a person dies his/her relatives, successors, or heirs (descendants, ascendants, spouse, siblings, relatives, legatee, or simply the State) can make use of the assets of the deceased. However, before making use of said assets, they would need to submit an affidavit to the General Directorate of Internal Taxes (DGII in Spanish) and pay the required inheritance tax on those assets.
Inheritance tax can be defined as the levy that applies to the transfer of an inherited asset.
In accordance with the Law, the rate to be paid is 3% of the estate, after deductions have been applied.
The 3% tax is waived only in the following cases:
Moreover, before paying the inheritance tax, you need to be aware of a few deductions that will be taken from the estate, which decreases its total value. Some of these deductions are the medical care expenses related to the last illness pending payment at the time of death, funeral expenses, and labor benefits, among other deductions established by the Law.
Law No. 2569 from 1950, as amended, is the law that applies to the transfer of movable or immovable property due to death.
Liability for the payment of inheritance tax is initiated on the date of passing of the “de cujus” and must be paid in order to receive the inheritance of movable and immovable property, in equal parts and sometimes in a proportional matter, by the successors and beneficiaries of a will, if there is one.
No more than 90 days after the death of the individual, form SD-1 and its annexes need to be completed, notarized, and signed by the declarants and beneficiaries; the corresponding documents must be submitted along with this form.
Form SD-01 lists the movable and immovable property of the deceased individual, specifying the property’s value, as well as the amounts corresponding to the debts that can be deducted. To add the values, the assets need to be appraised, which can be done by accredited appraisers or specialists, and in the case of real estate and vehicles, the securities that the DGII publishes for these purposes can be used.
If the goods have been acquired during marriage under a Community of Property arrangement, they must be included in the declaration. That being said, the tax calculation is made only on 50% of the property value since the remaining 50% goes to the spouse by law and given that they have ownership over that portion of the property, they do not need to pay tax for it.
Inheritance tax is paid based on the entire inheritance received within the national territory of the Dominican Republic, which applies to both movable and immovable property.
After posting the tax payment for its settlement made to the DGII, this office will need to notify the heirs or beneficiaries, with the specific amount to be paid and these inheritors will be given a period of 30 DAYS TO PAY THE TAX in full.
Payments can be made through the following channels:
When it comes to in-person payments in local administrations exceeding RD$15,000.00, the payment must be made with a certified or administration check, to be made in favor of the Internal Revenue Collector.
It is important to note that if the deceased individual leaves bank accounts or financial certificates, and the successor is unable to pay the inheritance tax, the Bureau of Internal Taxes could issue a payment authorization so that the bank holding the deceased’s funds can issue a check, allowing the successor to pay the required taxes with the funds available in the aforementioned bank accounts.
As we have stated previously, the declaration of succession must be made within 90 days of the passing. However, if the representative has not been able to complete the requested documentation, they may request an extension of up to 105 days, divided into two blocks of 60 and 45 days.
Statements that are not filed within the allotted time frame will be subject to additional charges, which are calculated based on the time elapsed since the deadline date.
Late filing surcharges on the succession declaration
Failure to file within the deadlines established by the law of succession declaration is subject to the following surcharges:
In case you have any questions or need professional advice in relation to inheritance tax in the Dominican Republic or any other legal issue, do not hesitate to contact us from anywhere in the world. You may write to us or call us and we will gladly address your request.
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