I am from Australia and married to a Vietnamese woman who has renounced her Vietnamese citizenship and been later naturalized in Australia. We are currently residing in Australia. Recently, my mother-in-law has expressed her wish to bequeath all of her real estate in Vietnam to my wife by a will. Is my wife entitled to receive the inheritance? And what tax procedures will we have to complete to receive the inheritance?
Vietnam’s law recognizes anyone’s will to bequeath his property as an inheritance to another person regardless of whether the heir is an overseas Vietnamese or a foreigner, as long as his will is lawfully made.
However, per Article 5 of the 2013 Land Law, as your wife has renounced her Vietnamese citizenship and is now a foreigner in accordance with the 2014 Law on Foreigners’ Entry into, Exit from, Transit through and Residence in Vietnam, she is no longer eligible for being allocated or leased land, having land use rights recognized by the State, or being transferred land use rights in accordance with the Land Law.
Therefore, if the inheritance is real estate, specifically land use rights or houses associated with land use rights, your wife is entitled only to the value of the house(s) associated with land use rights. In other words, she is entitled only to the house value and may neither directly own the house(s) nor use the residential land. The inheritance value that she is entitled to may be transferred abroad in accordance with the Foreign Exchange Ordinance.
The procedures for transfer of currencies abroad are specified in the 2005 Ordinance on Foreign Exchange (revised in 2013), Government Decree 70/2014/ND-CP and State Bank Decision 1437/2001/QD-NHNN, on purchase and transfer or bringing of foreign currencies overseas by residents being Vietnamese citizens.
In your case, your wife is an heir residing abroad and therefore may authorize a Vietnamese citizen to represent her in deciding on the inheritance and transfer of the inheritance value abroad. To do so, she has to present the following documents:
- A written request to purchase and transfer foreign currencies abroad;
- The original or a notarized copy of the competent agency’s document on division of the inheritance or the will or a written agreement between lawful and undisputed heirs;
- Contract on purchase and sale of house(s) and transfer of land use rights;
- The heir’s letter of authorization (notarized or authenticated) or document(s) proving the at-law representative status of the transfer requester; and,
- A valid identity card or passport.
Income tax payable in case of transfer of inherited land:
Under Article 4.4 of the Law on Personal Income Tax, income from inheritance being real estate between blood parents and offspring is not liable to tax. Meanwhile, income earned from the transfer of real estate is taxable (Article 3.5 of the Law).
However, for income earned from the transfer of inherited property, the transferor will not have to pay personal income tax for:
- Income from real estate transfer between spouses; blood parents and offspring; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grandchildren; and among blood siblings; and
- Income from transfer of houses, residential land use rights and land-attached assets of individuals in case the individual transferor has only one house or residential land area.