The Tax Dimension of Succession
An inheritance transfers not only property but tax obligations as well. Article 57 of the Tax Code determines how the deceased person's tax liability passes to the heirs and what rights remain with them, while article 82 regulates which types of income connected with property received by inheritance or gift are exempt from income tax. Together these two norms form the frame whose knowledge is decisive in succession planning — both for the decisions of the living and for the procedures awaiting the heir.
The Deceased Person's Tax Liability
The deceased's tax liability is to be paid by the heir proportionally to the heir's share in the inherited property, from the day of receiving the inheritance certificate. The liability is what existed as of the date of death. The heir must notify the tax authority of receiving the certificate if the liability is known to them, and the authority must send the person a notice of the liability within 30 days of learning of the certificate. The liability is written off where the deceased has no heirs, where an heir has renounced the inheritance, or where the liability exceeds the value of the inherited property — by the remaining amount. An heir who continues the deceased's economic activity must notify the authority, register as a taxpayer before commencing the activity, pay the liability and discharge the other obligations of a taxpayer.
For such an heir this is not a mere formality: registration and payment together determine which rights pass to the heir and which obligations remain unfulfilled. Where a liability exists, the heir does best to start the procedure immediately upon receiving the inheritance certificate — both at the level of notification and of subsequent settlements.The Heir's Rights
The Code grants the heir not only obligations but rights as well. An heir continuing the deceased's activity may claim the refund or offset of tax or sanctions overpaid by the deceased, use the deceased's primary tax documents, submit tax declarations for the period of the deceased's activity, and even continue the tax dispute begun by the deceased. The tax authority is obliged to merge the personal record cards of the deceased and the heir. Where a refund of an overpaid amount is claimed, the authority reflects it on the card within 3 months and then returns or offsets it; and with respect to unfulfilled obligations identified in this way, sanctions are not applied against the heir.
The authority may also verify the compliance of the overpaid amount with the legislation, including through a tax inspection, and where unfulfilled obligations are identified — assess them on the heir's card if the activity continues, or within the limits of the overpaid amount if it does not.The Exemption for Inheritance and Gifts
Article 82 determines the incomes exempt from income tax, and it is here that the mainstay of succession planning lies: the value of property received by gift or inheritance by heirs of the first and second line during a tax year is fully exempt; for heirs of the third and fourth line the exemption covers property valued up to 150,000 lari; and property received by gift — up to 1000 lari a year, apart from that received from an employer. These boundaries explain why establishing the line and choosing the form of transfer matter so much: succession within the close circle carries no tax, while for distant circles the distribution of amounts and the timing of transfer decide whether the transfer falls under tax.
Practical Steps of Planning
Succession tax planning proceeds on two levels. The first is the level of the transferor: choosing the form of transfer and the circle of recipients with an eye to the exemptions of article 82, so that the outcome is lawful and justified. The second is the level of the heir: upon receiving the inheritance certificate, engaging with the tax authority, verifying the liability and, where the activity is continued, registering in time. The rules on valuation of property, declarations and other procedural details are defined by other provisions of the Code and must be verified separately in each case.
Note that the exemptions apply to property received during the tax year: spreading amounts over several years is one of the instruments of lawful planning for distant circles, while for the close circle the choice between inheritance and gift leads to the same outcome either way.Frequently Asked Questions
Does the deceased's debt pass to the heir?
Yes — proportionally to the share in the inherited property, from the day of receiving the inheritance certificate; but where the debt exceeds the inherited property, the difference is written off.
What is the heir's principal duty?
Notifying the tax authority of the inheritance certificate where the liability is known; where the activity is continued — registering as a taxpayer before commencement and paying the liability.
Which inheritances are exempt?
Property received by heirs of the first and second line — fully; for the third and fourth line — up to 150,000 lari; gifts — up to 1000 lari a year.
May the heir continue the deceased's dispute?
Yes — the heir may continue the tax dispute begun by the deceased, use the deceased's documents and claim the refund of amounts overpaid.
How We Help on Legal.ge
The Legal.ge team supports you at every stage of succession planning and administration: we compute the tax consequences of inheritance and gifts by line and amount, plan the structure of the transfer, and help verify the deceased's liability and interact with the tax authority. Contact us — transferring to the family without tax pressure is achievable. Legal.ge.