Macedonia: Inheritance

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Inheritance tax and law

The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Macedonia: what restrictions there are and whether making a will is advisable.

INHERITANCE TAX

How high is income tax on residents in Macedonia?

Inheritance tax is levied on the market value of the inheritance received by beneficiaries. The beneficiary is liable to pay tax on the inheritance received. Debts and expenses are deductible from the taxable value. The rate depends on the order of succession. Beneficiaries who are first degree relatives are not taxed. Those who are second degree relatives are taxed at 3%, and all others are subject to a 5% rate.

INHERITANCE LAW

Thanks to LAWYERSANTEVSKI Skopje – Liechtenstein - Vienna

What inheritance laws apply in Macedonia?

Inheritance and endowment tax applies to individuals who inherit or are recipients of real estate, or rights to real estate. The tax applies whether the inheritance is determined by automatic operation of law, or by a will, and is based on the market value of the inheritance or endowment, as reduced by debts and expenses. Both resident and non-resident individuals (as well as companies) are liable to pay this tax.

Inheritance laws

In the Republic of Macednia, the laws applicable to issues of inheritance involving foreigners are:

• Law on civil court procedure
• Law on ownership and other real rights
• Law for inheritance
• Law for out-of-court procedure
• Law on obligation relationships
• Family Law, and
• Law for solving collision of laws with the regulations of other countries in determined relations

In Macedonia, the competent law concerning inheritance is the law of the country of which the testator was a citizen. That means, if a Macedonian citizen dies in a foreign country, the Macedonian law will apply to the inheritance of the testator. Regarding the competency of the court, a different principle applies: the principle “forum rei sitae “ i.e. the competent court is the court of the country where the property is located.

In the case when the Macedonian law refers to applying a foreign law, but the foreign law regarding the inheritance of property returns the authority to the Macedonian law (when the property is located in Republic of Macedonia), in that case the law of the Republic of Macedonia will be applied, without taking in consideration the rules for determination of the authoritative law.

Where movable property is concerned, the legal situation is the same, but the jurisdictional issue may be differently resolved. Then, wherever the foreign country’s court is not competent to decide on the movable inheritance of a citizen of the Republic of Macedonia, the Macedonian court will also not be competent to decide on the inheritance of the movable assets of a foreigner from that country located in Macedonia, i.e., reciprocity must exist. In that case, rather than being decided in Macedonia, the issue will be decided in the foreign country, and enforced in Macedonia, but first it is necessary for the decision to be recognized in front of a court in the Republic of Macedonia.

Only the person who is alive at the moment of opening of the inheritance can be an heir. The people who cannot inherit are those who:

• Intentionally deprived the testator of his life, or try to deprive the testator of his life;
• With force, menace or cheating, induced the testator to prepare or to revoke the will;
• Destroyed or hid the will of the testator with intention to prevent realization of the last will of the testator, or falsified the will of the testator, and/or
• Violated their obligation to support the testator, or did not want to give the testator the necessary help.

Though foreign natural persons and foreign legal entities can, under the condition of reciprocity, acquire the right of ownership as well as the right of long term lease, the law prescribes situations when permission from the Ministry of Justice is necessary, and also situations when permission from the Ministry of Justice is not necessary.

Permission is required when a foreigner acquires property, in the following cases:

• The acquisition of a long term lease of construction land for building of business buildings and business facilities and housing buildings and apartments on the territory of the Republic of Macedonia by a foreign natural person or legal entity
• The acquisition of a long term lease of agricultural land on the territory of the Republic of Macedonia by a foreign natural person or legal entity

Permission is not necessary where:

• A foreign natural person buys an apartment or a house in Republic of Macedonia
• A foreign natural person or legal entity buys an immovable object on the territory of the Republic of Macedonia
• A foreign natural person buys or leases long-term a business facility on the territory of the Republic of Macedonia
• A foreign legal entity buys or leases long-term of a housing or business facility in Republic of Macedonia

Probate proceedings without any conflicting interests take approximately 9 to18 months in Macedonia. Following the court’s decision, an heir must register his right to the inherited property in the public register book. A foreigner who has not acquired permission to acquire the right of ownership of real estate in Macedonia cannot repeat a request before the expiration of 1 year from the day of submission of the denied request.

The reserved portion for necessary heirs is 50% of the whole inheritance.

The spouse and children of the deceased are necessary heirs. In the absence of a will, three other ranges of heirs are allocated portions following the Inheritance Law.

The orders of priority are:

• First - children and spouse;
• Second - parents, brothers and sisters; and
• Third - grandparents.

The heirs in each range inherit portions allocated from 50% of the whole inheritance.

Within three years from the day of the proclamation of a will, the necessary heirs may request a decrease in the portions allocated to other heirs, and the return of any gifts provided by the deceased during his/her last 90 days of life. A single heir is responsible for the debts of the deceased, up to the value of the inherited property. Multiple heirs are collectively responsible for the debts of the deceased, up to the value of their inherited property.

A person who receives a legacy in a will has a right, within one yearfrom the day when he knew for his right on legacy and was authorized to request the execution of the demand and latest within twenty years of the death of the testator, to request that his/her legacy to be executed. An heir is not obliged to execute a legacy if this causes violation of his/her reserved portion. The receiver of a legacy is not responsible for the debts of the deceased, but the testator may order, the receiver of a legacy to be responsible for all or for part of the debts of the deceased or for part of the debt of the deceased, taking into consideration the value of the legacy.

It is advisable for a foreigner to make a will.

If there is no will, probate proceedings can take very long time in court.

Any person who is mentally competent and at least 15 years old can make a will in Macedonia. A will is void, if it was made by threat or force, or as the result of fraud or mistake.

There are several forms of will:

• Will made in one's own hand
• Court will
• Will prepared in front of a diplomatic or consul representative in abroad;
• Will prepared during war
• International will; and
• Verbal will

The formalities depend on the form of the will, and the country where it was prepared. A foreigner can prepare an international will without being present in Macedonia. An international will does not consider the place where the will is composed, the place of residence and nationality of the deceased or the location of his/her property.

Property can be given during the lifetime of the owner, but the heirs must agree to the gift.

An owner can freely give his/her property in Macedonia prior to his/her death. Such a gift is only valid if agreed by the heirs. The contract has to be prepared in written form, signed by the contractual parties, and verified by a notary.

Problems of inheritance.

In Macedonia property belonging to marital partners can be either owned in common, or separately. Property acquired during marriage is held in common, whereas property owned before marriage, including inheritances, gifts, legacies, and personal effects, is separate. If marital partners own separate property, then the applicable law for inheritance is the law of the country of which the deceased was a citizen.

If property in Macedonia, or part of it, goes on death to a child, or children not of legal age, or to others not legally adult, the court will appoint a guardian to take care of the interests of minors.

A foreign person can not be an owner of a real estate, which because of the protection of the interests and safety of the Republic of Macedonia is proclaimed by law as a territory on which foreign persons do not have right to ownership unless it is determined otherwise by law.

Macedonia - more data and information

• How high is income tax on residents in Macedonia?

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