BIR Ruling

February 16, 1968 Messrs. Sycip, Salazar, Luna Manalo & Feliciano P.O. Box 4223, Manila Gentlemen : This refers to your letter dated February 16, 1967 requesting a certification from this Office to the effect that the estate in the Philippines of the late Mrs. Johanna H. Hollander, a citizen of the United States of America and a resident of Wiesbaden, West Germany, is exempt from estate and inheritance taxes, pursuant to the provisions of Section 122 of the Tax Code. It is represented that the property left in the Philippines by the late Mrs. Johanna H. Hollander consists of shares of stock in two Philippine corporations and an amount in cash in a custody account with the Bank of the Philippine Islands. bilxel In reply thereto, I have the honor to inform you that Section 122(a) of the Tax Code imposes the following conditions for exemption from estate and inheritance taxes: (1) That the decedent was a resident of a foreign country at the time of his death; (2) That said foreign country did not impose a transfer or death tax of any character; and (3) That intangible personal property of non-resident Filipinos situated in that foreign country is exempt from transfer or death taxes of any character. In other words, exemption from estate and inheritance taxes must be total or none at all. (The Collector of Internal Revenue vs. Douglas Fisher G.R. No. L-11622, January 28, 1961). It appears that the late Mrs. Johanna H. Hollander was a resident of Eltviller Strasse 21, Wiesbaden, Germany at the time of her death. A certification of the Consul of the Embassy of the Federal Republic of Germany in Manila dated March 16, 1967 states that the only pertinent German laws on transfer or death taxes with respect to the intangible personal property let by a non-resident Filipino in West Germany is the German Inheritance Tax Law as amended, specifically Sections 8 and 9 thereof in relation to Section 121 of the German Valuation Law as amended; A reading of the aforementioned pertinent provisions of the German Tax Laws disclosed that intangible personal property of a non-resident decedent is not subject to German Inheritance Tax. West Germany does not impose estate tax on transfers of property generated by death of the owner. (Certification dated March 16, 1967 of the Consul of the Embassy of the Federal Republic of Germany in Manila). In view of the foregoing, this Office is of the opinion and so holds that the property left in the Philippines by the late Mrs. Johanna H. Hollander consisting of shares of stocks are exempt from estate and inheritance taxes pursuant to the provisions of Section 122 of the Tax Code. However, the amounts in cash in a custody account are subject to tax. lexlib Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue