A new ruling by the Supreme Administrative Court (STA) has recently been published on the subject of capital gains taxation under personal income tax (IRS).
In a case before the Arbitration Court (CAAD) concerning the sale of a property belonging to an undivided estate, the Court ruled in favour of the taxpayer, arguing that the sale of a duly identified property belonging to an undivided estate was exempt from capital gains tax, even if the transferred asset did not correspond to the entire inheritance share.
Disagreeing, the AT appealed the decision to the STA, which, in its decision, ruled in favour of the Arbitration Court, clarifying that the interpretation to be made of the Judgment on the Standardisation of Case Law, published on 04/06/2025, should be that the sale of a property belonging to an undivided inheritance, even if it corresponds to only a part of the inheritance share, is not a transfer of a real right for the purposes of Article 10(1)(a) of the IRS Code and is therefore not subject to capital gains tax.
This decision, contrary to that taken by the AT in its Circular Letter 20281 2025 of 25 July 2025, in which it had argued that only the sale of the entire inheritance share would not be subject to capital gains tax – is of extreme practical importance, allowing taxpayers to obtain a refund of the amount paid in capital gains tax in similar situations.
This interpretation by the STA allows taxpayers to request a review of their personal income tax assessments for the last four years in cases where capital gains tax was paid on the sale of property belonging to undivided inheritances.