Most small and medium-sized enterprises (SMEs) in Taiwan are invested in and operated by family members. It is common for responsible persons or shareholders to have loan transactions with the companies they invest in. When a responsible person or shareholder passes away, if they still hold shareholder receivable claims arising from loans to the company during their lifetime, these claims must be included in the decedent’s estate tax filing.

The National Taxation Bureau of Kaohsiung, Ministry of Finance explains that during estate tax audits, some heirs report the number of shares the decedent held in unlisted companies but overlook the loan transactions between the decedent and the company. As a result, they fail to declare the shareholder receivable claims owed to the decedent by the company and are therefore subject to penalties.

The Bureau further explains that when filing estate tax, the public should make good use of the “Checklist of Required Documents” attached to the estate tax return form and verify all supporting documents carefully. If the decedent held shares in unlisted companies during their lifetime, required documents include a statement of shareholding balance on the date of death, par value per share information, and the company’s balance sheet and income statement as of the date of death. If the balance sheet lists shareholder transaction amounts under liabilities, a detailed schedule of shareholder transactions must also be provided. Based on the shareholder transaction details, any outstanding loan balance owed by the company to the decedent should be reported under the receivable items of the decedent’s estate.

The Bureau would like to especially remind the public that if the decedent invested in shares of unlisted companies, heirs must check whether shareholder receivable claims exist between the decedent and the company to avoid omissions and resulting penalties. For further inquiries, please call the toll-free service hotline 0800-000-321 or visit the Bureau’s website (https://www.ntbk.gov.tw) to make inquiries online using the National Tax Smart Assistant “National Tax Helper.”

Provided by: Legal Affairs Division

Contact Person: Section Chief Shu-Hui Lin         Telephone: (07)7256600 ext. 7510

Drafted By: Jing-Tzu Chou                                    Telephone: (07)7256600 ext. 7518