Philippines Estate Tax Rules and Filing Requirements
(Comprehensive legal-style overview; updated to July 5 2025)
Disclaimer. This article is for general information only and is not legal advice. Estate-planning decisions should always be confirmed with a Philippine tax professional or lawyer because BIR regulations and court rulings evolve.
1. Statutory Framework
| Source | Key Provisions |
|---|---|
| National Internal Revenue Code (NIRC) of 1997, as last amended by Republic Act (RA) 10963 or the TRAIN Law (effective 1 Jan 2018) | • Fixed estate-tax rate of 6 % on the net estate, replacing the former graduated 5 %–20 % schedule • Revised deductions (see §4) • Electronic Certificate Authorizing Registration (eCAR) system |
| Estate Tax Amnesty Law RA 11213 (2019), as extended by RA 11569 (2021) and RA 11956 (2023) | • Optional 6 % amnesty on net estate of decedents who died on or before 31 Dec 2021 (filing window now open until 14 June 2025) • Waives surcharge/interest/penalties |
| Implementing Revenue Regulations (RRs) & Revenue Memoranda | • RR 12-2018, RR 17-2023 (amnesty extension) • RMC 17-2021 (eCAR), RMC 62-2023 (digital payment channels) |
2. Scope & Tax Base
| Decedent’s Status | Assets Subject to Philippine Estate Tax |
|---|---|
| Resident citizen or resident alien | Worldwide property (real, personal, tangible & intangible) |
| Non-resident citizen or non-resident alien | Only property situated in the Philippines |
| Intangible personal property of a non-resident alien | Taxed unless (a) reciprocal exemption exists between PH and the foreign country, or (b) foreign estate tax is credited (limited to proportion of PH assets) |
3. Gross Estate Valuation
Date of Death Value – ordinarily controls.
Real Property – higher of (a) BIR zonal value or (b) fair market value per local assessor’s schedule.
Shares of Stock
- Listed: closing price on date of death.
- Unlisted: book value from latest audited FS.
Personal/Tangible Property – fair value (e.g., appraiser’s report).
Accruals & Recoverables – e.g., unpaid employment benefits, life insurance proceeds payable to the estate (amount receivable net of any premiums refunded).
4. Allowable Deductions (TRAIN-era estates)
| Deduction | Cap / Notes |
|---|---|
| Standard deduction | ₱5 million (no substantiation required). Replaces the pre-TRAIN medical/funeral lump-sum deductions. |
| Family home | Up to ₱10 million of FMV; excess forms part of gross estate. Family home must be certified as such by the barangay; spouses only get one family-home deduction. |
| Funeral expenses (if elected) | Up to 5 % of gross estate not exceeding ₱200 k (rarely used now because the ₱5 M standard deduction is more favorable unless estate > ₱100 M). Cannot be claimed together with the standard deduction. |
| Judicial & estate-settlement expenses | Actual, necessary expenses (executor’s fees, lawyer’s fees, publication costs). Must be substantiated and unpaid as of death. |
| Claims vs. the estate / Losses | Debts of decedent legitimately incurred and enforceable at death; casualty or theft losses occurring within 1 year after death if not compensated by insurance. |
| Property previously taxed (Vanishing deduction) | Graduated reduction (100 %→20 %) depending on years elapsed (1-5 yrs) from prior transfer subject to donor’s or estate tax. |
| Transfers for public use | Bequests to the Government or accredited NGOs. |
| Share of the surviving spouse (Conjugal or ACP property) | Half of conjugal/community property is excluded before computing the net estate taxable. |
5. Computation in Outline
Gross Estate
– Deductions (section 4)
– Share of surviving spouse
= Net Taxable Estate
× 6 %
= Estate Tax Due
± Penalties/Surcharges/Interest (if late)
= Total Amount Payable6. Filing Requirements
6.1. Estate Tax Return (BIR Form 1801)
| Item | Details |
|---|---|
| Who files | Executor, administrator, or any of the heirs if no executor/administrator appointed. |
| Where to file | Revenue District Office (RDO) of decedent’s domicile at death; if non-resident: RDO 39 (South Quezon City). |
| When to file | Within one (1) year from date of death. Extension for payment (not filing) may be granted by the BIR: • Judicial settlement → up to 5 years • Extrajudicial settlement → up to 2 years |
| Mode | Manual (triplicate) or eFPS / eBIRForms (if mandated taxpayer). Attach digital copies when filing electronically. |
6.2. Supporting Documents (typical)
- PSA-issued Death Certificate
- TIN of the Estate (secure via BIR registration)
- Affidavit of Self-Adjudication or Extra-Judicial Settlement agreement (Rule 74, Rules of Court) or court-approved project of partition
- Certified true copies of titles (TCT/CCT) with tax declarations & latest real-property tax receipts
- Proof of valuation – BIR zonal value certification or assessor’s FMV
- Bank certification of balances (as of death) + BIR Waiver (RMC 57-2020)
- Certificate of Family Home from barangay & Registry of Deeds
- List of personal property with appraisal reports if required
- Debts/Claims proof – notarized promissory notes, contracts, etc.
- Official receipts for funeral or legal expenses (if claimed)
- For amnesty, additional requirements under RMC 33-2019 (e.g., Notice of Coverage)
6.3. Common BIR Clearances
| Clearance | Purpose |
|---|---|
| eCAR (Electronic Certificate Authorizing Registration) – issued per asset | Required for transfer with Registry of Deeds, LTO (vehicles), corporate stock & transfer books. |
| Tax Clearance Certificate (Executive Order 398) | Needed for government contract bids; may intersect with estates owning businesses. |
7. Payment of the Tax
- Authorized Agent Banks (AABs) of the RDO or Revenue Collection Officers where no AAB.
- Digital channels – LandBank Link.Biz, DBP PayTax, GCash / Maya QR, UnionBank On-Line, etc.
- Installment – Allowed without surcharge/interest within the approved extension schedule; collateral/security may be required for large estates (Sec. 91, NIRC).
- Partial withdrawal from the bank – Banks may release up to the lower of (a) ₱20,000 or (b) 20 % of the deposit to pay the estate tax upon BIR clearance.
8. Penalties for Non-Compliance
| Violation | Consequence |
|---|---|
| Late filing/payment | • 25 % surcharge on the basic tax (50 % if fraud) • Interest: double the legal rate (currently 12 % p.a. → 24 % p.a.) until fully paid |
| Failure to file return or supply information | Fine ₱10,000 – ₱50,000 and/or imprisonment 1-10 years (Sec. 255, NIRC). |
| Illegal transfer without eCAR | Deed or title transfer void; liability for documentary stamp tax and potential estafa. |
| Estate lien | Estate tax is a preferred lien on the estate’s assets; property cannot be legally transferred until cleared. |
9. Estate Tax Amnesty (Special Regime)
| Parameter | Details |
|---|---|
| Coverage | Estates of decedents who died on or before 31 Dec 2021 (per RA 11956). |
| Rate | 6 % on the net estate or ₱5,000 per heir/beneficiary for estates below ₱100,000. |
| Deadline | File until 14 June 2025 (non-extendible unless Congress further amends). |
| Effect | Suspension of civil/criminal cases for estate-tax deficiency; immunity from penalties. |
| Exclusions | Properties involved in pending cases under the Anti-Money Laundering Act, Forfeiture Law (RA 1379), or ill-gotten-wealth litigation. |
| Process | BIR Form 2118-E + Estate Amnesty Tax Return; pay at AAB/LandBank; secure eCAR. No opening of bank secrecy laws required. |
10. Procedural Notes on Settlement
Extra-Judicial Settlement (EJS)
- All heirs are of age or represented; there is no will; estate has no outstanding debts or all creditors are paid.
- Execute notarized “Deed of EJS”, publish in a newspaper of general circulation once a week for 3 consecutive weeks (Rule 74, §1).
Judicial Settlement – If a will exists, minor/ incapacitated heirs, or dispute among heirs, probate/letters testamentary/letters of administration are filed with the Regional Trial Court (Branch designated as a Special Probate Court).
Small-Estate Settlement – Estates ≤ ₱100,000 (exclusive family home) may use Affidavit of Self-Adjudication by sole heir (Rule 74, §1), but BIR requirements remain.
Estate’s TIN, Books, Returns – Estate becomes a separate taxpayer; if it earns income after death (e.g., rental), file BIR Form 1701A or 1702 annually until final distribution.
11. Special Topics & Pitfalls
| Issue | Key Points |
|---|---|
| Foreign property of resident decedent | May trigger foreign estate taxes; PH foreign-tax credit relief is limited to PH estate-tax proportion (Sec. 86(D)). |
| Life insurance | • Proceeds paid to the heirs/beneficiaries are excluded. • Proceeds payable to the estate are includible. |
| Transfer of shares | Stock transfer agent needs eCAR + Documentary Stamp Tax (DST). |
| Co-ownership vs. Heirship | Heirs hold the estate in co-ownership until partition; they cannot individually sell specific assets without BIR clearance. |
| Vanishing deduction strategy | Useful where property was donated/fell into the estate of another decedent within 5 years. |
| Preneed plans, retirement pay | Generally exempt if the plan designates heirs; but confirm contractual terms. |
| Digital assets (crypto, NFTs) | Treated as intangible personal property; include fair market value (convert to PHP at death). |
| Donations vs. estate transfer | Inter vivos donation before death may reduce the estate but triggers 6 % donor’s tax; timing matters because donor’s tax is due within 30 days of donation. |
12. Compliance Timeline (Illustrative)
| Day | Action |
|---|---|
| 0 | Date of death – gather documents, freeze bank accounts pending BIR clearance. |
| Within 30 days | Secure estate TIN; ask banks for certification; obtain preliminary property valuations. |
| Months 1-6 | Prepare draft return, compute deductions, finalize settlement deed, publish EJS if extrajudicial. |
| Month 12 | Deadline to file BIR Form 1801 and pay or request payment extension. |
| Upon payment | BIR reviews → issues assessment, accepts payment → releases eCAR(s). |
| Post-eCAR | Transfer titles, cancel old TCT/CCT, register new shares/vehicles. |
| Until final distribution | Estate files income-tax returns (if earning income). |
13. Best Practices
- Start valuation quickly – real-property zonal values may be updated; lock-in date-of-death values with certifications.
- Choose the most beneficial deduction combination – often the ₱5 M standard + family home deduction suffice.
- Keep contemporaneous records – debts, funeral/legal expenses must be existing and unpaid at death; avoid back-dated instruments.
- Consider donation-on-split strategy – donations of future interests (but watch donor’s tax).
- Evaluate amnesty vs. regular filing for pre-2022 decedents – amnesty often cheaper and wipes penalties.
- Synchronize estate-planning documents – will, life-insurance beneficiaries, buy-sell agreements, trust structures.
- Digitize – BIR now accepts PDFs for many attachments; prepare USB/CD when filing manually.
14. Recent & Pending Developments (as of July 2025)
- HB 7593 / SB 2882 – pending bills propose portable family-home deduction among multiple residences and automatic inflation-adjustment of the ₱5 M standard deduction every 3 years.
- Pilot “eCAR-One-Stop” portals in NCR and Cebu aim to reduce clearance time from weeks to 48-hours.
- BIR Draft RR circulating in June 2025 would allow optional appraisal freeze for volatile assets (crypto, listed shares) at the average of 30-day closing prices pre-death. Practitioners await final rules.
15. Conclusion
Estate taxation in the Philippines has been greatly simplified by the flat 6 % rate, generous standard deduction, and the ongoing amnesty program. Nevertheless, compliance remains documentation-heavy; failure to observe the one-year filing deadline or to secure eCARs stalls property transfers indefinitely. Early planning—often in tandem with inter vivos donations, insurance structuring, or trusts—can minimize friction and cost.
For estates pre-2022, the amnesty window (closing June 14 2025) offers perhaps the last chance to settle long-overdue filings at minimal cost.
Need a quick checklist?
- Get estate TIN & PSA death certificate.
- Inventory assets + debts (use date-of-death values).
- Compute deductions (standard ₱5 M, family home, others).
- Prepare BIR Form 1801 + attachments.
- File & pay within 1 year (or evaluate amnesty).
- Secure eCARs → transfer titles.
With diligence and timely action, heirs can preserve assets, avoid penalties, and move forward with peace of mind.