Does China Have an Inheritance Tax? What Heirs Actually Pay

China does not have an inheritance tax. There is no such tax in force: no statute, no pilot programme, no collection, no registration requirement. What circulates online as a "China inheritance tax draft" is a set of proposals discussed in the 1990s and again around 2004, none of which entered the legislative process. It is republished as news every couple of years, which is why the question keeps returning.

That answer is true but not very useful, because a file still costs money. This page sets out what an heir actually pays, and separates the charges that exist from the ones that are only rumoured.

At a glance

• No inheritance tax, no estate tax, no gift tax on death.
• Deed tax is exempt when a statutory heir takes by inheritance.
• A person outside the statutory circle who takes under a will pays deed tax at 3%.
• Income tax is not charged on the inheritance itself — only on a later sale.
• The real bill is notarisation, and the tax that arises when the property is sold.

1. What the law actually says

The Inheritance Part of the Civil Code (Articles 1119–1163) governs who takes property on death. It contains no tax provision at all. The taxes that touch land and buildings in China are imposed by separate statutes — the Deed Tax Law, the Individual Income Tax Law, the Stamp Duty Law and the VAT rules — and none of them taxes the event of inheriting.

What happens at the inheritance stage is a handful of administrative charges: notarisation if a notary is used, the registration fee, and — in most cross-border files — translation and authentication of documents obtained abroad.

2. What is charged, and what is not

Two of these are worth dwelling on. Notarisation is not compulsory in law, but in practice a cross-border file almost always uses a notary, because a notarised deed of inheritance is what makes the registration office comfortable with a chain of documents it cannot otherwise verify. Ask for the fee in writing before the file is opened — it is the one item that varies most with the value of the estate.

3. The distinction that catches families out: heir, or beneficiary

The deed tax exemption is written for statutory heirs — a defined term, not a general word for "family". Article 1127 of the Civil Code sets the first order (spouse, children, parents) and the second order (siblings, grandparents on both sides). A will that leaves the flat to someone outside those lists — a nephew, a friend, a carer — creates a bequest rather than an inheritance, and the registration office will treat the transfer as one that attracts deed tax at 3% of assessed value.

Income tax does not follow the same line: the exemption covers statutory heirs, testamentary heirs and bequest beneficiaries alike. So the two taxes diverge exactly where families least expect it. A will that "treats everyone equally" can therefore produce an unequal bill.

One more difference matters. A bequest beneficiary must indicate acceptance within 60 days of learning of the bequest (Civil Code, Article 1124), failing which the gift is treated as refused. Statutory heirs face no such deadline, though renouncing an inheritance is itself irrevocable once made.

4. Does Shanghai's annual property tax apply?

Shanghai has run a residential property tax pilot since 2011. It is levied on newly purchased homes above a floor area threshold, and on second homes for local households; property acquired by inheritance is not a purchase, so the pilot is not triggered by the inheritance itself. If the flat is later sold, or the household's composition changes, the position can change — that is a question for the district tax office, not for a general rule.

5. The tax event that actually costs money: the sale

Almost every overseas file ends with a sale, and that is where the bill is. Two points matter more than the rates:

• The five-year clock runs from the deceased's purchase, not from the inheritance. Under SAT Notice 国税发〔2005〕172号, Article 4, a home acquired by inheritance, gift or divorce settlement is treated as having been purchased at the time the deceased (or donor) bought it. A flat bought in 2001 and inherited in 2026 is a 25-year-held flat, not a one-year-held flat — which is often the difference between a 20% income tax bill and none.
• The gain is taxed as ordinary income at 20% where the five-year sole-residence relief does not apply. On VAT, the rule from 1 January 2026 is simpler than it used to be: a residence held for two years or more is exempt, and one held for less is charged at 3% of the full sale price (MOF/STA Announcement 2025 No. 17). Both tests turn on the facts of the file, not on how long ago the heir registered title.

There is a separate note on the sale side; the point here is simply that inheriting is the cheap part and selling is the expensive part.

6. Five statements you will read online, and what is true

• "China will introduce an inheritance tax next year." No draft has been published for comment and no timetable exists. The claim is recycled because it attracts readers.
• "The rate is 20%." Twenty per cent is the income tax on the gain when you sell, not a charge on inheriting.
• "Foreign heirs pay more." The deed tax exemption is drafted by relationship, not nationality. A statutory heir in Toronto pays the same as one in Jing'an.
• "A lifetime gift is cheaper than an inheritance." For a statutory heir the reverse is true: inheritance is exempt from deed tax, while a gift to a family member outside the spouse-to-spouse rule is taxed at 3%.
• "Sell first, divide the money later." The tax outcome is the same, and transferring before the heirs are registered creates title problems that cost more than the tax saved.

7. What you have to prove to get the exemption

The exemption is claimed at registration, and it is claimed with documents. You must show that you fall within Article 1127: the death certificate, a household register or notarised proof of relationship, and — where a parent of the deceased died before them — that parent's death certificate. The last item is the most common reason a file stalls, because until it is produced the office cannot see whether a share passed sideways to a grandparent.

Our guide to the documents a registration office actually accepts sets out the full chain, and the guide to inheriting property in China covers applicable law, notarisation and renunciation.

8. What we would do with your file

Three things, in this order: confirm who the heirs are under Article 1127 or under the will; check whether any beneficiary falls outside that circle and will therefore attract 3% deed tax; and produce a written cost estimate before anything is signed. In our experience the estimate is what clients actually want — not a discussion of tax policy.

To discuss a specific file, contact us. We answer in English and Chinese.

Sources: Deed Tax Law of the PRC, Article 6(5); Notice on Individual Income Tax for Gratuitous Transfer of Housing, 财税〔2009〕78号, Article 1(3); SAT Notice 国税发〔2005〕172号, Article 4; Civil Code, Articles 1124 and 1127; Stamp Duty Law, schedule of tax items; MOF/STA Announcement 2025 No. 17 on VAT for residential resales. Fees and practice described reflect Shanghai as at October 2026. Tax treatment depends on the facts of each file and on the current position of the local tax authority — confirm before completing a transfer. This page is general information, not advice on a particular estate.