Inheritance Tax Cases in Aruba – abolished (again!!)

In a recent development, we have received confirmation that the Aruban tax authorities have chosen not to file an appeal with the Supreme Court in an imporant inheritrance tax dispute.. This decision solidifies the precedent set by the Common Court, ensuring its previous position vis-a-vis its ability to collect inheritance tax despite the inheritance tax code being eliminated in 2018. As a result, it is now expected for the tax authorities to promptly align their actions with the verdict, setting the stage for relief in the lives of many heirs.

The case in question revolved around the validity of an inheritance tax assessment issued after the repeal of Aruba’s inheritance code in 2018. In that case a tax return for inheritance had been submitted in 2018, leading to the issuance of a final inheritance tax assessment by the end of December 2020. The pivotal inquiry at the onset of this case revolved around the legitimacy of the inheritance tax assessment for the year 2015. The taxpayer (later) asserted that this assessment lacked legal standing, as it had been imposed when the legal framework for such taxation had been abolished as of July 1, 2018.

The Court of First Instance affirmed that the authority vested in the tax inspector to levy inheritance tax had indeed been extinguished with the repeal of the inheritance tax legislation on July 1, 2018, without including any transitional arrangements by the legislator. due to the absence of a legal foundation, the tax inspector’s assessment was rejected by the Court. The Common Court of Justice of Aruba, Curacao, Sint Maarten, Bonaire, Sint Eustatius, and Saba delivered its judgment on June 28, 2023. In a decisive ruling, it dismissed the tax inspector’s appeal, upholding the earlier decision of the Court of First Instance. The Common Court underscored that there was no necessity for a transitional arrangement, as it was eminently reasonable to assume that repealing the inheritance tax code would take immediate effect on July 1, 2018. 

This verdict clarified that beyond June 30, 2018, a tax inspector does not have the authority to collect succession tax for events outlined in the repealed legislation, irrespective of their occurrence before July 1, 2018.

Now, with the tax authorities opting not to contest the ruling in the Supreme Court, the decision of the Common Court remains with standing. This may very well bring relief to countless heirs who will no longer endure the burdensome pursuit of collection actions against them.