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A query was raised regarding the taxation of redundancy payments that an employee was entitled to but had not yet received before their death, which were subsequently collected by their heirs. The Directorate General for Taxes (DGT) has ruled that these amounts must be taxed under Inheritance and Gift Tax.
This ruling clarifies that unpaid employment-related compensation becomes part of the deceased's estate, shifting the tax liability from Income Tax to Inheritance Tax for the beneficiaries.
The tax team reviews your specific situation.
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