The Supreme Administrative Court has clarified that the sale of a hereditary share does not generate capital gains for the IRS. See who can recover tax (up to 4 years) and how to claim. BTOCNET does screening free of charge and works on a success fee basis.
Anyone who has sold their share of the inheritance before the division - technically, the hereditary share - has not sold a property - this is the new understanding of the law. The Supreme Administrative Court (STA) has ruled that there is no IRS on capital gains in this operation. And, if payment has been made, it is possible to request a refund.
As a rule, the claim can be reviewed ex-officio up to four years after the liquidation. And in the case of "foreign exchange " (investments in foreign currency), repayments usually arise from misapplied exchange rates and poorly chosen bundling - both of which can be corrected.
If you need a guide to filling in the IRS, you can check out the article "IRS: how to fill in the tax return" on our blog!
Shall we understand the subject better?
What is the "hereditary share" anyway?
"Hereditary share" is the heir's ideal right over the undivided inheritance - the set of assets and debts not yet divided. From the update that has been made, whoever sells it is not selling "house X"; they are giving away their own position in the inheritance. Only with the division will there be individualized assets owned by the heir.
In plain language: selling your share (your share before the division) is not selling a property. That's why the Supreme Administrative Court concluded that the operation does not fall within the scope of capital gains on real estate in article 10 of the CIRS.
But who can, as a rule, recover IRS?
- Did you transfer the hereditary share and declare it in Annex G as a sale of property? With Ruling 7/2025 of the STA, the correct framework is that this operation is not subject to IRS - you can ask for a correction and a refund;
- Did you sell shares, funds or other securities in foreign currency and the broker (or the taxpayer) used an "average" exchange rate or the wrong date? The law requires you to use the official exchange rate under the terms of article 23 of the CIRS; correcting this "pormaior" reduces the capital gain and can generate a refund;
- Have you made the wrong choice to include capital gains in your taxable income (or not even compared it to the 28% autonomous rate)? In many cases, this choice has an impact on the final tax bill; a technical review can recover amounts.
But when "the handout is large, the poor are wary". Do you still have some doubts about this? Read on to find out exactly what the Supreme Administrative Court has decided on this matter.
What exactly the STA has decided about the hereditary share
Ruling no. 7/2025 standardizes case law in the following terms: "The sale of a hereditary share does not constitute an 'onerous sale of rights in rem over immovable property', under the terms of article 10(1)(a) of the IRS Code." The practical result: any gains from this sale are not subject to IRS. The decision was published in the Diário da República.
This conclusion is based on a rule of inheritance: before the division, there are no specific 'your' assets, there is an overall right to the inheritance. The ruling makes this clear and (fortunately) resolves years of divergent interpretations.
Deadlines and ways to recover IRS (without missing legal windows)
The most common route is the ex-officio review of the tax act, provided for in article 78 of the General Tax Law. In a nutshell: when there is an error attributable to the tax authorities (for example, assessments that contradict uniform case law), the AT can review and correct them up to 4 years after the assessment. This is the deadline that, in practice, allows IRS overpayments in recent years to be recovered.
Depending on the case, there may be other avenues, for example: a substitute declaration or an administrative complaint). Even when these windows have closed, the ex-officio review remains available under the conditions mentioned. The main thing is not to let the 4 years pass.
To find out more about current corporate obligations and good reporting practices, take a look at our article on corporate accountability!
Documents to be gathered in the event of a review request:
- IRS assessment note(s);
- Deed/contract for the assignment of the share;
- And for investments, statements and evidence of the exchange rate applied.
In practical guides, the OCC reinforces the use of Article 23 rules for currency conversion. But don't abandon this article just yet and run to the nearest office: there are typical pitfalls in the process that are worth knowing about!
"Foreign exchange and investments: understand the two most common traps
1) Correct gear
The law requires that you use the official rate of the currency according to article 23 of the CIRS:
- Income from abroad uses the exchange rate on the date of payment;
- Amounts transferred abroad use the selling exchange rate on the date of transfer;
- And there is a specific rule when the income stays abroad until the end of the year.
It is not valid to apply "average for the year" for convenience!
2) To encompass or not to encompass
For capital gains on securities, the basic rule is the autonomous rate (28%). In some cases, it pays to include it (add it to your other income) - in others, not. A comparison with a simulation is essential before you close your IRS. I'll say it again and again: talk to your accountant!
If the topic interests you, take a look at our article on wealth taxation, where we explain related taxes such as IMI, IMT and Stamp Duty on inheritances!
Simple steps to claim your IRS refund
- Gather evidence (liquidation notes, deed/contract for the assignment of the share, statements with dates and exchange rates).
- Confirm the framework: was it really a share (not a specific asset)? Did the exchange comply with Art. 23? Was aggregation the best option?
- Submit a request for an ex-officio review on the Finance Portal (or appoint a representative). Explain, in two lines, the STA's decision and the error in the framework.
- Keep track of deadlines: the AT may request clarification; in the event of a correction, compensatory interest may be due.
Very important: if you prefer specialized support, BTOCNET handles the entire process at no initial cost and only charges a success fee if there is a return. Contact us to find out how it works!
In practice: let's look at examples that could be real
Case A - Assignment of share (2022)
An heiress sold her share of the inheritance before it was divided. She declared it in Annex G as a sale of property and paid 2,400 euros. On the basis of STA Ruling 7/2025, she filed an ex-officio review and obtained annulment of the assessment relating to this transaction, with full reimbursement of the tax.
Case B - ETF in dollars (2023)
An investor declared capital gains using the average annual exchange rate provided by the broker. However, Article 23 requires an official exchange rate by date. When he corrected the exchange rates and tested the aggregation, he found that the tax was lower and requested a partial refund.
FAQ - Frequently asked questions
I sold my share of the inheritance but the estate only had one property. Does it count as a share?
Yes. Even if there is only one property before the division, what is being transferred is the ideal right to the inheritance, not an individual asset. That's why the Supreme Administrative Court has ruled out the taxation of capital gains in this situation.
I sold a specific property from the inheritance after it had been divided. Does this rule apply?
No. There are, in principle, real estate capital gains under the terms of Article 10 of the CIRS.
How long can I claim a tax refund if I'm entitled to it?
Practical rule: up to 4 years after the liquidation, through the ex-officio review provided for in article 78 of the LGT. But there are exceptions!
What if the error lies in the "currency" of the investments?
It can also be corrected. The exchange rate must comply with article 23 of the CIRS and the decision to aggregate must be compared with the autonomous rate. For bases and examples, see the OCC's technical guides.
Conclusion and next steps
For those who have sold their share of the inheritance (quinhão) or have doubts about investments in foreign currency, there is a concrete opportunity to recover IRS. Ruling STA 7/2025 rules out the taxation of capital gains on the transfer of a share; the General Tax Law allows for a review of assessments for up to four years; and exchange rate errors are correctable.
Need help to move forward with regularization? Talk to BTOCNET - the analysis is free and the fees are success fee, enjoy!
Legal note: This content is for information purposes only and does not dispense with the need for an analysis of the specific case by a certified accountant.
