How is each type of corporate vehicle used to invest in real estate taxed?
Following a significant change in the applicable law there has been a reduction of taxes due. Nonetheless, once incorporated real estate companies may be deemed to pay the following taxes:
Corporate vehicles incorporated in Argentina are subject to Income Tax Law according to its yearly balance. A progressive rate ranging from 25% to 35% on the net gain applies.
Corporate vehicles not incorporated in Argentina may also be taxed by Income Tax Law; subject to withholding in the payments they receive. An effective tax rate of 21% is withheld on the lease or rent payments to foreign beneficiaries that do not reside in low taxation or non-cooperative jurisdictions.
Other taxes may apply, depending on the transaction; for further detail refer to the Tax Questions section.
Please refer to the taxes topic for Australia.
Resident companies are subject to a standard corporate income tax rate of 25%. The first income band of €100,000 of small companies (see definition below) is subject to a lower rate of 20% (subject to certain conditions).
Regional tax is payable at the rate of 1.25% (in Brussels and Wallonia) or 3.97% (in Flanders) on the deemed rental income (or cadastral income) attributed to the property, plus additional local surcharges (which may increase this tax to around 30% to 50% of the cadastral income). Immovable withholding tax is tax deductible.
A 30% withholding tax is due on the distribution of a dividend, irrespective of whether the shareholder is an individual or a corporate entity.
Under the EU Parent-Subsidiary Directive as implemented in Belgium, no withholding tax is payable on dividends paid by a Belgian company to another EU company, provided that:
This regime also applies to dividends paid by a Belgian company to a parent company resident in a country with which Belgium has signed a bilateral tax treaty or any other agreement which provides for the exchange of information between the two countries.
Where the minimum holding period of 12 months has not yet expired, the distributor of the dividends must provisionally retain the withholding tax theoretically due on the dividends and the beneficiary must sign a declaration that the participation will be held for at least 12 months. If the beneficiary does not comply with this declaration, the withholding tax must be paid to the tax authorities. If the declaration is complied with, the amount withheld can be paid to the shareholder.
The withholding tax rate may also be reduced under an applicable double taxation treaty if the dividends are paid to foreign companies that are resident of a treaty state, or also under domestic legal provisions in some cases. Domestic law also provides for reduced rates in specific circumstances (eg 15% on dividends distributed by B-REITs or B-REIFs that invest at least 80% of their real estate directly or indirectly in immovable property that is exclusively or mainly used or destined for residential care units adapted to healthcare).
Domestic law provides for reduced tax rates which may apply to the distribution to individuals of dividends (other than share buybacks or liquidation dividends) related to newly registered shares that were issued after 1 July 2013. These rates will apply provided that the following conditions are satisfied:
The reduced withholding tax rates will only apply to dividends paid out at the time of the profit distribution related to the second financial year following that of the contribution. Any such dividend distributions will be subject to a 20% withholding tax rate. Dividend distributions paid out at the time of the profit distribution related to the third or subsequent financial years following the financial year of the contribution, will be subject to a 15% withholding tax rate.
A company is 'small' if it stays below at least two of the following three thresholds during two consecutive financial years:
In the case of a group of affiliated companies (eg a holding company with operating subsidiaries), the above criteria need to be applied to the group as a whole. A parent company may opt to apply the 'simplified method', whereby the totals of annual turnover and balance sheet of all the related companies for assessment purposes are added up. The thresholds of annual turnover and total balance sheet are then increased by 20%.
Companies qualifying as small companies may set up a liquidation reserve in order to be able to distribute dividends at a reduced rate. This reserve can be formed through the attribution of (part of) the profits after tax as a liquidation reserve. This attribution is subject to a separately assessed tax of 10% at company level. If the liquidation reserve is distributed before the company is liquidated and within five years after the creation of the reserve, an additional withholding tax of 20% will be due (effectively bringing the total tax to 30%). If the distribution takes place after more than five years as from the creation of the reserve, a withholding tax of 5% will be due (effectively bringing the total tax to 15%). No withholding tax is due if the liquidation reserve is distributed upon liquidation of the company.
Corporate entities receiving dividends can normally benefit from the dividend-received deduction. As a result of this, 100% of the dividend received is exempt from corporation tax. Any excess dividend-received deduction in a given tax year (ie that could not be used in the year in which it arose due to a lack of net taxable income to offset it against) stemming from qualifying dividends received from an EU or EEA subsidiary (as defined in the Parent-Subsidiary Directive), can be carried forward indefinitely to future tax years. In practice, the Belgian tax administration also accepts that dividend-received deductions may be carried forward when they originate from qualifying dividends distributed by subsidiaries located in a third country with which Belgium has concluded a tax treaty which provides for an equal treatment provision for dividends.
The use of such carried-forward excess dividend-received deductions is limited in a given tax year to € 1,000,000 plus 70% of the taxable basis in excess of € 1,000,000. As of income year 2023 (assessment year 2024), the 70% threshold has been reduced to 40% to increase the minimal taxable basis to 60% instead of 30%. This measure is only of a temporary nature, as it is the intention to abolish this measure as soon as the global minimum tax rules (OECD Pillar Two) enter into force in Belgium. Carried forward excess dividend-received deductions that cannot be used due to this limitation may be further carried forward indefinitely.
Capital gains realized on the sale of a real estate asset held directly (buildings as well as land) are subject to normal corporation tax. A system of tax deferral may apply to the taxation of capital gains if the real estate has been held as a fixed asset for more than five years, provided that the proceeds are kept on a blocked reserve account and are entirely reinvested in depreciable intangible or tangible fixed assets that are used for business purposes in Belgium or in any other member state of the European Economic Area (EEA) within three or five years. Losses related to real estate can be offset against other income. Tax losses may be carried forward indefinitely, but their use in a given tax year is limited to € 1,000,000 plus 70% of the taxable basis in excess of € 1,000,000. As of income year 2023 (assessment year 2024), the 70% threshold has been reduced to 40% to increase the minimal taxable basis to 60% instead of 30%. This measure is only of a temporary nature, as it is the intention to abolish this measure as soon as the global minimum tax rules (OECD Pillar Two) enter into force in Belgium. Any carried forward tax losses that cannot be used due to this limitation may be further carried forward indefinitely.
Capital gains realised by non-resident companies on the sale of immovable property in Belgium are subject to a withholding tax retained at source by the notary public. Afterwards the companies may offset any relevant charges and losses carried forward against this income through their annual tax return. As such the withholding tax only constitutes in a pre-financing cost.
Unless there has been speculative activity, capital gains on the sale of shares realized by Belgian individuals that are not held for business purposes are tax-exempt. In the event of a speculative sale of shares that are not held for business purposes, a separate tax rate of 33% (plus a municipal surcharge) will apply to the capital gain.
Capital gains realized by Belgian individuals on the sale of shares held for business purposes are normally taxed at the general progressive income tax rates. A separate tax rate of 16.5% (plus a municipal surcharge) applies if the shares are held for more than five years. The minimum five-year holding period does not apply when the capital gains are realized in the context of the winding-up of a business or a branch of a business.
Capital gains realized by corporate shareholders on the sale of shares are exempt provided that:
If one (or more) of the three conditions are not fulfilled, the capital gains will be subject to corporation tax at the ordinary rate of 25% .
In principle, there is no taxation of these entities' current income. They are subject to the standard corporation tax rate of 25% , but their taxable income only consists of specific items, such as received abnormal or gratuitous advantages and expenses that are not deductible (other than reductions in value or capital losses on shares). This usually means that their taxable base is limited.
An exit tax will become due, at the special corporation tax rate of currently 15% on the difference between the market value and the tax base of all assets when an existing ordinary taxed company is converted into a B-REIT or a B-REIF. The same special corporation tax rate applies to reorganizations involving a B-REIT or a B-REIF (unless only such entities are involved), including the contribution by an ordinary taxed company of a real estate asset into the share capital of such B-REIT or B-REIF.
Regional tax is payable at the rate of 1.25% (in Brussels and Wallonia) or 3.97% (in Flanders) on the deemed rental income (cadastral income) of the real estate, plus additional local surcharges (which may increase this tax to around 30% to 50% of the cadastral income). Immovable withholding tax is tax deductible.
In principle, a 30% withholding tax will be due on the distribution of a dividend by a B-REIT or a B-REIF, irrespective of whether the shareholder is an individual or a corporate entity. A rate reduction may apply under a bilateral tax treaty.
Non-resident savers may benefit from an exemption of Belgian withholding tax on the dividends they receive from a B-REIT or a B-REIF, to the extent those dividends do not stem from Belgian real estate and dividend income.
Qualifying non-resident pension funds may in principle benefit from a general exemption from Belgian withholding tax on dividends received from a B-REIT or a B-REIF, irrespective of the source of income – Belgian or foreign – that is distributed.
An individual shareholder of a B-REIT or a B-REIF who holds his shares as a private investment, can choose either to report or not to report the dividends in his personal income return. If the dividends are not reported in the personal income return, the withholding tax of 30% will be the final tax in the hands of the shareholder. Reporting the dividends in the personal income return may allow the shareholder, depending on the circumstances, to recover the withholding tax, in total or in part, and may thus result in a more beneficial taxation.
Corporate shareholders that are subject to the Belgian corporation tax will in principle be taxable on the dividends they receive from a B-REIT or a B-REIF. As a rule, such dividends are not eligible for the Belgian participation exemption regime. These will therefore be treated as ordinary income and will be included accordingly in the calculation of the corporation tax.
An exception to this rule applies for the categories of income listed below that are (re)distributed by a B-REIT or a B-REIF. To the extent and insofar dividends received from a B-REIT or a B-REIF encompass such income, these dividends benefit from the Belgian participation exemption regime and are therefore exempt from corporation tax in the hands of the shareholder:
There is no taxation of capital gains at the level of the B-REIT or the B-REIF, since capital gains are not part of the taxable income of the fund.
If the shareholder is a private individual, capital gains realized outside the scope of his business activities will, in principle, be exempt from income tax, unless the tax authorities can demonstrate that there has been speculation or that the sale of the participation is not consistent with the normal management of the taxpayer's estate.
In the hands of a corporate shareholder, the net capital gains realized on the shares of B-REIT or a B-REIF will be exempt from corporation tax to the same extent as that the dividends received from those shares would have been eligible for the participation exemption regime.
In principle, there is no taxation of this entity's current income. It is subject to the standard corporation tax rate of 25%, but it’s taxable income only consists of specific items, such as received abnormal or gratuitous advantages and expenses that are not deductible (other than reductions in value or capital losses on shares). This usually means that it’s taxable base is limited.
Regional tax is payable at the rate of 1.25% (in Brussels and Wallonia) or 3.97% (in Flanders) on the deemed rental income (cadastral income) of the real estate, plus additional local surcharges (which may increase this tax to around 30% to 50% of the cadastral income). Immovable withholding tax is tax deductible.
In principle, a 30% withholding tax will be due on the distribution of a dividend by an ELTIF, irrespective of whether the shareholder is an individual or a corporate entity. A rate reduction may apply under a bilateral tax treaty.
However, there are several domestic law exemptions that can be invoked by the ELTIF.
Dividends received on shares realized by a Belgian tax resident corporate investor are in principle subject to corporate income tax at the standard rate of 25%.
This type of investment income can however benefit from the ‘Dividend Received Deduction’, under which the income is fully exempt, provided that the following conditions are met:
The third condition is to be assessed at the level of the underlying investments (portfolio company, real estate asset etc) of the ELTIF. In other words, the dividends distributed by a Belgian ELTIF will be eligible for the Dividend Received Deduction at the level of the corporate investor, to the extent that income received by the ELTIF is derived from a company that is subject to the ordinary income tax regime in its jurisdiction.
The same transparency mechanism applies to foreign real estate income realized by an ELTIF. The real estate income distributed by a Belgian ELTIF will be eligible for the Dividend Received Deduction at the level of the Belgian corporate investors, provided that the real estate income realized by the Belgian ELTIF has been taxed abroad.
As a result, a breakdown between ‘good’ and ‘bad’ income (dividends, capital gains on shares and foreign real estate income) will have to be made, in order to determine the tax treatment of the dividend distributions by the Belgian ELTIF.
An individual shareholder of an ELTIF who holds his shares as a private investment, can choose either to report or not to report the dividends in his personal income return. If the dividends are not reported in the personal income return, the withholding tax of 30% will be the final tax in the hands of the shareholder. Reporting the dividends in the personal income return may allow the shareholder, depending on the circumstances, to recover the withholding tax, in total or in part, and may thus result in a more beneficial taxation.
Corporate shareholders that are subject to the Belgian corporation tax will in principle be taxable on the dividends they receive from an ELTIF. As a rule, such dividends are not eligible for the Belgian participation exemption regime. These will therefore be treated as ordinary income and will be included accordingly in the calculation of the corporation tax.
However, the profit distribution by an ELTIF upon the redemption of its own shares and/or its (partial) liquidation will be exempt from Belgian withholding tax.
There is no taxation of capital gains at the level of the ELTIF, since capital gains are not part of the taxable income of the fund.
If the shareholder is a private individual, capital gains realized outside the scope of his business activities will, in principle, be exempt from income tax, unless the tax authorities can demonstrate that there has been speculation or that the sale of the participation is not consistent with the normal management of the taxpayer's estate.
In the hands of a corporate shareholder, the net capital gains realized on the shares of an ELTIF will be exempt from corporation tax to the same extent as that the dividends received from those shares would have been eligible for the participation exemption regime.
In both the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS) corporation tax is payable at the rate of 10%.
All company profits as shown in its tax statement are subject to tax. The taxable amount includes revenues and capital gains. All expenditure must conform to recognized accounting standards.
Resident shareholders pay tax on the company's profits both in the territory of the FBiH and abroad.
They also pay withholding tax on dividends, interest and other amounts paid to non-residents.
Non-resident shareholders pay tax on company profits realized in the territory of the FBiH. They also pay withholding tax on dividends, interest and other amounts received.
Profits are taxed at the rate of 10% and withholding tax is also payable at the rate of 10%. Withholding tax on dividends applies at the rate of 5%.
Resident and non-resident shareholders are subject to tax on company profits.
All of a company profits as shown in its tax statement are subject to tax at the rate of 10%. The taxable amount includes revenues and capital gains. All expenditure must conform to recognized accounting standards.
Individuals are subject to personal income tax at the rate of 10%. Withholding tax is payable on net income at the rate effective on the date of payment.
Taxable income includes capital gains.
In the FBiH each canton has its own tax laws relating to the transfer of property. For example, under the Canton of Sarajevo's Law on Taxes applicable to Transfers of Property and Rights, tax is payable at 5% of the market value of the property.
In the RS, the tax rate for transfers of property has been abolished for all contracts for the purchase of real estate concluded after 31 December 2011. A transfer of property effected before that date still attracts a tax at 3% of the market value of the property.
Property transfers are generally exempt from VAT. VAT at 17% is only payable on the first transfer of ownership rights, or rights to dispose of, newly constructed property.
Corporation tax is payable in the FBiH and the RS at the rate of 10%.
All profits made by the partnership as shown in its tax statement are subject to tax. The taxable amount includes revenues and capital gains. All expenditure must conform to recognized accounting standards.
Resident partners pay tax on the company's profits both in the territory of the FBiH and abroad. They also pay withholding tax on dividends, interest and other amounts paid to non-residents.
Non-resident partners pay tax on company profits realized in the territory of the FBiH. They also pay withholding tax on dividends, interest and other amounts paid to non-residents.
Profits are taxed at the rate of 10% and withholding tax is also payable at 10%. Withholding tax on dividends is 5%.
Resident and non-resident partners are subject to tax on partnership profits.
All profits made by the partnership as shown in its tax statement are subject to tax at the rate of 10%. The taxable amount includes revenues and capital gains. All expenditure must conform to recognized accounting standards.
Individuals are subject to personal income tax at the rate of 10%. Withholding tax is payable on net income at the rate effective on the date of payment.
Taxable income includes capital gains.
In the FBiH, each canton has its own tax laws relating to the transfer of property so tax varies from one canton to another. For example, under the Canton of Sarajevo's Law on Taxes on the Transfer of Property and Rights, tax is payable at 5% of the market value of the property.
In the RS, the tax rate for transfers of property has been abolished for all contracts for the purchase of real estate concluded after 31 December 2011. A transfer of property effected before that date still attracts a tax at 3% of the market value of the property.
Property transfers are generally exempt from VAT. VAT at 17% is only payable on the first transfer of ownership rights, or rights to dispose of, newly constructed property.
There is no difference between the corporate types, such as Sociedade Limitada and Sociedade Anônima, in terms of taxation.
Entities are subject to corporate income taxes (ie IRPJ and CSLL) on the sale of real estate. Corporate income taxes are generally due at 34% on taxable income.
In addition, taxes on gross revenues (ie PIS and COFINS) may be due on the sale of real estate by a legal entity at either 3.65% or 9.25% depending on the regime elected by the entity. PIS and COFINS are exempt on the sale of fixed assets.
A more simplified tax regime known as Deemed Profit Regime can be used to achieve a lower effective tax rate. In general, the Deemed Profits Regime is a simplified regime intended to reduce the compliance burden on smaller companies. This regime must be elected by the taxpayer and is only available to companies accruing gross receipts of less than approximately USD15 million (BRL78 million) per year. Additionally, financial institutions and companies with income from sources outside Brazil may not elect to apply into the Deemed Profits Regime.
Specifically regarding FIIs, income and gross revenues from the lease fees and sale of property would not be subject to income taxes at the fund level. Instead, taxation will occur at the investor level on a semi-annually basis at a rate of 20%, except for: certain individuals subject to tax exemption as established in law; and non-resident investors – who are not individuals – subject to income tax at 15%.
As FIEs all generally have the status of a legal person and so are subject to the same taxes as set out in the Tax Topic for the Peopleʼs Republic of China.
Depending on the type of corporate vehicle, different tax obligations are imposed under Colombian regulations. For instance, Colombian corporations, such as Simplified Joint Stock Companies (SAS). and limited liability companies, are subject to tax liabilities as fiscal residents. On the other hand, when it comes to trust agreements, Colombia applies taxation principles based on the fiscal transparency principle, wherein the tax obligations are attributed to the settlors and/or beneficiaries rather than the trust itself. It is important to consider these distinctions and comply with the applicable tax laws and regulations accordingly.
Please, find below the main considerations and liabilities that Colombian companies and trusts are deemed to comply regarding Colombian tax regulation:
Tax |
Corporations
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Trusts |
|---|---|---|
| Income tax | Colombian corporations are subject to income tax on their worldwide income at the general rate of 35% (as of 2023). Taxable income is calculated as gross income (ordinary and extraordinary) minus costs and expenses authorized for tax purposes. | Under the principle of tax transparency, trusts are not subject to income tax. Instead, the settlors and/or beneficiaries of the trust must include in their income tax returns the income, costs and expenses accrued by the trust under the same conditions as if the activities that generated them were carried out directly by the settlor and/or beneficiary. The specific rate will be determined based on the classification of the taxpayer, taking into account their specific conditions (ie legal entity, corporation, individual) and tax residency status. |
| Capital gains tax | Capital gains tax, set a rate of 15% is an additional tax of income tax, which applies in certain taxable events, such as sale of fixed assets held for at least two years, liquidation of a company exceeding its paid in capital, inheritances, legacies, gifts or donations. | Capital gains tax also operates under the principle of tax transparency. Settlors and/or beneficiaries of the trust must include the income, costs and expenses corresponding to capital gains accrued by the trust under the same conditions as if the activities that generated them were carried out directly by the settlor or beneficiary. Nonetheless, the applicable tax rate is 15%. |
| Value added Tax (VAT) | VAT is levied at a general rate of 19% on the sale and importation of tangible movable goods and intangible assets related to industrial property, as well as the provision of services within Colombia or from abroad, unless otherwise specified. Services provided to foreign companies may be VAT exempted if services are provided in Colombia and used exclusively abroad by entities or individuals without business activities in Colombia. Taxpayers who provide this type of services need to keep all support documentation which evidence that the nature of the transactions do correspond to exportation of services. |
It's important to emphasize that in this case, the principle of fiscal transparency does not apply, meaning that the trust itself is responsible for fulfilling the VAT-related obligations. In this sense, the trustee assumes the responsibility for ensuring compliance with VAT regulations and fulfilling the corresponding tax obligations on behalf of the trust (ie VAT returns and withholding tax on VAT within the framework of the commercial trust). |
| Turnover Tax (Impuesto de Industria y Comercio) | Turnover Tax is a municipal tax that levies the industrial, commercial and service activities rendered in a Colombian municipality at rates that may vary between 0.2% and 1.4%. This tax normally includes a surcharge equivalent to 15% of the tax payable, which is triggered by the display of billboards and other kinds of publicity by the taxpayer. This tax may be used as a deductible expense of the corporate income tax. |
According to the principle of transparency, trusts are not subject to Turnover Tax. Instead, the settlors and/or beneficiaries will be responsible for paying this Tax. |
| Minimum Tax | All Colombian corporations will be subject to a minimum tax that guarantees an effective taxation of 15% over the accounting profits. So if the effective tax rate is less than 15%, the income tax will be increased by the percentage points required to reach such effective tax rate. To determine the effective tax rate, the law includes a formula based on the accounting profit with some specific adjustments determined by the law. | Not applicable. |
| Withholding tax | Withholding tax is the mechanism by which the state aims to gradually collect certain taxes, ideally within the same fiscal year in which they are triggered. Colombian companies must collect the applicable WHT amounts, deposit the withheld amounts with the tax authority, file monthly WHT returns, and issue WHT certificates to the payees. If withholdings are not made, or if partially made or not paid over to the tax authorities, Colombian companies will be subject to penalties and default interest. |
It's important to emphasize that in this case, the principle of fiscal transparency does not apply, meaning that the trust itself is responsible for the applicable withholding tax over the payments made in the execution of the trust agreement. In these circumstances, the trustee must withhold the applicable withholding tax at the time of payment. Payments made to the trustee for its administrative services, charged to the funds of the trust, are subject to withholding tax. However, payments made to the trust itself are not subject to withholding tax, as the trust is not considered a taxpayer for income tax purposes. |
| Real estate tax | Real estate is subject to municipal taxation, which depends on the value of the property, the economic use of each property and the municipal regulations. In general, this tax is levied annually on the ownership, usufruct, or possession of real estate property. It is collected by the municipality where the property is located, and the tax rate varies between 0.3% and 3.3%. | According to the principle of transparency, trusts are not subject for municipal taxation over real estate held by trusts. Instead, the settlors and/or beneficiaries are responsible for filing and paying the corresponding tax, under the principle of tax transparency. |
| Relevant Tax Information | Colombian taxpayers have to file annual relevant tax information reports (Información Exógena). This information includes the income, costs, expenses, collected and creditable VAT, shareholders, labour payments, withheld amounts, assets, liabilities, among other. This obligation applies both at a National and a Municipal level. |
Trustees must report, under their own Tax Identification Number and business name, the net asset value of rights held by settlor and/or beneficiaries over the trust, the value of contributions made to the trust during the year, accrued profits, the value of income received from each trust, payments or account credits made using trust resources, and any withholdings made or assumed. |
| Transfer Pricing Regime | Transactions carried out by companies with foreign related parties must be executed under arm’s length conditions. Consequently, the terms and conditions agreed on those transactions should be those that would have been agreed in a similar transaction with or between unrelated third parties. | |
| Tax compliance | A tax year in Colombia starts on 1 January and ends on 31 December. Tax returns must be filed on due dates determined by the Colombian government, which depends on the last digit of the taxpayer tax number. Here is a summary of the applicable periodicity for the main obligations of Colombian tax regime: - Income tax return: annually - VAT: bimonthly period or fourth-month period (the periodicity will depend on the incomes of the taxpayer and if it has the condition of exporter of goods and services) - Withholding tax return: monthly - Transfer pricing: annually - Turnover tax: annual period or bimonthly period (the periodicity will depend on the incomes of the taxpayer) - Relevant tax information: this return must be fulfilled in an annual periodicity before the national tax authority |
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| Fiscal liability | Regarding Colombian corporations, tax compliance is the company’s sole responsibility. Failure to comply with tax obligations will not create liability for this type of companies' shareholders, except if the companies have been used by their shareholders to commit fraud or similar actions, in which case the corporate veil may be lifted. When the investor incorporates in Colombia a branch of the foreign company, the branch will have certain operational autonomy. However, for legal, tax, and accounting purposes, it will still be part of the foreign company, and the foreign company will be deemed responsible for complying with the tax obligations of the branch and any non-compliance committed by it. |
The trust assumes responsibility for fulfilling tax obligations arising from tax agreements (such as VAT, stamp tax, and withholdings), including any penalties associated with such tax filings. Settlors and/or beneficiaries bear the responsibility for taxes where the principle of transparency applies, ensuring compliance with applicable tax laws and regulations. |
| Stamp Tax | The tax is levied on public deeds that are executed for every type of alienation (ie sales or donations) of real estate whose value exceeds 20,000 tax units (approx. USD169,650). These operations would be subject to an additional 1.5% or 3% stamp tax. | |
| Registry Tax | The tax paid for the registration of legal acts, contracts, or legal transactions subject to registration is paid once for each legal act (regardless of whether registration is required in more than one entity) and is incurred upon the registration request to the entity. The entity responsible for collecting the tax is the one that performs the registration. |
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| Double Taxation Agreements: (CDI for its acronym in Spanish) | Colombia has signed Double Taxation Agreements to avoid double taxation with several countries in the region, Europe and Asia, including: Andean Community (Bolivia, Ecuador and Peru), Mexico, UK, France, Portugal, Czech Republic, United Arab Emirates, Japan, Uruguay, The Netherlands, Chile, Canada, Spain, Italy, Switzerland, India, South Korea, Brazil, Luxembourg. The treaties signed with United Arab Emirates, Brazil, Uruguay, Luxembourg and the Netherlands are not yet in force since the internal approval phases have not been completed. |
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| Indirect Sales | Law 2010 of 2019 includes the indirect sales regime in Colombia. According to this regime, indirect sales of Colombian assets through the sale of foreign entities will be subject to income tax or capital gain tax, whenever Colombian assets represent more than 20% of the total assets of the foreign entity being sold considering book value and/or commercial value of such assets. | |
Corporate income tax is payable at 18% (or 12% in case of a company with less than HRK 3 mil. annual income) on income after the deduction of expenses.
For tax-resident shareholders which are corporations, dividends are not regarded as taxable income. In the case of tax-resident individuals, no income tax applies to dividends and profit share income up to HRK 12,000 per year; amounts above this threshold represent capital income and advance tax payments are withheld at 12% with no personal allowances included in the calculation. Withholding tax applies to dividends and profit shares distributed to foreign entities which are not private individuals. This tax applies at a rate of 12%. Since Croatia joined the EU, withholding tax on dividends and profit shares have not been payable if they are paid out to an enterprise that applies one of the joint taxation models applicable to holding and related companies in the various EU countries, if:
Capital gains on the sale of real estate assets are taxable. For a doo, capital gains are fully taxable at the 18% (or 12%) corporate income tax rate. Capital gains on the sale of a participation in a doo by individuals are taxable at the rate of 12% (if the participation has been held for less than three years).
Corporate income tax is payable at 18% or 12% (if the annual income is less than HRK 3 million) on income after the deduction of expenses.
As for a doo (see above)
Capital gains on the sale of real estate assets are taxable. For a dd capital gains are fully taxable at the 18% corporate income tax rate. Capital gains on the sale of stocks by individuals are taxable at the rate of 12% (if the shares are held for less than three years).
Corporate income tax is payable at 18 % (or 12%) on income after the deduction of expenses.
For tax-resident shareholders which are corporations, dividends are not regarded as taxable income. In the case of tax-resident individuals, no income tax applies to dividends and profit share income up to HRK12,000 per year; amounts above this threshold represent capital income and advance tax payments are withheld at 12% with no personal allowances included in the calculation. Withholding tax applies to dividends and profit shares distributed to foreign entities which are not private individuals. This tax applies at a rate of 12%. Since Croatia joined the EU, withholding tax on dividends and profit shares have not been payable if they are paid out to an enterprise that applies one of the joint taxation models applicable to holding and related companies in the various EU countries, if:
Capital gains on the sale of real estate assets are taxable. For a public partnership capital gains are fully taxable at the 18% (or 12%) corporate income tax rate.
Corporate income tax is payable at 18% (or 12%)on income after the deduction of expenses.
As for a jtd (see above)
Capital gains on the sale of real estate assets are taxable.
For a limited partnership capital gains are fully taxable at the 18% (or 12%) corporate income tax rate. Capital gains on the sale of shares in a limited partnership by individuals are taxable at the rate of 12% (if the shares are held for less than three years).
As a closed end real estate investment fund is a public limited liability company so the corporate income tax rate of 18% (or 12%) applies.
For tax-resident shareholders which are corporations, dividends are not regarded as taxable income. In the case of tax-resident individuals, no income tax applies to dividends and profit share income up to HRK 12,000 per year; amounts above this threshold represent capital income and advance tax payments are withheld at 12% with no personal allowances included in the calculation. Withholding tax applies to dividends and profit shares distributed to foreign entities which are not private individuals. This tax applies at a rate of 12%. Since Croatia joined the EU, withholding tax on dividends and profit shares have not been payable if they are paid out to an enterprise that applies one of the joint taxation models applicable to holding and related companies in the various EU countries, if:
Capital gains on the sale of real estate assets are taxable. For a closed end real estate investment fund capital gains are fully taxable at the 18% (or 12%) corporate income tax rate. Capital gains on the sale of shares in a closed end real estate investment fund by individuals are taxable at the rate of 12%.
Rental income is taxed after deducting related expenses (eg interest, depreciation and administrative costs).
Currently the corporate income tax rate is 21%.
In general, there is a withholding tax in the amount of 15% from dividends paid to corporate and individual shareholders.
There is no withholding tax if the dividend is distributed by a subsidiary to its parent company, provided that the parent company is a corporation of comparable legal form (ie a Limited liability company or a joint stock company) registered in the Czech Republic, in an EU member state or in Switzerland, Norway, Iceland or Liechtenstein and has held or will have held at least 10% of the shares/ownership interest in the subsidiary for an uninterrupted period of 12 months; this exemption is not applicable if the dividend is distributed to a shareholder – an individual.
There exist number of complex rules relating to tax deductibility of a loan interest and related party loan interest;, these can to a certain extent be modified with special tax structuring.
Under double-taxation treaties concluded between the Czech Republic and other countries, dividends may be taxed either in the country of the company's registration or in the country of the shareholder's residence. However, the rate of withholding tax in the country of the company's registration is usually lower.
Dividend income received from Czech subsidiaries is normally exempt from tax in corporate structures, as described above.
Capital gains from the sale of real estate made by non-resident corporations are subject to Czech corporate income tax, as part of general tax base.
Capital gains made by an individual are taxable only if the shares are sold within five years of purchase in case of limited liability companies, and three years in joint stock companies, as part of general tax base.
Capital gains derived from the sale of shares by corporate investors are subject to tax, as part of general tax base. A parent–subsidiary exemption described above for a dividend distribution applies also for sale of shares/ownership interests in a subsidiary.
Double-taxation treaties set out whether gains from the sale of shares, if not tax exempt under internal tax laws, are taxed in the country of residence of the foreign investor or in the country where the company is registered.
An unlimited partnership is considered to be fully transparent for income tax purposes. Any profits generated by the unlimited partnership or distributed to unlimited partners in a limited partnership are regarded as the profits of individual partners and are, therefore, treated as their personal income.
Profits of an unlimited partnership which are to be distributed to its limited partners need to be first taxed as income of the limited partnership (corporate income tax) and, if they are to be subsequently paid out to the limited partners, they are subject to 15% withholding tax.
These rules will also apply to allocation of income (profit) to foreign investors.
A partnership is tax transparent. The applicable tax depends on the status of each partner.
Capital gains in Denmark are subject to tax and for corporate owners (resident or non-resident) the applicable rate is 22% (2024). For individuals, the rate is up to 42%.
Danish-resident entities are subject to taxation in Denmark on all income deriving from Denmark. Income from permanent establishments and properties located in foreign jurisdictions is generally not subject to taxation in Denmark.
Taxable income comprises gross income minus deductible costs as shown in the company’s profit and loss statement. This may then be further adjusted to allow for exempt income, disallowable expenditure and losses brought forward.
All resident group entities and the Danish branches of non-resident companies are subject to mandatory tax consolidation.
Dividends from a Danish company distributed to a foreign parent company are exempt from Danish withholding tax if both the following conditions are met:
Subsidiary Directive or a tax treaty with the state in which the parent company is resident. Additionally, it is a requirement that the shareholder is treated as the beneficial owner of the dividends.
Capital gains on shares in Danish companies owned by foreign shareholders are generally not subject to Danish taxation.
A limited partnership is tax transparent. The applicable tax depends on the status of each partner.
Like the limited partnership a limited partnership company is treated as transparent for tax purposes.
As a general rule, an SCI is not subject to tax unless it opts to be subject to corporate income tax or unless it carries out a commercial activity. An SCI remains a pass-through entity even though it carries out an ancillary commercial activity, provided that the income received pursuant to such commercial activity does not exceed 10% of the total income of the SCI, including taxes.
Nevertheless, the SCI is not fully transparent for French tax purposes since its taxable profit is computed at its level before being taxed in the hands of its shareholders (each shareholder being taxable on its prorata share in the profits derived by the SCI).
Moreover, the taxable profits of an SCI are computed in practice in accordance with the tax provisions applicable to its shareholders as they appear at the end of the SCI's financial year (ie 31 December of each year). For instance, the portion of the SCI's profits attributable to corporate shareholders as at 31 December of each year, is computed in accordance with the tax provisions applicable to corporate income tax.
The rules applicable to an SNC are similar to those applying to an SCI except that in contrast to an SCI, an SNC keeps its pass-through tax status even if it carries on a commercial activity.
Corporate income tax is payable at the standard rate of 25%. A 3.3% social contribution applies to companies with a turnover exceeding €7,63 million and whose corporate income tax exceeds €763,000 resulting in a 25.83% effective tax rate.
Below is an overview of applicable rates of corporate income tax for the coming fiscal years (excluding the 3.3% social contribution to corporate income tax).
|
Type of company |
Turnover (EUR) |
Taxable income (EUR) |
FY as from |
|
|
2022 |
2023 |
|||
|
Standard company
|
Non applicable |
Non applicable
|
25% |
25% |
|
Small or medium company(1) |
T ≤ 10 M |
0 to 38,120 |
15% |
15% |
|
38,121 to 42,500
|
25% |
|||
|
> 42,500 |
25% |
|||
|
10 M < T ≤ 50 M |
Non applicable |
25 % |
25 % |
|
(1) Provided that the conditions to benefit from the reduced rate provided for in Article 219, I-b of the French General Tax code are met.
Until 2017, an additional 3% contribution to corporate income tax was also assessed (under conditions) on the amounts of distributed dividends, at the level of the distributing company.
In May 2017, the European Court of Justice ruled that such a contribution was in breach of the Parent-Subsidiary Directive.
The French Finance Law for 2018 repealed this contribution, which is no longer applicable since January 1, 2018.
Individuals: The French Finance Law for 2018 introduced a flat tax (PFU) applicable to capital gains, interests and dividends income. The rate for the PFU is set to 30% (12.8% of individual income tax and 17.2% of social contributions) and applies to dividends distributed as from 1 January 2018.
Previous to the introduction of the PFU, dividends were subject to French individual income tax at a progressive rate, after a flat-rate rebate of 40%. As from 1 January 2018, individual taxpayers may still elect for dividends to be taxed to the progressive income tax rate. However, please note that:
Companies: Dividends are subject to corporate income tax at the standard rate of 25% (or more if additional contributions apply - effective rate of 25.83% with the 3.3% social contribution).
Where a holding of at least 5% in the subsidiary has been held for at least two years or where the parent company commits to a two-year holding period, dividends benefit from the French Parent-Subsidiary regime, whereby dividends are 95% tax-exempt, resulting in a 1.25% effective tax rate (not including the 3.3% social contribution to corporate income tax which may apply).
In addition, distributions made between companies which belong to a same French tax consolidated group and distributions received by a member (French resident company or French permanent establishment) of a French tax consolidated group from EU or EEA qualifying subsidiaries held at 95% or more and fulfilling the criteria for tax consolidation (other than being a French tax resident) are 99% tax-exempt resulting in an effective 0.25% taxation (not including the 3.3% social contribution to corporate income tax which may apply).
The Parent-Subsidiary regime does not apply to dividends received from real estate companies whose shares are shown in the parent company's balance sheet as current assets (stock) as it is carrying on a real estate agency business (marchand de biens).
Dividends paid to a transparent entity by a company which is subject to corporate tax are declared at the level of the entity but taxed at the level of the shareholder.
Non-resident
Individuals: Dividend distributions to individuals who have their residence outside of France are subject to a final 12.8% withholding tax (aligned to the PFU rate), unless a lower rate is provided for by a tax treaty. The rate is 75% for dividends paid into a bank account located in a Non-Cooperative State or paid or accrued to persons established or domiciled in such a Non-Cooperative State.
Companies: Dividends arising in France distributed to non-resident shareholders are subject to a final withholding tax at the rate of 25%, unless a treaty provides for a lower rate.
The withholding tax is reduced to nil for dividends paid by a French resident company to (i) a qualifying EU parent company if the parent company has been holding at least a 5% participation in the French subsidiary for at least two years, or commits to a two-year holding period (ii) or to certain qualifying foreign UCIs under certain conditions. The rate is 75% for dividends paid on a bank account located in a Non-Cooperative State or paid or accrued to persons established or domiciled in such a Non-Cooperative State.
Individuals: capital gain realized on the disposal of real estate assets held directly or through a pass-through entity (ie an SCI) by an individual, resident or non-resident, is subject to a 19% tax plus 17.20% social contributions (subject to the provisions of tax treaties).
Furthermore, a progressive 2% to 6% tax applies on real estate capital gains on sales of property. This tax applies indifferently on real estate rights or assets other than developable lands.
Allowances increasing with the holding period can be deducted from the taxable gain, leading to a full exemption of individual income tax after 22 years of holding and of social contributions after 30 years of holding.
Companies: capital gains realized on a disposal of real estate assets located in France are subject to corporate income tax at the standard rate (ie 25%).
Capital gains realized on a disposal of a qualifying participating interest, ie where shares represent at least a 5% interest in the subsidiary and have been held for more than two years, are exempt from corporate income tax up to 88%, resulting in a 3% maximum effective tax rate (not including the 3.3% social contribution to corporate income tax which may apply).
The participation exemption regime does not apply to gains arising from the disposal of shares in a real estate company (i.e. a company where more than 50% of the assets consist of real property or real property rights, with the exception of real property used for the operation of the company’s business). Capital gains on a disposal of shares in real estate companies are subject to corporate income tax at the standard rate, or at a reduced 19% rate where the real estate company is publicly listed.
As above for an SARL (société à responsabilité limitée) – limited liability company.
As above for an SARL (société à responsabilité limitée) – limited liability company.
As a transparent entity, the SCPI's profits are taxed at the level of the shareholders.
Income is distributed to investors and taxed at the level of the individual investor.
As above for an SARL (société à responsabilité limitée) – limited liability company.
As above for an SARL (société à responsabilité limitée) – limited liability company.
Taxation of current income in France: The SIIC and its nominated subsidiaries (which must have the same business purpose and be at least 95% owned, directly or indirectly) are exempt from tax on renting or subletting real estate under finance lease agreements (lease agreements including an option for the tenant to buy the property at a fixed price during, or at the end of, the term), on capital gains arising from a disposal of real estate assets and on dividends received from SIIC subsidiaries, provided that at least:
Where a company, which is subject to standard corporate income tax, elects for the SIIC regime to apply, the election entails (i) taxation of all untaxed or deferred profits at the standard 25% corporate income tax rate and (ii) taxation of latent gains on real estate assets at a reduced 19% rate (note that the 3.3% social contribution is not applicable in the latter case).
Resident
Individuals: The flat-tax rate at a 30% rate (12.8% of income tax and 17.20% of social contributions) is payable on 100% of the dividends received. Please note that if the individual opts for the progressive income tax rate, the 40% rebate is not available.
Companies: Dividends are subject to corporate income tax at the rate of 25%[1] (25.83% if the 3.3% contribution applies). The Parent-Subsidiary regime is only available for distributions made by the SIIC to its corporate shareholders when they are made out of taxable profits made by the SIIC and/or capital gains taxable at the 19% rate (but the Parent-Subsidiary does not apply to the distributions made out of the SIIC's tax exempt profit).
In addition, distributions made to a corporate shareholder that holds at least 10% of the SIIC's capital (directly or indirectly) trigger a 20% withholding tax in the hands of the distributing SIIC if such dividends are not subject to corporate income tax (or any equivalent outside of France - at the rate of 8.33%) in the hands of the French corporate shareholder. This tax only applies when dividends are distributed out of the tax exempt profit of the SIIC.
Non-resident
Dividends arising in France distributed to non-resident shareholders are subject to a final withholding tax at the rate of 25% for a legal entity and at the rate of 12.8% for individuals, unless a treaty provides for a lower rate to apply.
The 20% withholding tax at the level of the SIIC is applicable if the dividends are not subject to a minimum rate of corporate income tax in the country where the foreign corporate resident which holds at least 10% of the distributing SIIC is established (8.33%). This tax only applies when dividends are distributed out of the tax-exempt profit of the SIIC.
Capital gains arising from the disposal of real property or shares in SIIC subsidiaries (and certain other real property rights) are normally exempt from corporate income tax, provided that the company complies with distribution requirements related to the gains.
Other gains are taxed in the same way as for an SARL (société à responsabilité limitée) – limited liability company.
[1] The corporate income tax may vary depending on the turnover of the company. Please refer to the table above which is giving an overview of the applicable rate.
15.825% corporation tax including a solidarity surcharge is payable on profits, and (generally) trade tax on taxable profit for trade tax purposes at a minimum rate of 7% (depending on the relevant municipality), which is defined as taxable profit for corporation tax purposes plus certain add back items and less certain deductions. The trade tax rates vary, since this tax is levied by the municipalities. A company, or corporation can have a tax presence in more than one municipality. The company or corporation can qualify for a trade tax‑exemption if it generates income only from leasing its own property. Business expenses, depreciation and amortisation are tax deductible. Deductions can also be claimed for interest, provided that the deductibility is not limited by the interest cap rule, introduced by the Business Tax Reform Act 2008. Under the interest cap rule, interest expenses are generally fully deductible as business expenses in an amount equal to the interest income of the business unit (Betrieb). If interest expenses in excess of interest income (that is net interest expenses) exceed €3,000,000, deductibility is limited to 30% of EBITDA (earnings before interest, taxes, depreciation and amortisation). Exemptions to this interest cap rule may apply.
In respect of trade tax, 25% of all interest on debt payments (as far as interest payments have already been deducted) and 6.25% of the expenditure on temporary usage rights (for example licences and concessions) must be added back into the taxable income to the extent it exceeds €100,000.
A GmbH must deduct withholding tax on dividends at the rate of 25% plus a solidarity surcharge (total tax rate 26.375%).
Withholding tax may be credited against the investors’ income or corporate income tax. As regards private investors, in certain circumstances a flat tax of 26.375% may apply which is treated as settled by the withholding tax deducted.
If the EU Parent-Subsidiary Directive applies, (ie if dividends are paid by a German GmbH or AG to another EU corporation, which has held 10% of the shares in the German GmbH or AG for an uninterrupted period of 12 months prior to the distribution of dividends), and the shareholder is sufficiently large and active, no withholding tax is payable as long as the shareholder provides an exemption certificate to the company. The shareholder must apply for this certificate from the German Federal Central Tax Office (Bundeszentralamt für Steuern). If the shareholder has not obtained an exemption certificate but the requirements of the Parent-Subsidiary Directive and the substance requirements are met, the tax will be refunded upon application.
If the EU Parent-Subsidiary Directive does not apply, but a double‑tax treaty does, withholding tax of between 10% and 15% is normally payable (although this is generally deductible against tax due on taxable German income).
Withholding taxes exceeding these rates will be refunded upon application, provided the shareholder meets the substance requirements. In addition, withholding taxes may be refunded eg if the shareholder held a stake of at least 10% of the share capital as of the beginning of the relevant fiscal year of the distributing entity.
German tax law provides a special tax regime for REITs when the following requirements are met:
The maximum direct shareholding by any one person or entity is limited to 10% of the shares. In addition, at least 15% of the shares must be held in free float and, at the date of the admission of the REIT, 25% of the shares must be held in free float. A share is held in free float if the shareholder holds less than 3% of the voting rights in the REIT.
At least 75% of the assets of a REIT must consist of real estate (an existing residential building cannot be part of the assets) and 75% of the REIT's gross yield must result from leasing or selling immovable assets.
A REIT's income is exempt from corporate and trade tax as long as at least 90% of its profits are distributed to the shareholders. If less than 90% of the profits are distributed the tax authorities may impose penalty payments amounting to between 20% and 30% of the difference between 90% of the profits and the dividends actually distributed.
Distributions are fully taxable at shareholder level. The REIT must impose a withholding tax of 25% plus a solidarity surcharge (total tax rate 26.375%). Presently this withholding tax will be credited against assessed income tax and/or refunded if applicable.
As of 1 January 2009 the taxation of private income from capital investment was changed by the Business Tax Reform Act 2008. From that date private capital investment income became subject to a final withholding tax of 25% plus a solidarity surcharge (total tax rate 26.375%) if certain requirements are met.
The fund is subject to corporation tax at a 15% tax rate for certain domestic income. The taxable domestic income includes, in particular:
The fund is subject to German trade tax if it is engaged in trade or business.
German investors in an investment fund are subject to tax on the following income (so called ‘Investment Income’):
The Investment Income may be tax-exempt to a certain extent (so called partial exemption – Teilfreistellung). For real estate funds, the partial exemptions amount to 60% if the fund holds domestic real estate properties and 80% if the fund holds foreign real estate properties. A qualified real estate fund is an investment fund which invests more than 50% of its value in real estate or real estate companies.
At the level of German private investors, investment income is subject to a final tax burden of 25% (plus solidarity surcharge of 5.5%) in accordance with section 20 para 1 no. 3 of the German Income Tax Act.
Special investment funds are subject to the same principles set out above. Hence, the special investment fund is generally subject to German corporate income tax on certain domestic income. Other than the mutual investment fund, a German special investment fund may opt for a transparent taxation regime (Transparenzoption). When opting for the tax transparency status, certain income is directly allocated to investors.
The German Investment Tax Act offers various options to optimise the tax burden of an investment fund structure by considering certain investor-specific tax positions.
A KG is a tax-transparent entity. The taxation of income from letting real estate in Germany by a partnership depends, for corporation tax purposes, on the status of its partners and, for trade tax purposes, on whether or not the real estate is held through a permanent establishment.
Corporate partners are subject to German corporate income tax at the rate of 15.825% (including solidarity surcharge). Individuals who are partners are subject to German income tax at their individual tax rate.
If the partnership has a permanent establishment in Germany it is subject to German trade tax on income. The partnership may qualify for a trade tax‑exemption if it generates income only from leasing its own property. If there is no German permanent establishment, no trade tax will be payable.
There is no additional tax on profit repatriation from the German partnership to investors.
The sale of real estate by the partnership, as well as a sale of an interest in a partnership which is not engaged in a trade or business, is treated as the partial sale of the underlying assets by the partners. Thus, the taxation depends on the legal status of the individual partners. Corporate partners are subject to German corporate income tax at the rate of 15.825% (including solidarity surcharge). Individuals are subject to German income tax at their individual tax rate.
If the German partnership is engaged in a trade or business, the partnership itself is subject to German trade tax at a rate minimum 7% on capital gains arising from the sale of real estate (although certain deductions and exemptions may apply). The trade tax rate depends on the municipality. The same applies to any capital gains from the sale by a corporation of its interest in a partnership.
Hong Kong adopts a territorial principle of taxation, therefore under the Inland Revenue Ordinance (Cap. 112 of the Laws of Hong Kong) only profits arising in or derived from Hong Kong are subject to Hong Kong profits tax. Profits sourced elsewhere are not subject to Hong Kong profits tax.
Profits generated by the partnership are assessed in accordance with the Inland Revenue Ordinance. Thereafter, the assessed profits for the relevant year of assessment will be apportioned amongst the persons who were partners during the relevant period in the ratio in which the profits for that year of assessment were divided. Such apportioned profits will constitute the shares of the assessable profits of the individual partners for that year of assessment and taxed accordingly, without any taxes levied against the partnership itself.
A limited partnership fund (as long as they meet the definition of a fund) and special purpose entities held by a limited partnership fund will be exempted from profits tax in Hong Kong subject to certain conditions. No stamp duty is chargeable for subscription, transfer or redemption of limited partnership interest. Capital contributions or distribution of profits in kind involving transfer of Hong Kong stock or immovable property will attract stamp duty.
Trusts are generally subject to profits tax from a business carried on in Hong Kong. However, unit trusts which are authorized by the Securities and Futures Commission may enjoy tax exemptions, which means that the profits derived from the investment activities of the unit trust in accordance with the trust deed and other applicable statutory requirements will be exempt from profits tax.
All four of these entities are subject to corporate income tax at the general rate of 9 percent. In addition, a local business tax of up to 2 percent also applies, so that the specific tax rate is determined by each local municipality.
Dividends paid to shareholders who are not private individuals are not subject to withholding tax.
Dividends paid to non-resident private individuals are taxed at the rate applicable under the relevant double taxation treaty. If no double taxation treaty applies, withholding tax is payable at the rate of 15 percent.
Dividends distributed to Hungarian business associations (companies) are exempt from tax at source and in the hands of the shareholders.
Hungarian real estate investment funds are not subject to direct taxation in Hungary.
REITs and their wholly owned special purpose vehicles are, as a rule, exempt from corporate income tax and local business tax.
Rental profits are subject to corporation tax at a rate of 25% where the property is held by an Irish tax resident company or a non-Irish tax resident company carrying on a trade in the jurisdiction through a branch or agency. Income is taxable on an arising basis.
Deductions allowed when calculating taxable net rental income include:
A full deduction is available for interest on borrowings used by a landlord to fund the purchase, improvement or repair of both commercial and residential property. Prior to the Finance Act 2018, the deduction available for interest on borrowings and residential properties was restricted.
A tax deduction cannot be made for expenditure on capital expenses, although it may be possible to claim tax depreciation (capital allowances) on these.
Deductions cannot be made for expenditure incurred before the first letting of the property but should be allowed for expenditure incurred between lettings. A deduction is allowable for ‘pre-letting’ expenses of a revenue nature (for example, routine repairs and maintenance costs) incurred on a residential property which has been vacant for a period of 12 months or more (such expenses incurred before the first letting of the property would not currently be considered deductible). The relief will be subject to a cap of €5,000 per property and will be available for qualifying expenditure incurred up to the end of 2021.
Where deductible expenses exceed rental income, a rental loss results. This can be offset against net Irish rental profits for the same period. Any residual losses can be carried forward indefinitely and offset against future rental profits.
Rental profits may be taxed at the rate of 20% where the property is held by a non-Irish resident company that is not carrying on a trade in Ireland through a branch or agency.
Capital gains tax is payable on the disposal of Irish real estate whether held through a company or by an individual and whether the owner of the property is resident in Ireland or elsewhere. The current rate of capital gains tax is 33%.
A new exit tax regime was introduced by the Irish government in the Finance Act 2018 and it will tax unrealised capital gains where companies migrate their tax residence out of Ireland or transfer assets offshore, such that they leave the scope of Irish tax. An Irish company which migrates its tax residency out of Ireland will be deemed to have disposed of and immediately reacquired its assets at the current market value and any gain arising on this deemed disposal will be subject to capital gains tax at the rate of 12.5% or in some instances 33%.
Generally, collective investment schemes regulated by the Central Bank of Ireland do not pay any tax on income and gains in Ireland. Nor do they apply any withholding tax on income distributions to or redemptions of units by non-Irish tax resident investors. However, Collective Investment Vehicles (CIVs) must operate an exit tax at 20% on the occurrence of certain taxable events, namely the making of a relevant payment to a non-resident investor or on redemption of a non-resident investor’s shares where that fund is deemed to be and Irish Real Estate Fund (IREF) to the extent that the amount of redemption is attributable to profits derived from Irish real estate activities.
A fund will be an IREF if 25% of the value of the umbrella fund (or sub-fund, as applicable) is derived from Irish real estate assets or if it would be reasonable to assume that the purpose, or one of the main purposes, of the umbrella fund/sub-fund was to acquire Irish real estate or engage in the development of Irish real estate.
For CIVs involved in long-term capital appreciation strategies, the redemption proceeds paid to an investor should not be subject to the exit tax mentioned above where the proceeds relate to a capital gain arising to the CIV on the disposal of property it acquired at market value and owned for a minimum of five years, provided that the disposal is to a person unconnected with the fund or any of its investors (further anti-avoidance provisions may apply). Payments to certain categories of investors, including pension funds and other Irish and EEA regulated funds are also exempt, as are ‘Section 110 companies’.
For investors who are Irish tax resident or ordinarily resident in the jurisdiction for tax purposes, the fund must withhold tax (at a rate of 25% where the investor is a company and in all other cases 41%) on the happening of a “chargeable event” which includes distribution payments to unit-holders and gains arising on the encashment, redemption, cancellation or transfer of units. A deemed “chargeable event” also occurs on the expiry of each eight year period beginning on the date of acquisition of the units by the unit-holder. This tax will be a tax liability of the fund, although the cost is effectively borne by the unit-holder out of the investment proceeds.
It is assumed that the investors do not have the right to influence investment decisions. Where investors have the right to influence investment decisions the Collective Investment Scheme may be treated as a Personal Portfolio Investment Undertaking resulting in higher rates of withholding tax.
A limited partnership is treated as transparent for Irish tax purposes resulting in income and gains being attributed to the underlying investors. Assuming that the investors and the limited partnership are Irish tax residents, the limited partners will be subject to Irish tax on the partnership's worldwide income. Profits that are generated by the limited partnership and distributed to the partners are treated as ordinary income and subject to income tax at the level of the partners. If the partner is a company then corporation tax applies. If the partner is an individual then income tax applies.
In the event of the disposal of assets, the winding-up of, or transfer of interest in the limited partnership, the partners would be responsible for paying their proportionate share of capital gains tax at a rate of 33%.
A REIT is exempt from tax in respect of the income obtained through its property rental business or property profits and will also be exempt from tax in respect of the chargeable gains arising from the disposal of assets of its property rental business (subject to meeting certain conditions and maximum shareholding thresholds). A REIT is required to distribute at least 85% of its income to its shareholders annually by way of dividend.
Dividends paid by a REIT may be subject to withholding tax (at a current rate of 20%), subject to the provisions of Ireland’s double-tax treaties. Non-Irish tax resident shareholders will not be liable to Irish capital gains tax on disposal of shares in an Irish REIT. Irish tax resident shareholders will be liable to Irish capital gains tax (at a current rate of 33%) on any gain arising on the disposal of shares in a REIT. Irish stamp duty will arise (at a current rate of 1%) on the transfer of shares in a REIT, provided there is no change in control of the underlying property and the property is held for long term rental income (and not for disposal) or where the underlying property is residential property. In all other cases, Irish stamp duty will arise at 6% on the transfer of shares in a REIT.
An Srl, an Srls and an SpA in Italy are subject to IRES (corporation tax) payable at the rate of 24% and to IRAP (business activity tax) payable at the ordinary rate of 3.9%. IMU (municipal property tax) is payable on all property held by a business at a rate of between 0.76% and 1.06% of the cadastral value.
Normal corporation tax rate applies to a TMK. However, in the case of a tax-qualified TMK, dividends to equity holders may be deducted from the TMK's taxable income. So, in theory no corporation tax liability is possible by distributing all the profits as dividends. Withholding tax applies to dividend distributions.
The requirements for a tax-qualified TMK include, without limitation:
Normal corporation tax rate applies to a GK, a TK operator. However, as far as proper TK arrangement is recognised, any share of the TK business profits allocated to TK investor(s), together with other TK business expenses, may be deducted from the GK's taxable income. So, in theory no corporation tax liability is possible by distributing all the profits to TK investor(s). Withholding tax applies to profit distributions to TK investor(s).
Normal corporation tax rate applies to a GK, a TK operator. However, as far as proper TK arrangement is recognised, any share of the TK business profits allocated to TK investor(s), together with other TK business expenses, may be deducted from the GK's taxable income. So, in theory no corporation tax liability is possible by distributing all the profits to TK investor(s). Withholding tax applies to profit distributions to TK investor(s).
Normal corporation tax rate applies to an investment corporation. However, in the case of a tax-qualified investment corporation, dividends to equity holders may be deducted from the investment corporation's taxable income. So, in theory no corporation tax liability is possible by distributing all the profits as dividends.
The requirements for a tax-qualified investment corporation include, without limitation:
The applicable corporate income rate in 2024 is 19% for the first €200,000 and 25.8% thereafter. Financing costs, depreciation and other at arm’s length expenses are generally deductible from (rental) income.
Dutch real estate may be depreciated for tax purposes, generally based on a linear method taking into account a residual value and a 20-50 year depreciation method, until a certain floor value (bodemwaarde) for tax purposes is reached. Such floor value is set at 100% of the value for the purpose of the Valuation of Immovable Property Act (such floor value generally referred to as the WOZ–value in the Netherlands) applicable for each relevant year. The WOZ-value is set annually and determined by the municipality in which the real estate is situated on basis of comparable transactions (due to which, depending on the business cycle, the valuation may be lower (economic upturn) or higher (economic downturn) than fair market value. For newly developed real estate, the WOZ-value may be set conservatively in early years.
Interest expenses are only deductible within the limits of the Dutch implementation of the European Anti-Tax Avoidance Directive's interest deductibility rule. As a result, net interest expense are deductible up to the highest of 20% of the Company's EBITDA or €1 million. The Dutch government published the intention to abolish or limit the €1 million threshold for companies leasing real estate assets to third parties as of 1 January 2025. Typically for intragroup loans, other interest non-deductibility rules may apply as well. Furthermore, anti-base-erosion rules may limit the deductibility of interest paid on intra-group debt relating to certain transactions, subject to rebuttal (eg unless such interest is subject to sufficient (roughly 10%) effective taxation in the hands of the creditor or otherwise based on business considerations).
As of 1 January 2021, the Netherlands levies a conditional withholding tax on interest paid to related entities that are residents for tax purposes in a so-called low tax jurisdiction, are on the EU blacklist or in certain abusive situations. The rate of the conditional withholding tax is linked to the highest corporate income tax rate (25.8% in 2024).
General
Limited liability company (B.V.) and Public limited company (N.V.)
Co-operative
Dutch tax-resident shareholders
If the Dutch resident shareholder or member is an entity holding 5% or more of nominal paid-up share capital of a company or holds a membership right in the co-operative, (regardless to what extent the member is entitled to profits), the Dutch dividend withholding tax exemption should apply.
Non-Dutch tax-resident shareholders
If the shareholder or member is an entity, tax resident in the EU or EEA (Iceland, Norway and Liechtenstein) or jurisdiction which the Netherlands has concluded a double taxation treaty with, no Dutch dividend withholding tax applies, provided that the Dutch participation exemption would apply to the proceeds if such shareholder or member were a resident of the Netherlands, which generally is the case when holding a 5% or more shareholding or a membership of the co-operative. Specific rules apply when the shareholder or member is considered a hybrid entity (ie difference in qualification as tax opaque or tax transparent in jurisdiction of residence and the Netherlands)
The same anti-abuse rule applied to substantial shareholdings will apply to deny the aforementioned dividend withholding tax exemptions. This means the exemptions will be denied if the shareholding or membership is both held with the principal purpose, or one of the principal purposes, of avoiding the levy of dividend withholding tax and the shareholding is part of an artificial (non-genuine) structure or transaction or series of transactions.
Capital gains on the sale of real estate are taxed at the same rates as rental income (ie 19% for the first €200,000 and 25.8% thereafter). Capital gains are calculated as the difference between the sale price (fair market value) and the tax book value of the real estate.
Under circumstances, capital gains related to the sale of the Dutch real estate may be added to a reinvestment reserve (herinvesteringsreserve). This may result in the postponement of taxation on the capital gain by deducting the amount of capital gain from the tax book value of the Dutch real estate in which the qualifying reinvestment is made.
Capital gains on the sale of shares in a Besloten Vennootschap, a Naamloze Vennootschap or Co-operative
For corporate shareholders or members that are tax resident in the Netherlands, the participation exemption regime should generally apply if the shareholder holds a 5% or more of the nominal paid-up share capital of the B.V. or N.V. or the member holds a membership of the co-operative. Hence, capital gains realized on the sale of the shares in a B.V. or a N.V. or the termination or transfer of the membership in a co-operative should be exempt from corporate income tax.
Capital gains on the sale of shares in a BV or NV or the termination or transfer of the membership in a co-operative are subject to 25.8% Dutch corporate income tax, in case the shares constitute a 'substantial shareholding' (ie 5% or more) in the hands of the disposing shareholder or member, but only if the shareholding/membership is both held with the principal purpose, or one of the principal purposes, of avoiding the levy of Dutch personal income tax at the level of another person and the shareholding/membership is part of an artificial (non-genuine) structure or transaction or series of transactions.
The Netherlands may yet refrain from levying taxation on capital gains realized from the sale of a substantial interest under a relevant tax treaty, provided that the shareholder is resident in that other jurisdiction for tax purposes and is entitled to tax treaty benefits.
The fiscal investment vehicle (fiscale Beleggingsinstelling or FBI) is effectively corporate income tax exempt (ie 0% tax rate). It is a facility for individual shareholders to invest jointly in securities and real estate among others, without resulting into higher taxation, compared to when the individual shareholder invests directly without the interference of a fiscal investment institution. Thus, the FBI regime was introduced in the past to facilitate collective investment by preventing additional taxation at the level of the investment institution compared to direct investment.
As of 1 January 2025, the regime will be amended as a result of which it will no longer be possible for a FBI to invest directly in Dutch real estate (direct investment in foreign real estate remains possible). Such a real estate FBI will become a regular subject to corporate income tax. It remains allowed to invest directly in shares in a regular taxpaying subsidiary that holds real estate located in the Netherlands. This proposal aims to ensure corporate income taxation under all circumstances of profit derived from real estate.
Until 2025 (see below), a Limited partnership (CV) can be structured as either a transparent (closed) or a non-transparent (open) entity for Dutch tax purposes. An open limited partnership (open commanditaire vennootschap) is a limited partnership in which admission or substitution of the limited partners can take place without the prior written consent of all partners, general as well as limited. If a CV cannot be classified as an open CV, the CV should be deemed to be closed. Thus, a CV is deemed to be closed if the admission or substitution of a limited partner (apart from through inheritance or bequest) requires the unanimous consent of all general and limited partners.
If the CV qualifies as an open CV, the CV itself is liable to Dutch corporate income tax, as it is considered to be a non-tax-transparent entity for Dutch corporate income tax purposes. A closed CV, which is transparent for Dutch corporate income tax purposes, is not (itself) liable to Dutch corporate income tax, instead the profits will be allocated to the partners of the CV and taxed in accordance with the rules of their jurisdictions.
As of 1 January 2025, the open CV will be abolished (ie in principle all CVs will be treated as transparent for Dutch tax purposes).Transitional law is provided as of 1 January 2024.
In addition, as of 1 January 2022, a closed CV could become a taxpayer if it is a so-called ‘reverse hybrid entity’. This is the case if the partners of the closed CV considered the closed CV to be a taxpayer (opaque) and therefore do not treat the income and profits of the closed CV as the income and profits of the partners.
Until 2025 (see below), a mutual fund (FGR) can be structured as either a transparent (closed) or a non-transparent (open) entity for Dutch tax purposes. An open mutual fund (open fonds voor gemene rekening) is a FGR in which admission or substitution of the participants can take place without the prior written consent of all participants. A FGR is deemed to be a closed mutual fund (closed fonds voor gemene rekening) if the admission or substitution of a participant (except by inheritance or bequest) requires the unanimous consent of all participants. This consent does not have to be actively obtained. If for an admission or replacement to all participants' written consent has been requested, and that permission is not refused within four weeks, the permission may be assumed to have been granted. In addition, a closed FGR may repurchase its own participations.
If the FGR qualifies as an open FGR, the FGR itself is liable to Dutch corporate income tax, as it is considered a non-transparent entity for Dutch corporate income tax purposes. A closed FGR, which is transparent for Dutch corporate income tax purposes, is not (itself) liable to Dutch corporate income tax, instead the profits are allocated to the participants of the closed FGR and taxed in accordance with the rules of their jurisdictions.
As of 1 January 2025, a mutual fund only qualifies as a tax opaque FGR if, amongst others, such fund is a qualifying fund under the Dutch Financial Supervision Act (implementing the AIFMD). Any other mutual investment fund will generally be considered a tax transparent fund for Dutch tax purposes.
Please refer to the tax topic for New Zealand.
Companies Limited by Shares are subject to Companies Income Tax (CIT). The profits of a Nigerian company are taxed on its worldwide income, assessed on a preceding year basis according to the formula in the table below:
|
Type of Company |
Turnover |
Income Tax Rate |
|
Small Company |
Less than N25 million |
0% |
|
Medium Company |
Greater than N25 million but less than N100 million |
20% |
|
Large Company |
Greater than N100 million |
30% |
Companies Limited by shares are required to charge and remit Value Added Tax (VAT) on their goods and services at 7.5%. Additionally, any investment income that is paid to a foreign shareholder is subject to 10% withholding tax and is deemed as a final tax paid by the foreign shareholder. However, the rate is 7.5% for foreign shareholders that are located in countries that have entered into a double tax treaty (DTT) with Nigeria.
Under the Companies Income Tax Act, REITs are treated as companies and unit holders as shareholders. While the profits earned by Collective Investments Schemes are subject to company income tax as indicated in the table above, the government has issued Value Added Tax (VAT) and withholding tax waivers which apply to asset and mortgage-backed securities. Accordingly, dividends of publicly traded REIT securities are exempt from withholding tax in the hands of the investors, and VAT and Capital Gains Tax are not applicable on the sale of the securities.
On the other hand, by virtue of the Finance Act, dividend and rental income received by a REICO on behalf of its shareholders is exempt from company income tax (CIT), provided that a minimum of 75% of the dividend or rent earned is distributed within 12 months of the end of the financial year in which the income was earned. However, where a REICO fails to distribute the dividend or rental income within the stipulated 12-month period, the income would be subject to CIT.
Dividends and distributions received by a REICO are also exempt from withholding tax (WHT). Accordingly, where a REICO has an equity stake in a company, the company will be required to pay gross dividends to the REICO without deducting WHT. However, the REICO shall upon distribution to its shareholders deduct tax at 10% and remit same to the relevant tax authority.
In addition, qualifying REITs and REICOs may be eligible for the Government’s grant of Pioneer Status Incentives which are company tax holidays of 3–5 years, under the recent Pioneer Status guidelines.
In addition, qualifying REITs and REICOs may be eligible for the Government’s grant of Pioneer Status Incentives which are company tax holidays of 3–5 years, under the recent Pioneer Status guidelines.
Net rental income from real estate located in Norway is subject to general corporate income tax at 22% (2022 rates).
Other income, including that from the sale of assets, interest and income from real estate etc, is taxable as ordinary income at a rate of 22%. Costs connected to this income are tax deductible.
Under the Norwegian tax-exemption model (TEM), corporate shareholders in Norway are not subject to tax on capital gains on the sale of shares and dividends within EEA. Correspondingly, capital losses on shares are not deductible. Dividends are tax-exempt if the shareholder owns more than 90% of the distributing company’s share capital and controls a corresponding share of the voting rights at the shareholders’ meeting. In other cases, 3% of the dividend will be taxed at a rate of 22%.
An investor company has the right to set interest costs – including those connected with (tax-free) investments – off against taxable income. However, Norway has introduced interest deduction limitation rules which generally limits the tax deductions of interest to 25% of the Norwegian company's "Tax-EBITDA".
Dividends distributed to non-resident corporate investors are subject to withholding tax at the rate of 25%, unless the recipient is protected by a tax treaty or the holding company is resident in the EEA and fulfils certain other requirements. For corporate investors resident in the EEA, under the TEM no withholding tax applies. The TEM applies only to qualifying entities considered to be the real (beneficial) owner of the dividend paid by the Norwegian company, and that the shareholder has an actual establishment and carries out genuine economic activities in the EEA country. The 3% rule referred to above does not apply to corporate shareholders resident outside Norway without a permanent establishment in Norway.
For corporate investors’ resident outside the EEA, the withholding tax rate is usually reduced to 15% or less depending on the relevant tax treaty between Norway and the investor’s country of residence.
Profit from the sale of shares in a Norwegian limited company is not taxable in Norway as long as the investor is not resident there and the shareholding is not connected to a business carried on by the shareholder in Norway. This applies to both foreign companies and private individuals.
A KS is taxed as a partnership and is therefore not a separate taxable entity. The profit and loss of partnerships, including net rental income from real estate located in Norway, are calculated at the partnership level and the result is allocated to the partners and taxed in their hands. The tax rate is 22%. Non-residents are liable to the same income tax as residents on income derived from a business or participation in Norwegian business activities which is carried on or managed from Norway and on income derived from immovable property located in Norway.
An additional tax is levied on distributions by a limited partnership to personal investors. The tax rate on distributions is 35.2% (the tax rate is 22% but the distribution is multiplied with a factor of 1.6 as of the 2022 tax rates), effectively amounting to an extra tax at 27.456% points on the business’s net rental income. The marginal rate of taxation is therefore 49.5%.
An investor company has the right to set interest costs off against taxable income subject to the same rules as apply to limited liability companies. However, the interest deduction limitation rules may apply.
Gains on investments covered by the TEM are tax-exempt while losses are not tax deductible.
Partnerships are not separate taxable entities. The profit and loss from a partnership, including net rental income from real estate located in Norway, is calculated at the partnership level and the result is allocated to the partners and taxed in their hands. The tax rate is 22%. Non-residents are liable to the same income tax as residents on income derived from a business or participation in Norwegian business activities which is carried on or managed from Norway and on income derived from immovable property located in Norway.
An additional tax is levied on distributions by the limited partnership to personal investors. The tax rate on distributions is 37.8% (the tax rate is 22% but the distribution is multiplied with a factor of 1.72 as of the 2023 tax rates), effectively amounting to an extra tax at 29.5% on the business’s net rental income. The marginal rate of taxation is therefore 51.5%.
An investor company has the right to set interest costs off against taxable income subject to the same rules as apply to limited liability companies. However, the interest deduction limitation rules may apply.
Gains on investments (covered by the TEM) are tax-exempt while losses are not tax deductible.
Corporate income tax is payable at a flat rate of 19% on net income (small taxpayer under certain threshold of income can qualify for 9% rate). Entities resident in Poland, as a rule, pay corporate income tax in Poland on their worldwide income.
Income can be transferred to shareholders in the form of a dividend. Generally, distributions are subject to a withholding tax of 19% of the gross amount (regardless of whether dividends are paid to a company or to an individual, or whether the recipient is resident or non-resident).
There may be an exemption from withholding tax on dividends where the EU Parent-Subsidiary Directive applies. Generally, a tax-exemption on dividends paid by a Polish resident company applies if all of the following conditions are met:
The taxation of dividends may be modified by a double-tax treaty, in which case a withholding tax of between 5% and 15% normally applies.
Net income from the sale of real estate is subject to income tax (corporate income tax) which is paid by a limited liability company or joint stock company in accordance with the general rules on taxation.
Both types of partnership are treated as transparent for tax purposes so no tax is payable at the level of the partnership. Income is allocated directly to the partners who are taxed individually in accordance with the applicable rate of corporate income tax (for legal entities) or personal income tax (for individuals). For income tax purposes, partners are treated as if they hold the real estate themselves.
Personal income tax rates are progressive. The following rates apply: 12% and 32%. However, partners carrying out business activities may opt for 19% flat rate taxation.
As a rule, non-tax-resident partners pay personal income tax in Poland on the net income earned in connection with real estate located in Poland. Double tax treaties may also apply.
Corporate income tax is payable at the rate of 19% (small taxpayers under certain income thresholds can qualify for a 9% rate). In the case of corporate non-tax resident partners, as a rule, tax is paid in Poland on income earned in the territory of Poland. However, double tax treaties may modify this position.
There is no taxation on distributions: income is simply allocated to the partners who pay income tax in accordance with general tax rules. In the case of cross-border income distribution, double tax treaties may apply.
Net income earned on the sale of real estate is subject to income tax (personal income tax or corporate income tax), which is paid by the partners.
The sale of shares in an entity, the assets of which consist mainly of real estate, may trigger a corporate income tax obligation in Poland for the seller (depending on the relevant double-tax treaty; if there is no tax treaty – such income will be subject to corporate income tax in Poland).
A share in a limited or unlimited partnership may be sold only if the sale is expressly allowed for in the partnership agreement. Income earned on the sale is subject to personal income tax (in the case of an individual) or corporate income tax (in the case of a legal entity subject to corporate income tax). Double-tax treaties may modify this rule.
In addition, the sale will be subject to a 1% tax on civil law transactions (PCC) levied on purchaser.
There is no taxation of income at the level of the fund, unless such income is generated by the partnership and allocated (transferred) to fund (in the form of dividend, portion of its income allocated to the Fund, interest from a loan granted to partnership, etc). Funds, therefore, provide efficient tax planning opportunities for investment in real estate since all income (including that from rent and sale) is exempt from corporate tax.
For individuals: capital gains are taxable at the 19% personal income tax rate.
For corporations: capital gains are taxable at the 19% corporate income tax rate.
Tax planning schemes may reduce the applicable rates of tax.
However, due to a new general anti-avoidance clause, the optimization possibilities may be limited and they require business justification.
Portuguese corporate income tax (IRC) is levied at a normal rate of 21% plus a municipal surcharge of up to 1.5%. (levied by many Portuguese municipalities) and a state surcharge of 3%, on income between €1.5 million and €7.5 million. For income varying between €7.5 million and € 35 million the surcharge rises to 5%. For income above €35 million the surcharge rises to 9%. Taxable income for IRC purposes is calculated on the basis of the net accounting profit as adjusted for tax purposes. A reduced rate of 17% may be applicable to the first €50,000 of taxable income (if the company is recognized as a small or medium-sized company or as a small-mid cap). These rates apply both to SQ and to SA.
Capital gains from the sale of real estate are equally subject to the above rates. It should be noted that there is a tax-exemption of 50% applicable to capital gains from the sale of certain assets, if the sales proceeds are reinvested in the purchase of certain qualified assets.
Business entities in Romania are subject to a flat rate profit tax of 16 percent. The taxable profit is the difference between the entity's income from all sources and the expenses incurred for the purpose of generating that income, after deducting non-taxable income and adding non-deductible expenses.
Expenses are only deductible if they are incurred for the purpose of generating taxable income, which may mean that certain types of expenses are only deductible to a limited extent.
Taxation of income
The taxable income is the rental income minus tax deductible expenses (for example, depreciation and administrative costs).
Corporate income tax is payable at the rate of 21% or a reduced rate of 15% for companies whose taxable income (revenues) do not exceed €60,000 in the tax period (the reduced rate threshold of €60,000 is applicable for the tax period beginning from 1 January 2024).
Taxation of distributions of current income to an investor
The distribution of profit after tax in the form of dividends to shareholders — natural persons — is taxed (10%). In the case of shareholders — legal entities, the dividends are not subject to income tax, save for certain statutory exceptions, where, for instance, the withholding tax rate of 35% applies to dividends paid by the Slovak companies to all residents from non-treaty countries or blacklisted countries by the EU.
Taxation of capital gains
Capital gains on the sale of shares held by individuals and corporate investors are subject to tax (19%).
Double taxation treaties usually stipulate that capital gains from the sale of shares are taxed in the foreign investor's country of residence, but they may also be taxed in the country where the company is incorporated if the company's assets consist mainly of real estate.
Taxation of income
Since a partnership is transparent for income tax purposes, any profits generated are regarded as the profits of individual partners and are therefore treated as personal income.
Taxation of distributions of current income to investors
Not applicable.
Taxation of capital gains
Since a partnership is transparent for tax purposes, capital gains are regarded as the profits of individual partners and taxed accordingly.
Corporation tax (CT) is generally payable at the rate of 25% of the profits shown in the accounts prepared in compliance with IS rules. In some cases this tax can be reduced.
This tax is fixed by each municipality and depends on the cadastral value of the real estate, which may be subject to tax rates from 0.4% to 1.3%.
Tax-resident shareholders: distributed dividends are subject to CT at the rate of 25 percent. Additionally, an exemption may be available if the participation held is, at least, 5% or more or if the investment in the shares exceeds €20,000,000 and has been held for at least one year. This requirement may be fulfilled after the distribution of the relevant dividend.
Non-tax-resident shareholders: the distribution of dividends to shareholders is subject to Spanish non-resident income tax (NRIT) at the rate of 19% unless the EU Parent-Subsidiary Directive applies (in which case no tax is payable), or an applicable tax treaty reduces the tax to a lower level.
Sale of a real estate asset:
Tax-resident owners: CT is generally payable at 25%
Non-tax-resident owners: NRIT is payable at the rate of 19% unless an applicable treaty provides otherwise
In addition, most Spanish municipalities impose a tax on the increase in the value of urban land (IIVTNU) which is payable on the transfer of property other than rural land. This is paid by the seller and calculated on, either (a) an objective method on the basis of the land’s cadastral value multiplied by a coefficient dependent on the holding period (up to 20 years), or (b) a real capital gain method on the basis of actual capital gain of the land calculated by the difference between the transfer price and the acquisition price.
Sale of a participation in a real estate company:
Tax-resident shareholders: CT is payable at the rate of 25%. Additionally, an exemption may be available if the participation held was 5% or more or the investment in the shares exceeds €20,000,000 and had been held for at least one year
Non-tax-resident shareholders: NRIT is payable at the rate of 19% unless an applicable treaty provides otherwise
A transfer of real estate assets by a business is subject to VAT (at 21%, except for residential real estate where a 10% rate applies). In the case of a second or subsequent transfer, a VAT exemption applies and the transfer is subject to Transfer Tax. Transfer Tax may be avoided if the VAT exemption is waived.
Transfer Tax amounts to between 6% and 11% of the value of the underlying real estate assets at the time of the transfer. Where the transfer is subject to and not exempt from VAT, Stamp Duty will apply (0.5–3%).
The transfer of shares is exempt from VAT and Transfer Tax . Nevertheless, Transfer Tax /VAT can be incurred on the transfer of shares in companies, when the transfer of the shares is made with the purpose of avoiding the payment of the tax that would have been paid in case of transfer of the real estate. The law considers there are tax avoidance reasons where 50% or more of the assets consist, directly or indirectly, of real estate located in Spain and are not used for business activities, and, as a result of the transfer, the buyer acquires control over the company (ie more than a 50% stake in its share capital) or increases its stake once it has obtained control.
A special tax on real estate owned by non-resident entities applies in Spain. Entities resident in a jurisdiction classified as a tax haven owning real estate or rights over property are subject to a special tax of 3 percent of the cadastral value (valor catastral) which accrues at 31 December each year.
The rental income and capital gains obtained by the SII will be taxed at a rate of 1%. To benefit to from this rate the SII must comply with the following requirements during the whole investment period:
The SII must have at least 100 shareholders
The SII's sole corporate purpose must be investment in urban real estate for rental
The assets acquired should be held for a minimum of three years, unless an early sale is authorized by the CNMV (National Securities Market Commission)
Tax-resident unit holders: CT is payable at the rate of 25%
Non-tax-resident unit holders without a permanent establishment: dividends are subject to withholding tax at the rate of 19 percent. A reduced withholding tax may apply under a relevant tax treaty
Tax-resident unit holders: CT is payable at the rate of 25%
Non-tax-resident unit holders without a permanent establishment are subject to non-resident income tax (NRIT) at the rate of 19 percent. A reduced withholding tax may apply under a relevant tax treaty
This is the broad appeal of this vehicle. In general, the SOCIMI is exempt from the payment of CT in relation to the rents arising from leasing property but the shareholders will be taxed on the dividends and gains distributed by the SOCIMI. Only where shareholders with a stake greater than 5% in the share capital are taxed at a rate lower than 10%, is a special rate of 19% payable by the SOCIMI.
An amendment to the SOCIMI regime establishes a 15% levy on the amount of any undistributed gain obtained in the tax period, deriving from:
For tax-resident companies, CT is generally payable at the rate of 25%, and for non-tax-resident companies, a rate of 19% applies.
Exceptions arise in the event of the application of specific regulations as double taxation treaties, EU regulations or any other particular circumstances on the company or its shareholders.
The tax rate is 20.6% (2023). Rental and other income, including capital gains, is treated as ordinary business income. Interest payments and other costs are tax deductible. A general reduction of net interest deduction corresponding to 30% of EBITDA applies. However, the reduced interest deduction applies only if negative net interest exceeds SEK 5 million (simplification rule). The amount is measured on a group level. Certain additional restrictions apply to the deduction of interest on intercompany loans. Depreciation for buildings is allowed for tax purposes at the following annual rates: 2% to 5% for industrial premises, 3% for retail and 2% for offices. Speeded up depreciations (additional 2% the first six years) are available for newly produced apartment houses.
Property tax is calculated as a percentage of the tax value of the property, which is 75% of the estimated market value. For the following types of property, the rates are:
Corporate shareholders are normally exempt from tax on dividends from shares in non-listed companies. An individual is normally taxed at a rate of 25 percent. Special rules apply to closely held companies in which the shareholders are actively engaged.
The Parent-Subsidiary Directive applies. No withholding tax is imposed in Sweden on dividends paid to a foreign parent company, provided the parent company is comparable to a Swedish company (AB) and is taxed in a similar way. Withholding tax is normally imposed only on the distribution of dividends to companies located in tax havens. Special rules apply to dividends paid to non-corporate shareholders.
Capital gains on the sale of real estate are taxed as ordinary business income at the rate of currently 20.6% (2023).
Non-resident shareholders (without a permanent establishment in Sweden) are not taxed in Sweden on capital gains made from the sale of shares.
Resident corporate shareholders are exempt from tax on capital gains from unlisted holdings. Resident individuals are normally taxed at the rate of 25% on capital gains from the sale of shares.
A partnership is transparent for income tax purposes. Income tax is calculated in the same way as for ordinary business income in an incorporated company. Depreciation is allowed for tax purposes at the following rates:
The tax rate is currently 20.6% (2023) for corporate partners, and there is a progressive rate of 30–68% for individuals.
A partnership is subject to property tax. Property tax is calculated as a percentage of the tax value of the property, which is 75% of the estimated market value. For the following types of property, the rates are:
No withholding tax applies to the distribution of profits.
Non-resident partners are not taxed in Sweden on capital gains made from the sale of shares in the partnership.
Capital gains from the sale of shares in a partnership are exempt from tax for corporate partners. Resident individuals are normally taxed at the rate of 30% on capital gains.
Capital gains from the sale of property owned by the partnership are taxed as ordinary business income for corporate partners at currently 20.6% (2023). Individual partners are taxed on capital gains at 27%.
A gain derived from a sale of real estate assets is required to be included with other taxable income and subject to corporate income tax at the rate of 30% in a given year. Conversely, a loss resulting from the sale can be used to offset any other taxable income in the given tax period.
SBT at the rate of 3.3% (including municipal tax) applies on the greater of the sales price or the most current appraised value on record by the Department of Land ('DOL'). The SBT must be paid at relevant land office upon the registration of the real estate assets.
A seller of real estate assets who is a legal person will be subject to withholding tax at the rate of 1% of the sales price or the most current appraised value on record at the DOL, whichever is greater.
The sale/ transfer of real estate assets is subject to a transfer fee at a rate of 2.0% of the official appraisal value of the DOL. The transfer fee will be collected by the DOL.
The sale of real estate assets is subject to 0.5% stamp duty on the sales price of the land or the most current appraised value on record with the DOL, whichever is greater. The stamp duty will be exempt if the SBT has been paid on the sale of the real estate assets.
Property funds are exempt from corporate income tax, specific business tax, and stamp duty. The transfer fee is reduced to 0.01% of the DOL's official appraisal value.
REITs are not regarded as taxable entities. Dividends distributed by the trustee will be subject to withholding tax at the rate of 10% when paid out to the unit holders of the trust. Income derived by the trustee from the REIT, apart from its fee and other benefits from its service, will be exempt from corporate income tax.
Most of the individual Emirates have issued income tax decrees. While these decrees are in principle applicable to all (respective) entities, in practice corporate tax is currently only enforced against oil and gas companies, including certain petrochemical companies, and in certain Emirates, branches of foreign banks. The enforcement practice may change at any time and corporate tax could be enforced, potentially even retroactively, on a larger population of corporate entities. Companies established in one of the Emirate level instated Free Zones could enjoy a temporary exemption from corporate tax, granted by the relevant Free Zone Authority.
There are some municipality taxes paid on rent and certain land transfer charges paid when transferring real estate.
On 1 January 2018 the UAE introduced VAT. The standard rate of VAT is 5% whereas some supplies are exempt (eg the supply of bare land) or zero rated (eg first supply of residential property within three years of completion). In principle, VAT applies on the domestic supply of goods (eg sale of commercial real estate) and services (eg lease) as well as on the import of such goods and services.
Most of the individual Emirates have issued income tax decrees. While these decrees are in principle applicable to all (respective) entities, in practice corporate tax is currently only enforced against oil and gas companies, including certain petrochemical companies, and in certain Emirates, branches of foreign banks. The enforcement practice may change at any time and corporate tax could be enforced, potentially even retroactively, on a larger population of corporate entities. Companies established in one of the Emirate level instated Free Zones could enjoy a temporary exemption from corporate tax, granted by the relevant Free Zone Authority.
Limited partnerships are tax transparent for tax purposes. An investment partnership will not generally be regarded as carrying on trade in its own right. Therefore, the income tax payable by the investors will depend on their individual circumstances. This means that a limited partnership incorporated in the UK (of which England and Wales form part) is a suitable vehicle for participation by UK tax-paying and tax-exempt investors (for example, charities or pension funds).
For UK capital gains tax purposes, all investors are regarded as owning a share of each underlying property investment. When a property investment is disposed of by the partnership, each investor is therefore regarded as disposing of their share, corresponding to its profit-sharing interest. Capital gains tax charges can arise when new partners are introduced to the partnership if there is a revaluation of the partnership's assets or if payments are made between one or more of the partners outside of the framework of the partnership accounts. Otherwise capital gains tax payments should be deferred until the disposal of each property within the partnership. Each partner is responsible for tax on his share of the capital gain. The partnership is not a separate taxable entity.
A limited liability partnership (LLP) is tax transparent for UK income tax purposes and members are treated like partners in a general partnership provided the LLP is carrying on a business. However, an LLP which has its principal purpose as investment in real estate is not tax transparent for capital gains tax exempt investors, for example, pension funds.
An LLP is tax transparent except for capital gains tax exempt investors (for example, pension funds, personal pension schemes and charities).
The trust is regarded as tax transparent provided it is not a collective investment scheme.
Each investor is regarded as entitled to a share of profits corresponding to their beneficial entitlement under the trust. Accordingly, the trust is ignored for capital gains tax purposes and individual beneficiaries are subject to capital gains tax in relation to their proportion of the gains from the sale of property.
The tax treatment of the investors in the syndicate trust as described above is dependent on the trust not being regarded as a collective investment scheme. This means all decisions which could affect the financial return of the investors in relation to the property must be taken by the investors rather than being delegated to the manager or administrator of the trust or to the trustees (thereby giving investors the necessary day-to-day control over the trust property required by statute).
Property unit trusts are normally subject to income tax but income can be offset against loan costs and running expenses to minimise tax exposure. Income tax can also be reclaimed by investors in an exempt unauthorized unit trust.
The unit trust is exempt from capital gains tax either by virtue of Financial Conduct Authority (FCA) authorized status or the trust's status as not resident in the UK (of which England and Wales form part). With a dedicated unit trust for UK pension fund investors only (known as an exempt unauthorized unit trust scheme), the trustee will not be liable to capital gains tax where the unit holders are all UK tax authority registered pension schemes or UK-registered charities.
Any UK-incorporated company and any non-UK-incorporated company which is UK resident because it is managed and controlled in the UK, is subject to corporation tax on its worldwide income and gains, subject to applicable reliefs under a relevant double tax treaty. A non-UK-resident company is subject to corporation tax on its income and gains from any trade or business carried on through a branch or agency in the UK.
The position is the same as that for limited companies described above.
Limited partnerships are tax transparent for tax purposes. An investment partnership will not generally be regarded as carrying on trade in its own right. Therefore, the income tax payable by the investors will depend on their individual circumstances. This means that a limited partnership incorporated in the UK (of which Scotland forms part) is a suitable vehicle for participation by UK tax-paying and tax-exempt investors (for example, charities or pension funds).
For UK capital gains tax purposes, all investors are regarded as owning a share of each underlying property investment. When a property investment is disposed of by the partnership, each investor is therefore regarded as disposing of its share, corresponding to its profit-sharing interest. Capital gains tax charges can arise when new partners are introduced to the partnership if there is a revaluation of the partnership’s assets or if payments are made between one or more of the partners outside of the framework of the partnership accounts. Otherwise capital gains tax payments should be deferred until the disposal of each property within the partnership. Each partner is responsible for tax on their share of the capital gain. The partnership is not a separate taxable entity.
A limited liability partnership (LLP) is tax transparent for UK income tax purposes and members are treated like partners in a general partnership provided the LLP is carrying on a business. However, an LLP which has its principal purpose as investment in real estate is not tax transparent for capital gains tax-exempt investors, for example, pension funds.
An LLP is tax transparent except for capital gains tax-exempt investors (for example, pension funds, personal pension schemes and charities).
The trust is regarded as tax transparent provided it is not a collective investment scheme.
Each investor is regarded as entitled to a share of profits corresponding to their beneficial entitlement under the trust. Accordingly, the trust is ignored for capital gains tax purposes and individual beneficiaries are subject to capital gains tax in relation to their proportion of the gains from the sale of property.
The tax treatment of the investors in the syndicate trust as described above is dependent on the trust not being regarded as a collective investment scheme. This means all decisions which could affect the financial return of the investors in relation to the property must be taken by the investors rather than being delegated to the manager or administrator of the trust or to the trustees (thereby giving investors the necessary day to day control over the trust property required by statute).
Property unit trusts are normally subject to income tax but income can be offset against loan costs and running expenses to minimise tax exposure. Income tax can also be reclaimed by investors in an exempt unauthorised unit trust.
The unit trust is exempt from capital gains tax either by virtue of Financial Conduct Authority (FCA) authorised status or the trust’s status as not resident in the UK (of which Scotland forms part). With a dedicated unit trust for UK pension fund investors only (known as an exempt unauthorised unit trust scheme), the trustee will not be liable to capital gains tax where the unit holders are all UK tax authority registered pension schemes or UK registered charities.
Any UK-incorporated company, any non-UK-incorporated company and any public limited company which is UK resident because it is managed and controlled in the UK, is subject to corporation tax on its worldwide income and gains, subject to applicable reliefs under a relevant double-tax treaty. A non-UK resident company is subject to corporation tax on its income and gains from any trade or business carried on through a branch or agency in the UK.
Corporate vehicles incorporated in Ukraine are recognized as tax residents and are therefore taxed on their worldwide income. The standard corporate profit tax rate is 18 percent.
Taxable supplies of goods/services are normally subject to 20 percent VAT.
Legal entities and individuals pay property tax in respect of real estate assets. Property tax applicable to real estate consists of:
The rates of immovable property tax are set by municipalities and for residential and commercial property may not exceed (per sq. m of the area of the property) 1.5 percent of the statutory minimum salary, effective on 1 January of the tax year.
Municipalities are free to decide on whether to set immovable property tax for particular vicinity and on the rate to apply subject to the mentioned cap (ie 1.5 percent).
The taxable value for immovable property tax includes the total area of residential/non-residential property.
Immovable property tax on individuals is assessed by tax authorities. Legal entities self-assess the tax and file the relevant tax return annually.
Land payment consists of:
The value for land tax purposes is:
The amount of land tax in regions with an established normative valuation cannot exceed the following thresholds (irrespective of where the property is located):
The amount of land tax applicable to plots of land which are located outside developed areas and which have not undergone normative valuation cannot exceed 5 percent of the normative valuation of a standard unit of arable land established for the relevant region (oblast). For agricultural land plots which are located outside developed areas and which have not undergone normative valuation land tax cannot be less than 0.3 percent and cannot exceed 5 percent of the normative valuation of a standard unit of arable land established for the relevant region.
The amount of land rent is stipulated in the lease contract between the lessee and state/municipal state authority. The land lease contract is subject to registration.
The law stipulates that land rent cannot be less than the amount of land tax for respective plot and more than 12 percent of the normative valuation.
Land tax is assessed annually for the following year and is paid monthly by the owners or users of land. Land rent is also paid monthly.
Withholding tax may also apply to outgoing cross-border payments (dividends, interest, etc) at the standard rate of 15 percent unless otherwise stipulated by a relevant double tax treaty.
For US federal income tax purposes, a limited partnership is a pass-through entity. Thus, the limited partnership itself does not pay any US federal income tax. Instead, the income and loss of the limited partnership is passed to the partners who each report their share of income and loss on their tax returns. The taxable income passed to the partners retains its character; thus, if the partnership sells an appreciated capital asset that it has held for 12 months, each partner will be allocated capital gain (currently taxed in the US at more advantageous capital gains rates) from that sale. If the partnership has rental income, each partner will be allocated ordinary income. Note that some states charge a separate flat tax on limited partnerships owning real estate in their state.
For US federal income tax purposes, an LLC is a pass-through entity. Thus, the LLC itself does not pay any US federal income tax. Instead, the income and loss of the LLC is passed to the members who each report their share of income and loss on their tax returns. The taxable income passed to the members retains its character; thus, if the LLC sells an appreciated capital asset that it has held for 12 months, each member will be allocated capital gain (currently taxed in the US at more advantageous capital gains rates) from that sale. If the LLC has rental income, each member will be allocated ordinary income. Some states (such as California) impose an entity-level tax on LLCs.
For US federal income tax purposes, a general partnership is a pass-through entity. Thus, the general partnership itself does not pay any US federal income tax. Instead, the income and loss of the general partnership is passed to the partners who each report their share of income and loss on their tax returns. The taxable income passed to the partners retains its character; thus, if the partnership sells an appreciated capital asset that it has held for 12 months, each partner will be allocated capital gain (currently taxed in the US at more advantageous capital gains rates) from that sale. If the partnership has rental income, each partner will be allocated ordinary income.
Property unit trusts are subject to capital gains tax which is levied on the capital gain arising from the disposal of a specified asset, which will include any marketable security, such as unit trusts
By virtue of a company’s separate legal personality, it is individually liable for corporate tax. Its income is taxed in its own name as tax on profits. Furthermore, once a dividend is declared, it is subject to withholding tax when distributed to shareholders. The distribution of dividends to shareholders is subject to non-resident withholding tax at the rate of 10% for dividends from listed shares and 15% for other dividends, unless an applicable tax treaty reduces the tax to a lower level.
Where remuneration is paid to a director, the Companies and Other Business Entities Act [Chapter 24:31] states that it is unlawful for such remuneration to be paid free of any taxation in respect of income, or otherwise calculated by reference to or varying with the amount of such taxation or with the rate of taxation on incomes.
Companies can offset or reduce tax as provided by Section 15 of the Capital Gains Tax Act [Chapter 23:01] and section 15 of the Income Tax Act [Chapter 23:06] .
By virtue of a company’s separate legal personality, it is individually liable for corporate tax. Its income is taxed in its own name as tax on profits. Once a dividend is declared, it is subject to withholding tax when distributed to shareholders. The distribution of dividends to shareholders is subject to non-resident withholding tax at the rate of 10% for dividends from listed shares and 15% for other dividends, unless an applicable tax treaty reduces the tax to a lower level.
Where remuneration is paid to a director, the Companies and Other Business Entities Act [Chapter 24:31] states that it is unlawful for such remuneration to be paid free of any taxation in respect of income, or otherwise calculated by reference to or varying with the amount of such taxation or with the rate of taxation on incomes.
Companies can offset or reduce tax as provided by Section 15 of the Capital Gains Tax Act [Chapter 23:01] and section 15 of the Income Tax Act [Chapter 23:06].
