REALWorld Law

Real estate finance

Taxes and fees

Are taxes or fees paid on the granting and enforcement of security over real estate, such as documentary taxes, registration fees and notaries' fees?

Angola

Angola

There may be notary fees and land registry fees, plus stamp duty, save if the creation of security is deemed ancillary to a financing transaction, as same is already subject to stamp duty.

Australia

Australia

Generally, fees will be payable for the registration of security interests, however the amount will vary in each jurisdiction (amounts are unlikely to exceed AUD200 per security requiring registration).

Belgium

Belgium

The following indirect taxes and fees are payable upon the obtaining of a mortgage loan and a pledge over the business or movable assets:

  • Approximately 1.6% of the amount of the guaranteed debt in connection with the registration of a mortgage and the conversion of a mortgage mandate
  • Registration of a pledge over the business or movable assets: the cost of registering a pledge in the National Pledge Register is calculated in function of the amount of the guaranteed claim. The maximum amount payable is €500. Such retribution will be payable to the extent that the amount of the guaranteed claim exceeds €500,000.

In addition to such taxes, notary fees must be paid in relation to any notarial deed such as a mortgage deed.

With respect to other forms of security such as a pledge over shares, a pledge over receivables, a pledge over bank accounts and guarantees, no substantial taxes or fees will be due. Only a lump sum duty of €0.15 on certain finance documents executed in Belgium (payable on each original of a finance document within the scope of the duty)  is due.

Bosnia-Herzegovina

Bosnia-Herzegovina

Notary's fees and registration fees apply in such instances.

Registration and notary's fees are determined in accordance with the cantonal Law on Court Tax and the Law on Notaries and the Notary’s Tariff. These vary on a case by case basis. For instance, for the enforcement of a security valued at KM 100,000, the notary's fee would amount to 378 KM (excluding VAT) and the court fee would amount to KM 3,000.

The Constitutional Court of Federation of Bosnia and Herzegovina rendered a decision no. U-22/16 on 6 March 2019 deciding that the provisions of the Law on Registration of Companies are not in accordance with the Constitution of FBiH. This decision is already applied in the practices, to that the registry courts do not require the delivery of incorporation documents in the form of a notarial deed.

Canada

Canada

Fees will be payable for the registration of mortgages, hypothecs and other security interests, however, the amount will vary in each jurisdiction. Fees on enforcement may be levied in connection with any foreclosure process in the courts.

China

China

When handling mortgage registration, a notary public will charge mortgage registration fees which are usually borne by both parties in equal shares.

Croatia

Croatia

An agreement for the creation of security must made be in the form of a notarial deed. The size of the notary's fee depends on the value of the secured obligation. However, due to the large amounts which are generally secured, these fees usually reach the maximum level of notaries fees permitted by law (HRK 20,000) (approximately €2,700) plus VAT).

No Land Registry registration fee is payable for the registration of a mortgage or the registration of fiduciary ownership based on a security document in the form of a notarial deed.

Czech Republic

Czech Republic

Fees related to the registration of a mortgage right over real estate in the cadastral register amount to CZK 2,000.

Notarial fees for a deed relating to any of the following:

  • An agreement containing consent to direct execution against a receivable
  • A pledge agreement relating to real property which is not registered in the cadastral register
  • Groups of assets or assets not handed over to the pledgee or to a depositary

are calculated on a scale related to the value of secured receivable.

Fees related to registration in the commercial register of a pledge over an ownership interest amount to CZK2,000.

Fees related to a petition initiating the sale of an asset which is subject to a mortgage amount to CZK5,000 for real estate and to CZK2,000 for movable assets.

Denmark

Denmark

Fees must be paid to the Land Registry on registration of a mortgage. The fee is DKK 1,730 plus 1.45% of the amount of money secured.

The security is enforced by applying for sale by foreclosure auction. The application costs amount to DKK 800.

France

France

Mortgage-related fees are proportional to the amount of the secured debt at the time of creation of the mortgage.

Costs relating to the creation of securities interests include the public notary’s proportional fees, which are based on a sliding scale (subject to discounts that are regularly offered by the notarial offices).

 

 

Mortgage (hypothèque)

Money lender's legal mortgage
(hypothèque légale de prêteur de deniers)

Land publicity tax

0.715% of the secured amount

between EUR 0 and EUR 125

Notary’s emoluments

Proportional to the loan amount (but the percentage differs) + VAT

 

Real estate security contribution

0.05% of the secured amount

 

Disbursements

Depends on the transaction

Depends on the transaction

Lawyer's fees

Depends on the transaction

Depends on the transaction

Germany

Germany

The grant of security over real estate and shares in a German limited liability company or 'GmbH' requires notarisation which will involve the payment of notary’s fees. In addition, security over real estate requires registration in the land register which will involve registration fees. The notarisation and registration fees are determined by statute and can be quite substantial.

Security over real estate is enforced by way of court proceedings and in such cases court fees will become payable.

A successful public auction of real estate would trigger real estate transfer tax. The tax rate is between 3.5 percent and 6.5 percent of the purchase price, depending on the German federal state.

The grant of security generally does not result in any VAT liability. If the security over real estate were to be enforced, the sale by public auction would be exempt from German VAT unless the borrower opts out of the exemption from VAT. This option may only be exercised if the person granting the security as well as the purchaser both qualify as entrepreneurs within the meaning of German VAT law and the purchaser uses the real estate for the purpose of its enterprise.

Hong Kong, SAR

Hong Kong, SAR

There are no taxes in creating a security interest. The fee for registration of mortgage or legal charge at Companies Registry is HK$340.

A legal charge over real estate may be perfected by registration at the Land Registry. There is a fee payable depending on the amount or value of the consideration. For consideration below HK$750,000, the fee charged is HK$230 while it is HK$450 for consideration above HK$750,000.

Hungary

Hungary

No tax is payable upon granting of a security. There is a small fee payable to the Land Registry for the registration of a mortgage (and/or call option). In addition, to enhance enforcement via judicial execution, banks normally require security agreements to be concluded in the form of a notarial deed and to notarize the terms of the secured credit facility agreement. The fees payable to the notary public for such notarization are regulated and depend on the value of the secured obligation and certain other circumstances (eg number of pages of the document), but also the notary public has some room for interpreting some of the mandatory provisions of law regulating pricing.

In the event that security is enforced, transfer tax (at a rate of 4%) is normally payable. VAT (at a rate of 27%) may also apply. Additional costs include notarial and legal fees, registration fees etc.

Ireland

Ireland

There is no stamp duty or other tax payable on the creation of a security interest. Nor are there any mandatory notary/authentication fees (documents are generally only notarized in connection with the authentication procedures for foreign jurisdictions).

In relation to an Irish incorporated company, details of security taken should be registered at the Companies Registration Office within 21 days of its creation in order to preserve enforceability. The fee for the registration of security at the Companies Registration Office is €40.

Where a parcel of real estate which is registered in the Land Registry is charged, the charge can also be registered at the Land Registry. There is a fee payable but it does not generally exceed €175.

A charge in relation to real estate registered in the Registry of Deeds can be registered at the Registry of Deeds. There is a fee payable but it does not generally exceed €50.

Enforcement of the security does not create a taxable event in itself although tax issues may arise in the context of the enforcement process, particularly on the sale of real estate assets.

Italy

Italy

The following taxes and fees are payable in relation to the granting of security over real estate:

  • notaries' fees are payable in fairly substantial amounts in respect of any security document executed as a notarial deed, and such fees vary in proportion to the secured amount
  • nominal stamp duty
  • registration tax:
    • €200, if the grantor is securing its own obligations
    • 0.5% of the secured amount (or, in relation to shares - ie azioni, the value of the shares, if lower; quotas of Srls are taxable according to the secured amount), if securing third parties' obligations
  • Mortgage tax is payable at 2% of the secured amount (further 0.5% is due in case of deletion of the mortgage).

To avoid paying registration tax, mortgages and cadastral tax, stamp duties, governmental duties and other tax and duties (other than income tax and withholding taxes), which are otherwise payable in connection with a facility agreement and (subject to the exception listed below), connected documents, including security documents, it is possible to apply Substitute Tax (imposta sostitutiva).

Substitute Tax is an umbrella tax (currently) at a flat rate of 0.25% of the principal amount of the loan from time to time effectively drawn down (Substitute Tax is normally retained by the bank from the advance) but only applies where certain conditions are met and only to particular types of financial transactions, as follows:

  • where the loan has a contractual duration of at least 18 months and one day
  • where the loan is advanced by EU Banks or Italian branches of EU banks, and
  • where the facility agreement is executed in Italy.

The enforcement costs are substantially limited to the following charges:

  • legal fees for the drafting of all judicial deeds required
  • notarial fees for the preparation of the property documentation
  • court fees for case filing (contributo unificato) of the application for sale, currently fixed at €200
  • fees for the technical appraisal evaluating the property
  • notarial fees where the procedure is led by a public notary appointed by the court
  • costs for the publications of the sale offer ordered by court (depending on the costs charged by the single newspapers or other publication means)
  • fiscal charges related to filing the seizure (trascrizione del pignoramento immobiliare) currently a fixed amount of €200.
Japan

Japan

There is no stamp duty payable on mortgage agreements or pledge agreements.  Depending on what is transferred, stamp duty is payable on security by way of transfer agreements, and stamp duty is payable on loan agreements, the amounts of which depend on the amount of the subject to be transferred or the amount of the loan, as applicable. 

The tax rate for registration of mortgage over real estate is 0.4% of the secured amount (or the maximum secured amount for revolving mortgage).

Some notaries' fees are payable when preparing affidavits, and the like in the foreign lender's country, which will be used for registration of the mortgage for the benefit of the foreign lender.

Netherlands

Netherlands

As stated above, a right of mortgage will be created by means of a notarial deed. A certified copy of the notarial deed needs to be registered at the Land Registry. A legal charge of approximately EUR250 must be paid for registration at the Land Registry. Notarial fees are not fixed and depend on the work carried out by the relevant Dutch notary.

Nigeria

Nigeria

The grant of enforceable security is subject to the perfection requirement. By the provisions of the law, any transfer purporting to grant an interest in land whether by way of an assignment, sublease, mortgage or transfer of possession is required to be effected subject to the consent of the Governor or Minister as the case may be and without which consent; the transfer of interests is void. The perfection process involves: (i) obtaining the consent of the Governor or Minister; (ii) Stamping of the specific transfer instrument (usually Deed of Legal Mortgage); and (iii) registration with the land registry. Some of the applicable charges and fees in this regard include: the consent fee, stamp duties, registration fees, and such other sundry charges as may be determined by the relevant State’s Lands Bureau.

Norway

Norway

There is no stamp duty in creating a security interest. There are also no notaries’ fees. The fee for registration of security in the Land Registry is NOK585 per pledge or NOK540 if made electronically (as of September 2022).

Fees are also payable for security registered in the Moveable Property Register, at NOK1,516 per pledge or NOK1,051 if made electronically (as of September 2022).

Poland

Poland

The creation of a mortgage requires at least the owner’s declaration of will in the form of a notary deed and registration of a mortgage onto the Land and Mortgage Register.

Notary fees depend on the transaction’s subject value. The maximum tariffs for the acts performed by a notary public are provided by the Minister of Justice’s Regulation (Regulation) and vary from PLN 100 to PLN 10,000. As the Regulation defines only maximum tariffs, the costs of the notary may not exceed them.

According to the Regulation, the notary fees for a draft of the notary deed on the creation of a mortgage amount is half of the rate which would be charged for a transaction of the same value and a quarter in the case of a mortgage created to secure bank credit for housing development, house purchase or business activity.

The court fees for the registration of a mortgage into the Land and Mortgage Register amount is PLN 200. It is the notary public who charges the parties for creating a mortgage and forwards the registration fees to the relevant court, together with the application for registration of a mortgage into the Land and Mortgage Register.

The debtor is additionally charged with a tax on civil law transactions. It is the value of the secured claim that constitutes the base to be taxed. The rate amounts to 0.1% in the case of claims with a specified value and PLN 19 in the case of a claim of an undefined value.

The costs of collateral transfers of ownership entails notary fees for the agreement transferring the property, such notary fees calculated as above. The registration of the new owner into the Land and Mortgage Register is also required as above. Collateral transfers of ownership are not taxed under the tax rules on civil law transactions.

Portugal

Portugal

Yes. Stamp Duty, registration fees and notaries’ fees (whenever public notary services may be required) are usually associated with granting and enforcement of security over real estate.

Stamp Duty is levied in respect of security (except if such security is materially ancillary to another agreement subject to Stamp Duty, eg a loan, and granted simultaneously with such contract, in which case the security would not be subject to Stamp Duty, but the loan would be subject to the applicable Stamp Duty rates) at the following rates:

  • 04% of the total amount secured, for each month or part of a month, for security with a maturity not exceeding one year;
  • 5% of the total amount secured, for security with a maturity of one year or more but less than five years; and
  • 6% of the total amount secured, for security with a maturity of five years or more or which are open ended.
Romania

Romania

To create a valid mortgage over real estate, the agreement must be notarized. Notary fees are provided by the law in a progressive manner, depending on the value of the secured amounts. A fee is also payable for the registration of the mortgage in the Land Book. The fee is RON 100 plus 0.1% of the amount of the debt which the mortgage secures. If the mortgage is transferred by way of an assignment agreement, a fee of RON 100 is payable for the registration of the mortgage in the Land Book in the assignee's name.

To transfer a debt secured by an immovable mortgage, the assignment agreement must be notarized and the notary’s fee is calculated by applying a percentage of 0,3% to the value of the assigned debt.

Slovak Republic

Slovak Republic

There is no stamp duty that arises following the creation of a security interest. However, a mortgage shall be perfected by registration with the respective Cadastral Registry. The basic fee for the registration is €66, and the registration must take place within 30 days following the creation of the mortgage. If the applicant files for an accelerated registration within 15 days from the filing of the application for registration with the Cadastral Registry, the registration fee amounts to €266.

Moreover an application to register a mortgage can be lodged electronically. In such a case, the basic fee is reduced from €66 to €33 and in the case of an accelerated registration procedure from €266 to €133.

All of these fees are reduced by €15 if a notice of an intended registration is filed.

In addition, notarial fees must be paid for the verification of the signature of the transferor on the agreement for the transfer of the ownership right. The price varies according to the notary and is in the range of €1.50 to €3.50.

The costs related to the enforcement of security also have to be taken into consideration, but the amount of such costs depends on the means of enforcement of the security.

Spain

Spain

Mortgages are only effectively created when they are registered at the relevant Land Registry. In order to be registered, mortgages must be executed by means of a public deed (escritura pública). This is a formal document entered into between the parties which is witnessed in front of a Spanish notary public.

Registrars and notaries charge fees, which are set by the government and are based on a sliding scale, although notary's fees can be negotiated down. In practice, the costs of both notaries and registrars together should not exceed 1% of the value of a particular transaction.

With regard to the taxation of mortgages, the actual loan is exempt from Transfer Tax (Impuesto sobre Transmisiones Patrimoniales ITP) but the execution of the mortgage deed is subject to Stamp Duty (Actos Jurídicos Documentados) at rates which depend on the region where the property is located (0.5% to 1.5%). The rate of Stamp Duty is calculated over the amount stated in the notarial deed as maximum mortgage liability (ie the total amount secured by the mortgage).

Pledges of shares are not subject to stamp duty, but the grant of a pledge involves payment of notary fees, as a public document is required.

A pledge of credit rights and moveable assets must also be created pursuant to a public document (escritura pública or póliza mercantil) to benefit from priority over other creditors, so notary’s fees are involved. A pledge of moveable assets must be registered at the Moveable Assets Registry (Registro de Hipoteca Mobiliaria y Prenda sin Desplazamiento), and registry fees and (if granted as escritura pública) stamp duty must be paid.

Pledges over credit rights may be registered at the Moveable Assets Registry if they are granted as pledges without dispossession of the pledged assets, in which case registry fees and (if granted as escritura pública) stamp duty are payable.

If the mortgagee acquires ownership of the property through enforcement proceedings, it will have to pay Transfer Tax or VAT, depending on whether it is a first or subsequent transfer of the real estate. The second and subsequent transfers of real estate are exempt from VAT. This exemption can be waived by the acquirer if it acts in the exercise of its business or professional activities and is fully or partially entitled to deduct the VAT levied on the relevant transaction.

The rate of Transfer Tax depends on the place where the property to be mortgaged/acquired is located (generally, a rate of 6 to 11% applies) and the rate of VAT is 21% (or 10% in the case of residential property).

If the pledgee acquires ownership of the shares in a company through enforcement proceedings, the transfer is generally 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.

Sweden

Sweden

Stamp duty in the amount of 2 percent will be levied on the issuing of most mortgages and 1 percent on floating charges.

Thailand

Thailand

There is a mortgage registration fee payable at the Land Office on the registration date at the rate of 1 percent of the total mortgage amount, provided that the total fee may not exceed THB 200,000. Stamp duty may also apply in certain cases, ie if the parties wish the mortgage agreement to be an evidence of the loan or overdraft facility, such mortgage agreement shall affix stamp duty at the rate of 0.5 percent of the mortgage amount but shall not exceed THB 10,000.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

The following fees are payable with respect to the granting of security over real estate:

  • notarial fees for documents which must be notarized; and
  • a real property mortgage registration fee payable to the DUPM, and other nominal services charges and issuance fees also payable to the DUPM.

The following additional fees are payable with respect to the enforcement of security over real estate:

  • notarial fees with respect to any notice of default that is required to be notarized;
  • court fees as prescribed by the relevant court; and
  • a public auction fee if the property is sold by public auction, as well as other fees related to the public auction (such as publication fees).
United Arab Emirates - Dubai

United Arab Emirates - Dubai

The following fees are payable with respect to the granting of security over real estate:

  • notarial fees for documents which must be notarized; and
  • a real property mortgage registration fee payable to the DLD, and other nominal services charges and issuance fees also payable to the DLD.

The following additional fees are payable with respect to the enforcement of security over real estate:

  • notarial fees with respect to any notice of default that is required to be notarized;
  • court fees as prescribed by the relevant court and any expert fees (where applicable); and
  • a public auction fee if the property is sold by public auction, as well as other fees related to the public auction (such as publication fees).
UK - England and Wales UK - England and Wales

UK - England and Wales

There is no stamp duty payable on creating a security interest. There are also no notaries' fees. English companies and limited liability partnerships, including any English company which is acting as the General Partner in relation to a charge granted by a limited partnership, must register any charge document to which they are a party in order to grant security at the registry of companies, known as Companies House. The fee for registration at Companies House is £23.00 (£15 for online registrations) for each separate charge document granted by each charging company. There is no requirement for security created by non-UK corporate parties or by individuals to be registered at Companies House, but that is not the case in relation to the necessary registration at the Land Registry where registration is dependent on the location of the property in England or Wales and not the jurisdiction of incorporation of the charging company.

A legal charge over land in England and Wales should be perfected by registration at the Land Registry in order to ensure the priority of that charge even if it is granted by non-English or Welsh parties or by individuals. There is a fee payable but it does not exceed £305 for registration of the charge alone (if there is a registration involving both a transfer of title eg to a purchaser who then grants a charge the fee will not exceed £1,105 for registration of the transfer and the charge).

UK - Scotland

UK - Scotland

There is no stamp duty in creating a security interest. There are also no notaries' fees.

A standard security is validly created and enforceable against third parties not when it is signed but when it is registered in the Land Register of Scotland. Prior to 1 April 2016 it was also possible to register a standard security in the historic property register known as the General Register of Sasines, (or ‘Sasine Register’) if the property over which the security was being granted was not yet registered in the Land Register. Until registration in the property register, the security is merely a bilateral agreement. There is a flat fee payable of £80 per title over which the security is granted for the standard security itself and an additional £20 registration fee for an ‘Advance Notice’ relating to the grant of the standard security in terms of which the security is protected against any competing deed presented for registration during a 35-day priority period. Since 1 April 2016 it has not been possible to register a new standard security in the Sasine Register, meaning that any property over which a standard security is to be created must first be registered in the Land Register.  Where title to a property is being registered in the Land Register to enable the creation of a standard security over the whole of that property, the registration fee is waived in its entirety, although a £80 fee is still payable for the registration of the standard security.

The security is then perfected by registration at Companies House within 21 days of the date of registration at the Land Register of Scotland if the borrower is a company. If the security is not registered at Companies House, it is not enforceable against a liquidator or administrator in the event of the borrower's insolvency. The fee for registration at Companies House is £23 (£15 for online registrations).

Ukraine

Ukraine

Under Ukrainian law mortgage agreements and trust ownership over immovable property, as well as any amendment thereto, are subject to notarization. The state duty for notarisation of these security instruments amounts to 0.01% of the cost of the immovable asset (although in practice may be charged at a rate of up to 1%).

A mortgage as an encumbrance and trust ownership are subject to state registration in the State Register of Proprietary Rights over Immovable Property. The state registration shall be performed by state registrar or notary by entering relevant information to the State Register of Property Rights over Immovable Property. Currently, the administration fee for mortgage registration constitute around UAH 119 (approximately US$4). Whereas the current administration fee for trust ownership registration equals to UAH 238 (approximately US$ 9).

United States

United States

Mortgage instruments as well as all documents intended to be recorded in the public records require the acknowledgment/notarization of the parties executing such document. The nominal amount charged by notaries, in each case licensed by the applicable states, may vary.

The amount of mortgage fees and taxes also vary from state to state (and local jurisdictions within each state). Unlike notarial fees, mortgage recording taxes may amount to substantial sums. For instance, under New York state law, for loans of a certain size, a mortgage recording tax of nearly 3% of the principal balance secured must be paid when a new mortgage is created and recorded against a property.

Zimbabwe

Zimbabwe

Fees and levies charges in the granting of security are applicable for stamp duties and notarial fees. Government Stamp Duties are levied in terms of the Stamp Duties Act [Chapter 23:09], while Notaries fees are in terms of the tariffs of the Law Society of Zimbabwe. However, if the debtor has been declared insolvent, and has surrendered the property for auction, the creditor must pay sequestration costs, tax on sequestration and capital gains tax and value added tax.