REALWorld Law

Sale and purchase

Taxation of asset deals

Which taxes are relevant/which transaction costs will be incurred when buying real estate as an asset (asset deal) and how are the transaction costs shared between the buyer and seller?

Angola

Angola

The purchase of a real estate is subject to transfer tax (SISA) at a rate of 2% (levied on the acquisition amount when equal to or higher than the value registered in the Land Registry Office). Additionally, it is also subject to stamp duty at a rate of 0.3% (levied on the acquisition amount). Stamp duty is also due for the execution of a sale and purchase deed at a fixed amount of AOA 2,000.

Costs are not typically shared and are normally entirely paid by buyer.

Argentina

Argentina

Taxes: Income Tax for Seller. Stamp Taxes also apply pro-rate within the parties. Notary’s fees are incurred by the buyer and deed costs are borne by the seller.

Australia

Australia

Stamp duty is payable on the acquisition of real property in all Australian states and jurisdictions. The rates of duty differ from state to state and are based on a sliding scale depending on the purchase price/value of the real estate.

The highest rate of duty payable is 7 percent, however for most property the highest rates of duty are between 5 percent and 6 percent. Stamp duty is generally payable by the buyer. In relation to acquisitions of residential real estate by foreign persons, an additional foreign purchaser surcharge duty is payable in some states (ranging from 3 percent to 7 percent).

In addition to stamp duty, the government land registries impose registration fees on the transfer of title documentation. In some jurisdictions these fees are calculated by reference to the consideration paid for the land and can represent significant additional cost.

Goods and Services Tax (GST) (roughly equivalent to VAT) at a rate of 10 percent is payable by sellers in relation to the sale of real estate which constitutes a ‘taxable supply’. There are GST exemptions for most residential property and the sale of a going concern Other exemptions may apply. The conditions for obtaining GST free status can be complex.

Where a contract provides that the buyer agrees to pay to the seller an amount equal to the seller’s GST liability for the supply of the land, stamp duty will be calculated on the GST inclusive consideration.

Belgium

Belgium

In the case of an asset purchase, registration duties (registratierechten/droits d’enregistrement) or VAT (Belasting over de Toegevoegde Waarde (BTW)/Taxe sur la Valeur Ajoutée (TVA)) may apply.

Registration duties

The transfer of ownership, or the setting up or sale of a usufruct (a right to use the property concerned and to benefit from its profits and/or products) over an asset located in Belgium, is subject to a registration duty amounting to 12% when the asset is located in the Flemish region or 12.5% when the asset is located in the Walloon or Brussels regions. A distinction is made in the Flemish region between the purchase of the only owner-occupied home (where the registration duty amounts  to 3%) and the purchase of a home other than the only owner-occupied home (where the registration duty amounts to 12%). The registration duties are calculated on the contractual price or the market value, whichever is higher. In some circumstances, and provided that certain conditions are met, a reduced registration duty rate applies to purchases by corporate entities or individuals whose business activities mainly consist of buying and selling real estate.

The granting of a long lease or a building right may serve as an alternative to acquiring the ownership of a real estate asset. These rights can be granted for a very long period (see above). When not subject to VAT (see below), the granting of these rights is generally subject to a registration duty of 5%, calculated on the total price and any charges imposed on the lessee or the beneficiary of the building right. In certain circumstances, the establishment of long leases and building rights might be deemed by the tax authorities to constitute a sale by virtue of anti-abuse measures. The normal 12.5% (12% in the Flemish region) duty is then payable on the market value of full ownership.

A contribution in kind of an interest in real estate into the share capital of a Belgian company, or the transfer of such property through a merger or demerger, is generally not subject to normal registration duties or to VAT (only a fixed duty of EUR50 is payable upon registration of the notarial deed, unless an exemption thereto applies). This also applies to the acquisition by a company of a wholly-owned subsidiary (the simplified merger procedure). An exception is made for buildings designated for private residential use, if the contribution is made by an individual (a 12.5%, or 3% or 12% in the Flemish region depending on whether it concerns the purchase of a only owner-occupied home or the purchase of a home other than the only owner-occupied home, registration duty is payable).

VAT

The transfer or grant of real rights over ‘new buildings’ can be subject to VAT (generally at 21%). A newly constructed building is considered to be ‘new’ for VAT purposes until 31 December of the second year after it is first put to use (this also applies to renovated buildings which have been structurally modified or which have been given a new designation or function).

The purchase of land belonging to a ‘new’ building, is subject to the same VAT treatment as the purchase of the new building, if that land and the new building are sold simultaneously by one and the same owner. No VAT is due on the part of the price attributable to the land if the building is not new or if these conditions are not met. Registration duties will, however, then be payable on the sale of the land at a rate of 12% if it is located in the Flemish region or 12,5% if it is located in the Walloon or Brussels region. A distinction is made in the Flemish region between the purchase of the only owner-occupied home (where the registration duty amounts to 3%) and the purchase of a home other than the only owner-occupied home (where the registration duty amounts to 12%)

In the case of a transfer of a going concern by means of a sale, contribution or otherwise, no VAT will be due on the transfer of the property (although in some cases registration duties may apply). In addition, even where the property does not qualify as a ‘new building’, there will be no effect on input VAT incurred by the transferor which has previously been reclaimed, since in such cases the transferee will be deemed to assume all the rights and liabilities of the original owner.

Other

Costs include the fees of professional advisors and some documentary duties. A notarial fee (determined by law) of between 0.057% and 4.56% (+ 21% VAT) of the transfer value of the property is payable. Other costs include the fees of professional advisors, as well as stamp duty on the notarial deed. A documentary duty must be paid to the notary public before the deed is registered.

All costs related to the notarial deed (such as transfer taxes) are the responsibility of the buyer. The parties may however agree that the seller will bear this cost instead.

Bosnia-Herzegovina

Bosnia-Herzegovina

Transaction costs are typically paid by the buyer, who also pays tax on the transfer of the property and the fee for registering the change of ownership in the land register.

The buyer also usually pays the notary's fee and the agency fees, but this is subject to agreement between the parties. 

Brazil

Brazil

The most important taxes and costs are listed below:

Real Estate Transfer Tax (ITBI)

ITBI is a municipal tax levied on the transfer of real estate for consideration or related rights (except guarantee) at a rate that varies depending on the municipality where the real estate is located. The tax should be calculated on the real estate market value, which is the higher between the transaction declared value or the value of the property defined by the municipality.

The Federal Tax Code and the Federal Constitution establishes that ITBI is not levied on the transfer of real estate or related rights to pay up capital or as a result of a merger, spin-off or termination of a company, except if one of the main activities of the buyer/new company is the acquisition and sale and/or lease of real estate.

The tax must be paid by the buyer of the property before the execution of the purchase and sale deed. In case of assignment of rights, the assignor is liable for the payment.

Inheritance and Donation Tax (ITD)

ITD is a state tax applicable to the transfer of properties by inheritance or donation, whether urban or rural. The rate varies in accordance with the state where the real estate is located. The tax is calculated on the real estate market value, which may be revised by the state tax authority, and paid before the execution of the transfer deed.

Urban (IPTU) and Rural (ITR) Property Taxes

IPTU and ITR are, respectively, local and federal taxes levied annually on urban and rural properties.

The basis for IPTU is the real estate market value and the rate at which the tax is collected depends on the municipality. A tax payment slip with the amount due is annually issued by the municipality.

The basis for the ITR is the value of the rural land at rates that vary depending on the number of hectares and the level of use of the area. It’s important to point out that ITR requires the filing of an annual ITR tax return to the Brazilian Tax Authority to establish the amount due.

According to articles 130 and 131 I of the Brazilian National Tax Code, the buyer can be liable for past IPTU and ITR charges regarding the period of ownership of former owners. It’s crucial to ascertain whether the former owners have paid all previous charges of those taxes.

Other charges such as utilities and fire brigade tax are also frequently charged from the current owner, regardless of whether they’re related to a period prior to the real estate acquisition.

Taxation of capital gains on real estate

Brazilian individuals and non-residents (including foreign legal entities) are taxed by the capital gain tax, which is due when an asset or a right is transferred with profit, that is, when the sale price exceeds the price of the acquisition. However, there are some tax incentives for individuals who are tax residents in Brazil.

For acquisitions since 1997, the tax base of capital gains of rural properties is subject to a different regime based on the market value indicated in the annual ITR tax return, which may be revised by the Brazilian Tax Authority.

From a Brazilian legal entity perspective, the taxation is based on its tax regime (actual or deemed profit regime) and if the acquisition and sale of real estate transactions is part of its business purpose (taxed as ordinary income instead of capital gains). Corporate Income Taxes (IRPJ/CSLL) and taxes on gross revenues (PIS/COFINS) may apply, although the deemed profit method and tax planning are also available to reduce such tax impact.

According to Federal Law No. 13.259/2016, article 1, the capital gain tax rates are:

  • 15% for gains which do not exceed BRL5 million
  • 5% for gains between BRL5 million and BRL10 million
  • 20% for gains between BRL10 million and BRL30 million
  • 5% for gains which exceed BRL30 million

According to article 39 of Law No. 11.196/2005, the seller of a property is exempt from paying the capital gain tax if they use all the profit of the transfer to acquire another property in a period of 180 days. This benefit can only be used once in a period of five years. If this benefit is not used, the tax must be paid by the last business day of the month after the transfer.

There are two other hypotheses of exemption: the real estate is transferred for an amount less than BRL35,000; the real estate is transferred for an amount less than BRL440,000 and, cumulatively, it is the sole property of the seller and the seller must not have sold any other property in the last five years.

Emphyteusis

Properties that are emphyteutic require the payment of laudêmio, calculated according to the property market value, which must be the higher between the transaction declared value and the value of the property defined by the authority or private entity which has emphyteusis over the property. The seller has to pay it, but it is very common for this cost to be transferred to the buyer.

Notary Public fees

The buyer pays the notary public and notary offices fees, which are calculated on the basis of the transaction price, using a standard method defined by the regional government.

Certificates

The mandatory certificates, required by the notary public, are, as a market practice, paid by the seller, but certificates which are not mandatory or customary, required by the buyer for due diligence purposes, are usually paid by the buyer.

Canada

Canada

Goods and Services Tax (GST) is a federally imposed tax payable at a rate of 5% on the gross purchase price on most real property transactions. Some provinces have a Harmonized Sale Tax (HST) Regime such that a tax of 10­-15% of the gross purchase price is imposed instead of the 5% GST. There are several exceptions, most notably in the purchase of used residential property for which GST/HST is not payable. Buyers of commercial properties who are registered for GST/HST purposes on the closing date will also generally be entitled to an offsetting tax credit for the GST/HST payable. As a general rule, the seller must collect and remit the GST/HST to the relevant authority.

GST/HST is also payable on commissions charged by realtors, which is typically deducted from the purchase price on closing.

In addition to GST/HST, the provincial land registries impose a tax on the transfer of registered ownership of real property at a typical rate of 0.5-2% depending on the fair market value of the land being transferred, or at a higher rate in some jurisdictions if the buyer is a non-resident of Canada. This tax is payable by the buyer and there are certain exemptions that may be available.

Finally, the sale of real property may trigger an obligation on the part of the seller to pay taxes on the capital gain or income earned by the Seller in respect of the sale of the property.

China

China

The following taxes will be incurred in asset deals:

  • Value-Added Tax – China has gone through tax reform to replace Business Tax with Value-added Tax (VAT) and it has applied to real estate industry and construction industry starting from 1 May, 2016. After such tax reform, sales of real estate should be subject to VAT at 9% under the general rules. Such VAT costs will be added on top of the purchase price and finally borne by the purchaser of such real estate property. The purchaser may use such input VAT (supported by valid VAT invoices) to offset its output VAT payable on its income generated from business operations. The tax reform program also offers transitional rules, under which the seller of real estate properties may opt for a simplified tax method if the real estate property was acquired before 30 April 2016, ie apply a reduced VAT rate of 5% on sale of real properties without claiming input VAT credit. If the seller of the real estate properties choose for such simplified method, the purchaser’s VAT costs will be reduced to 5% on the purchase price, but such 5% VAT will not be deductible against the purchaser’s output VAT on its business income.
  • Deed Tax – Deed Tax is levied and payable by the buyer of real property on the transfer of real property or land use rights. The rate ranges from 3 to 5% (depending on the location) of the total purchase price of the property or land use rights.
  • Land Value Appreciation Tax – Potentially, the most expensive tax is Land Value Appreciation Tax (LVAT), which is imposed on the seller on taxable gains derived from the transfer of real property. The rate of LVAT is set on a progressive scale ranging from 30% to 60% depending on the amount by which the sale proceeds exceed certain prescribed deductions. These prescribed deductions include, the cost of acquiring land use rights, developing the land and construction, as well as the value of any existing buildings and any taxes paid in relation to the land or property.
  • Stamp Duty –Stamp Duty (SD) is levied on certain dutiable documents executed or used in China, including property transfer documents. SD is calculated at a fixed rate according to the contract amounts. For transfers of property, SD is 0.05% of the contract value, and is levied on both the buyer and the seller.
  • Enterprise Income Tax – The rate is 25% of net profit (consolidated with the enterprise’s annual profit) payable by the seller of the real estate. Foreign enterprises not maintaining establishments in China are taxable on their income and gain on a gross withholding basis at the rate of 10%.
Colombia

Colombia

The following taxes and fees will be incurred on assets deals:

  • Deed fee – This fee is equivalent to 0.3% of the sale price. This amount is paid to the notary when the public deed is signed. It is customary for it to be paid in equal parts by the parties.
  • Registration fee – This fee is between 0.7% and 1.1% of the sale price. Usually, this amount is paid when the public deed is granted. The buyer usually pays it.
  • Registration tax – This value of this tax must be set by the departmental assemblies and can range from 0.5% to 1% of the price. This expense can vary in each department. This tax must be paid before registering the deed with the Office of the Governor. The buyer usually pays it.
  • Estampillas departamentales – Departmental stamps are a tax used at departmental level to finance specific projects and programs in each department of Colombia.
    The value of departmental stamps varies according to the department, but generally the value ranges from 1% to 2% of the price. These taxes are paid together with the registration tax and are usually paid by the buyer.
  • Stamp duty – This applies to all transactions involving the sale of real estate with a price exceeding approximately USD200,000. Depending on the price, this tax is equivalent to 1.5% or 3% of the price or can range from 1.5% to 3% of the price. This tax must be paid to the notary when the deed is signed.
    As this is a relatively new tax, it’s not clear which party will have to pay it. Therefore, it is subject to negotiation.
  • Withholding tax – The withholding tax for the purchase of real estate is calculated by applying a rate to the price of the property and the seller pays it. The value of the tax varies depending on whether the seller is an individual or a legal entity. For individuals, the general withholding rate is 1% on the value of the transaction. For legal entities the rate is 2.5%.
Croatia

Croatia

From 1 January 2015 any acquisition of a building and/or a development site from a VAT payer is subject to VAT at the rate of 25 percent. This rule applies to buildings, which are new, ie have not been in use since their construction and buildings in respect of which the time elapsed since their first use up to the sale is two years or less. Acquisitions of “old” (used) buildings, ie those which do not fall into the above categories, are subject to land transfer tax. Acquisitions of land which is not a development site are either subject to VAT (if the buyer is also a VAT payer and both the seller and the buyer agree to apply VAT) or land transfer tax.

The notary's fee for certification of the seller's signature is approximately HRK150 and the registration fee payable to the land registry is approximately HRK300. If the parties agree to use a notary public as escrow agent for the payment of the purchase price, the notarial costs will significantly increase since they depend on the value of the transaction. These costs are usually borne either by the buyer or shared between the parties.

Czech Republic

Czech Republic

  • Real estate acquisition tax at 4% of either the purchase price or the value of the real estate has been cancelled in 2020. VAT may apply to certain types of transaction.
  • The fee for registration with the Cadastral Registry is CZK 2,000.
  • The fees for the authentication of signatures paid to a notary or local authority CZK 70 per signature.
  • If the purchase price is paid via an escrow agent, an escrow fee will be payable, the amount depending on the value of the transaction.
  • Other fees, for example the cost of lawyers, technical consultants and agencies.
  • The registration fee is normally paid by the buyer while the escrow fee is usually shared equally between both parties.
Denmark

Denmark

Profit on the sale of investment property is taxed in the same way as capital gains in Denmark. For corporate owners (resident or non-resident) the tax rate is 22% in 2024. For individuals, capital gains are taxed at a rate of up to 42%, depending on total income.

Capital gains on residential property are not taxed if the seller has used the property for his own residential purposes.

The fee for the registration of a title document is DKK 1,850 plus 0.6% of the purchase price or the public land assessment value, whichever is higher. If the real estate is residential the fee will be calculated solely on the purchase price. The parties are free to agree on the sharing of costs. Agency fees in relation to residential properties are usually between two and four per cent of the trade value of the property. Agency fees in relation to commercial property vary greatly and depend on the nature of the property.

Furthermore, the sale and purchase of real estate is — as a general rule — not subject to VAT.

However, the commercial sale of new buildings (with or without land), building sites (irrespective of whether they are developed or not), built-up sites, and substantially converted/renovated properties, is subject to 25% VAT.

The rules apply to individuals as well as companies carrying on a business activity.

The buyer has the right to recover the VAT charged by the seller if the buyer is a VAT taxpayer carrying out transactions which are subject to VAT and provided the real estate forms part of the activities subject to VAT.

France

France

Generally, the sale of property is subject to transfer taxes or value added tax. Transfer taxes, at the rate of 5.09–5.81% of the price paid for the property, depending on the type and location of the property, apply to transfers of property built more than five years ago.

An additional tax of a rate of 0.6% of the sale price applies to transfers and sales occurring as from 1 January 2016. This additional tax only relates to disposals of office premises, retail premises and storage premises in Ile-de-France department for consideration. As a result, as from 1 January 2016, the global rate of transfer taxes applicable to disposals for consideration in Ile-de-France department is increased from 5.81% to 6.41%.

This additional tax does not apply to disposals for consideration that are subject to VAT.

Moreover, transactions involving real estates or rights on real estates are subject to a real estate security contribution (contribution de sécurité immobilière) of 0.10% of the price paid for the real estate or for the rights on real estates.

Properties built less than five years ago are subject to VAT at the rate of 20%.

Special rules apply to renovation works completed during the last five years on properties built more than five years ago.

Special regimes, driven by tax incentive legislation, apply to some newly built properties intended for use as primary residences or rental properties.

Professionals in the real estate industry who buy and sell properties as their normal business benefit from a reduced rate of transfer taxes (0.715%), provided that the properties are resold within five years of acquisition.

Transaction costs include:

  • Broker fees, which are typically paid by the seller and are normally assessed at a rate of 5% of the price paid; and
  • Transfer taxes, which are typically paid by the buyer.

Alternative arrangements for meeting the costs of the transaction can be agreed between the parties.

Germany

Germany

The most important tax is the property transfer tax. Most sale and purchase agreements stipulate that this tax is paid by the buyer.

The rate of property transfer tax is between 3.5% and 6.5% of the purchase price, depending on the German federal state.

VAT may also apply. The rate of VAT is 19%. Property transactions are not normally subject to VAT if they form part of the transfer of a business as a going concern. Even where this is not the case, property transactions are generally exempt from VAT, although a seller can opt for VAT to apply to a particular sale. This can be advantageous to a buyer where the VAT on costs incurred during related development activities can be offset against VAT on the purchase price.

Transaction costs usually include:

  • the notary's fees, which are fixed by statute;
  • the property transfer tax;
  • the legal costs of registration/deletion of priority notices, land charges and transfer of title; and
  • the fees of the lawyers instructed to carry out due diligence and draft the sale and purchase agreement.

Normally each party pays its own legal fees. Property transfer tax, notarization fees and the legal costs related to the implementation of the sale and purchase agreement are paid by the buyer, with the exception of any legal costs incurred in connection with the discharge of existing encumbrances by the seller.

Hong Kong, SAR

Hong Kong, SAR

Stamp Duty, Buyer's Stamp Duty and Special Stamp Duty

Please refer Tax of acquisitions for further information.

Hungary

Hungary

As a general rule, the transfer of real estate is exempt from VAT, unless the seller has opted to apply VAT at the rate of 27%. The seller may choose to apply VAT to the sale of real property other than residential properties.  If the transfer is subject to VAT, then the reverse charging mechanism applies, ie the buyer is liable for VAT thus the VAT is not included in the invoice, rather it is paid by the buyer direct to the tax authorities.

The transfer of new buildings and building plots is always subject to VAT, and the seller is liable for VAT at the rate of 27% or 5% (ie no reverse charging applies). The lower rate (5%) applies to new residential buildings and apartments having a usable floor area not exceeding 300 sqm and 150 sqm, respectively or certain residential properties constructed within brownfield development projects implemented on specifically designated areas. The VAT payable on the completion of a purchase of real estate may be reclaimed in accordance with the provisions of the VAT Act.

If the transfer takes the form of an asset deal, 4% of the market value is payable by the buyer as transfer tax. A reduced rate of 2% applies to the value above HUF 1 billion. Nevertheless, the transfer tax payable cannot exceed HUF 200 million per real estate. The tax authority normally accepts the purchase price stated in the transfer agreement unless it is obviously below the market value.

If the buyer is:

  1. a property dealer and acquires a property for resale or
  2. a finance lease provider

then the real estate transfer tax is 2% or 3% (providing the property is sold/leased within two years). A 2% rate applies where the property is acquired by a Hungarian real estate fund.

The transfer tax rate is 2% if the property is purchased by a REIT (real estate investment company) or if it is a wholly owned special purpose vehicle.

In addition, a service fee is payable to the land registry office. Legal and notarial fees may also be incurred. These additional costs are usually paid by the buyer unless otherwise agreed (eg each party pays their own legal advisers' fees).

Ireland

Ireland

The stamp duty rate on a transfer of non-residential property (on or after 9 October 2019) is 7.5%. The stamp duty rates on a transfer of residential property are 1% on the first €1 million and 2% on any excess.

The indirect acquisition of real estate in Ireland through the acquisition of shares in an Irish special purpose vehicle company may, in certain cases, be subject to stamp duty at the rate of 7.5% where the shares derive their value wholly or partly from the underlying real estate, which is normally paid by the buyer.

The Stamp Duty Refund Scheme provides for a refund mechanism where residential dwellings units are built on non-residential land. It operates to reduce the stamp duty rate for qualifying residential developments to 2% where higher stamp duty had been paid on the acquisition of the land.

The scheme was due to expire for new construction commencing after 31 December 2022, but has now been extended by three years to 31 December 2025.

Value Added Tax

Value Added Tax (VAT) will usually be chargeable on the acquisition of commercial real estate. In relation to new buildings, i.e. one which has been developed in the previous 20 years or redeveloped in the previous 5, the VAT rate charged will be 13.5%. The sale of old properties is exempt from VAT.

The sale of old properties are generally exempt from VAT. In order to avoid a claw back of VAT that the seller may have previously recovered, both parties may jointly opt to have the sale subject to VAT. The sale will be subject to VAT where there is a contract, in connection with the sale, for the property to be developed.

The Capital Goods Scheme (CGS) applies where a party has been charged VAT on the acquisition or development of a property and they are engaged in business. CGS is a mechanism for regulating the amount of VAT reclaimed over the VAT-life of a capital good, i.e. a developed property. Where there is a change in the proportion of use for taxable purposes for any year in comparison with the use during the initial 12 months (initial interval), an adjustment of a proportion of the VAT reclaimed will be required

In relation to the disposal of a property, VAT is paid to Revenue on a bi-monthly VAT return during which the sale closes. For the letting of a property, VAT is paid to Revenue on a bi-monthly VAT return in which an invoice is issued. Where the CGS adjustment applies, VAT is paid to Revenue on a bi-monthly VAT return each year following the financial year end.

Capital Gains Tax

The disposal of the real estate may give rise to capital gains tax for the vendor, currently at the rate of 33%, regardless of where the vendor is resident.

The disposal of shares in a company which derives its value or the greater part of its value from Irish real estate may also give rise to capital gains tax for the vendor, currently at the rate of 33%, regardless of where the vendor is resident.

Local Property Tax

The Local Property Tax (LPT), which came into effect from 1 July 2013, is a yearly tax payable on the market value of residential property. The LPT is administered by the Revenue Commissioners. It is a self-assessed tax and the property owner must determine the market value of the property. The LPT charge is based on the valuation of the property as at 1 November 2021. The valuation on this date determines the LPT charge for each year up to 2025.

Certain types of property are exempt from the LPT, including properties unoccupied for extended periods due to illness of the owner, properties purchased, adapted or built for use by incapacitated persons, and properties that are fully subject to local taxation of commercial property, and certain properties used by charitable bodies. There are qualifying conditions necessary to avail of each of these exemptions.

Corporation / Income Tax

Rental income is taxed at the rate of 25% where held by a company which is resident in the jurisdiction or a non resident company carrying on a trade here through a branch or agency subject to deductions which may be available for certain costs incurred in connection with the rental business.

Italy

Italy

The sale of commercial property performed by VAT liable entity (eg companies) is generally exempt from VAT, except in the following cases:

  • Where the seller is the developer of a new property or the company which carried out renovation works and the sale occurs within five years of the completion of the property
  • Where the seller opts for VAT in the sale and purchase agreement.
  • For all sales subject to VAT, VAT is applied at the rate of 22% (or 10% in case the property has been refurbished by the seller) under two different and alternative mechanisms:
  • The ordinary regime, which requires the seller to issue an invoice charging VAT, applies where the seller is the developer or the renovating company.
  • The ‘reverse charge mechanism’ applies when the seller opts in the sale and purchase deed for VAT to apply. Under the reverse-charge regime, the seller issues an invoice without VAT. The buyer then ‘writes’ into that invoice the rate and amount of the applicable VAT and registers it in both its input and output VAT registers. The result is that no cash out is due by the purchaser.

If the sale and purchase are subject to VAT (under the taxable or the exempt VAT regimes), cadastral tax at the rate of 1%, mortgage tax at the rate of 3% (mortgage and cadastral rates are reduced to 50% in case one of the party is an Italian real estate fund), and registration tax of EUR200 are payable. VAT can often be recovered, although this can take up to two years.

If the sale is out of the scope of VAT (the seller is not a VAT liable entity – eg individuals not carrying on business), registration tax is payable at a rate of 9%, while cadastral and mortgage tax are payable at fixed rates of EUR50 each.

Each side will normally pay its own legal costs. Property transfer tax, notaries’ fees and the legal costs for the implementation of the sale and purchase agreement are usually paid by the buyer, with the exception of any legal costs incurred in connection with the cancellation of existing encumbrances on the property, which are paid by the seller.

Agency fees are usually between 1% and 3% of the property value. Unless otherwise agreed between the parties, the estate agent can claim its total fee from both parties (except where the payment has been already declared in the transfer deed).

Japan

Japan

For asset deals, the relevant tax and transaction costs are as follows:

Real Estate Acquisition Tax

Real estate acquisition tax is imposed on persons which acquire real estate in Japan.

This tax rate ranges from 3 to 4% of the tax-assessed value of lands and buildings.  However, this tax is not imposed on an acquisition of trust beneficial interests representing real property (TBI).  If certain types of acquisition vehicles are used, lower tax rates will apply.

Registration Tax and Relevant Fees

Registration tax is imposed on persons when they register transfer of the title to real estate.  This tax rate ranges from 1.5 to 2% of the tax-assessed value of lands and buildings.  In the case of an acquisition of TBI, JPY1,000 per registration.  If certain types of acquisition vehicles are used, lower tax rates will apply.

Typically, since the registration is arranged by a judicial scrivener (shihoshoshi) representing the purchaser, a fee for their services is required.  The aforementioned tax and accompanying fees are usually payable by the purchaser.

Stamp Tax

Stamp tax is imposed on each sets of an SPA.  The amount of this tax depends on the purchase price of the real estate and can amount to JPY600,000 (JPY480,000 under the reduced tax rate currently available) per each set.  In the case of an acquisition of TBI, it is JPY200 per each set.  Each party usually bears the stamp tax for the set of an SPA kept by such party.

Consumption Tax

The sale and purchase of buildings (not lands) are subject to Japanese consumption tax at a rate of 10%.  The same rates will apply in the case of an acquisition of TBI.  The amount of the consumption tax is usually added on the purchase price.

Fixed Asset Tax and City Planning Tax

The fixed asset tax and city planning tax are payable by persons owning real estate as of January 1st of each year.

The fixed asset tax rate is usually 1.4% of the tax-assessed value of the property and the City Planning Tax rate is usually 0.3% of the tax-assessed value of the property.

If a transaction is conducted in the middle of a year, since these taxes for such whole year are imposed on the seller owning the real estate as of 1 January of such year, the buyer usually pays to the seller the amount of the taxes for the period from the closing date until 31 December of such year.

Brokerage fee

When a broker assists a buyer or a seller to execute an SPA, the buyer or the seller must pay respectively a brokerage fee.  The maximum legally permissible fee is 3% of the purchase price plus JPY60,000 from each party.

In Japan, it is not unusual for one broker to receive a brokerage fee from both the seller and the buyer.

Netherlands

Netherlands

A transfer tax at 10.4% applies, unless residential property is involved. For residential properties, a transfer tax rate of 2% is applicable (only) in case the new owner will use the property for its own occupation. There is an exemption for transfer tax in case the value of the newly acquired property is under EUR510,000, the buyers are between 18 and 35 years old and the buyers have not taken advantage of this exemption before.

Real estate transfer tax (RETT) is based on the higher of the fair market value of the relevant property or the purchase price paid for the property. RETT is payable on the acquisition of the legal and/or beneficial ownership of real property (and in some circumstances, qualified shares or membership rights).

The Dutch civil law notary must receive the purchase price (including costs and RETT) payable by the buyer prior to the execution of the transfer deed. The notary is jointly and severally liable for the RETT, and will not execute any deeds before the transfer tax has been transferred to the notarial trust account. To comply with notarial professional rules, the purchase price (including costs and RETT) must be paid to the notarial trust account by the buying entity. If any entity other than the buyer pays the purchase price, the notary must obtain clarification with respect to the source of the funds used in the transfer in question.

Notwithstanding this, it is possible for a buyer to pay the purchase price directly to the seller (through an escrow account if desired). This will be reflected in the wording of the deed of transfer.

In the case of newly built (and in some cases thoroughly renovated) real estate, the transfer may instead be subject to turnover tax (VAT) at 21%.

Normally the buyer will pay most of the costs. However, in the case of newly built property, costs are normally paid by the seller.

New Zealand

New Zealand

Common taxes and transaction costs:

  • General transactions costs – This commonly includes legal fees and disbursements and real estate commission. Generally, each party pays their own costs unless otherwise agreed.
  • Goods and Services Tax (GST) – GST is a tax on the supply of most goods and services in New Zealand. GST can apply to people who buy and sell property. In many cases GST is not charged on the sale of a residential property, but it can apply depending on whether the seller is GST registered and if the sale is part of their GST-registered seller's business. However, where both the seller and the buyer are GST-registered, the sale will attract compulsory zero rating (meaning that GST is charged at a rate of 0%).
  • Rates (local and regional council rates and water rates) – Local and regional councils charge annual rates on land within their respective territories. The annual rates will be apportioned between parties at settlement. There may also be other rates charged for commercial properties or hotel owners.
  • Land taxing provisions – New Zealand does not have a comprehensive capital gains tax regime. However, New Zealand has specific land-taxing provisions that can result in income tax becoming payable on any capital gain derived on the disposal of land. For example, any capital gain derived from the sale of "residential land" that is bought and sold within the bright-line period (currently either five or ten years, depending on when the property was acquired) will be subject to New Zealand income tax (eg the Bright-Line Test). There are exceptions to these provisions, for example, if the sale of land relates to a person's "main home." There are also specific provisions which may result in New Zealand income tax becoming payable if the seller acquired the land with an intention of disposal, if the seller is in the business of dealing in land, if the seller is a developer of land or if the seller has undertaken a development on or subdivision of the land. There are also exceptions to these specific provisions.
  • RLWT – Residential land withholding tax is required to be withheld by a seller where the land meets the definition of "residential land" and the seller falls into the category of an "offshore person." There are also certain timeframes regarding the acquisition and sale date of the residential land that inform whether the RLWT regime applies.
Nigeria

Nigeria

Real estate sale and purchase transactions are by law subject to taxation. The applicable taxes are the following:

  • Capital Gains Tax is based on gains or profits from the sale of property and is payable by the seller. By law, capital gains tax payable is 10% of the gains made from the disposal of the property. However, in practice, for the registration of transfer of title, the usual rate charged by the Federal Inland Revenue Service is about 1.5% of the assessed market value of the property.
  • Stamp Duty Tax is payable at the registration of the transfer deed and the buyer of property is responsible for the payment. The Federal Inland Revenue Service charges about 1.5% of the assessed market value as stamp duty.
  • Consent and registration fees. By law, transfers of real estate must have the consent of the State Governor to be valid. The law also provides that transfer of real estate interests for terms that are above three years should be registered. The different states have different rates for consent fees and registration fees. The rates applicable in Lagos State are 1.5% and 0.5% respectively for consent and registration fees.

In practice, all transfer taxes and costs are not shared and are paid by the buyer. The Finance Act 2020 grants tax exemptions under the revised provisions of Capital Gains Tax Act for asset transfers among a related party group. A company is recognised as member of a group where it has been part of the group for a minimum of 365 days prior to the reorganisation. Also, the assets must be held by the acquiring company for not less than 365 days to stay exempted from the applicable tax law. Furthermore, the Act in defining the goods that are subject to value added tax exempted transfer of interest in land.

Also, the Nigeria Startup Act 2022 provides that Capital Gains Tax will not be charged on gains that accrue from the disposal of assets (including shares and land) by investors (angel investor, venture capitalist, private equity fund, accelerators or incubators) with respect to a labelled startup under the Startup Act provided the assets have been held in Nigeria for a minimum of 24 months.

Norway

Norway

Where deeds of transfer are filed with the Land Register, registration is normally subject to stamp duty at the rate of 2.5% of the purchase price or the market price if this is higher. There are exemptions from this where property is transferred between married couples, where the transferred property is a unit in a housing cooperative (borettslag), or where companies are merged or demerged. The stamp duty is paid by the buyer.

The seller must pay income tax on any profit from the sale.

Agency fees are usually between 1% and 3% of the purchase price. These are normally paid by the seller unless otherwise agreed. In addition, there is a charge for the registration of the title deeds, as well as any mortgage deeds. These charges are paid by the buyer. In the case of other costs, such as legal fees etc, each party normally pays its own expenses.

Poland

Poland

In the case of an asset deal (ie the direct purchase of an interest in real estate by a corporate vehicle or individual), where the seller is not an entity carrying on a business, a 2 percent tax on civil law transactions (PCC) is due, based on the market value. This is normally the purchase price but can sometimes be assessed at a higher level by the tax authorities using an authorized expert's opinion. The obligation to pay PCC rests with the buyer. If the seller is an entity carrying on a business, value added tax (VAT) is usually payable. Generally, the standard rate of 23 percent applies. With respect to subsidized housing – a rate of 8 percent applies.

In principle, VAT charged by the seller can be recovered by the buyer as input VAT (if the purchaser is a VAT taxpayer carrying out transactions which are subject to VAT). If a sale is subject to VAT, PCC is not due. The sale of agricultural land is exempt from VAT (but in such cases 2 percent PCC is due).

Any sales of real property other than land are exempt from VAT if two years have lapsed since that property's first occupation. However, in some circumstances, the seller may opt for such a transaction to be subject to VAT. Other specific exemptions may apply. If a sale is exempt from VAT, it is subject to tax on civil law transactions (PCC) at a rate of 2 percent.

Transaction costs are normally 2 percent of the purchase price, including the court fee and notarial fee of up to PLN 10,000, but not including any VAT or legal costs. There is also a fee for registration in the Land and Mortgage Register of PLN 200.

Costs are subject to negotiation and agreement between the buyer and seller. Normally, the buyer pays the transaction costs and according to the law the tax on civil transactions.

Portugal

Portugal

When buying real estate in Portugal as an asset the following taxes may apply: municipal property transfer tax (Imposto Municipal sobre Transmissões Onerosas de Imóveis or IMT); stamp duty (Imposto do Selo); and VAT (Imposto sobre o Valor Acrescentado or IVA).

Municipal property transfer tax is payable at a single rate of 6.5% on the sale or transfer of any urban property not exclusively of a residential nature. The rate for rural properties is 5%.

In the case of the sale and transfer of urban buildings or apartments exclusively for residential purposes and intended to be the buyer's permanent residence, IMT is payable at the following progressive rates:

Taxable value (€)

Rate

Threshold deduction (€)

Up to 101,917

0%

0

Above 101,917 to 134,412

2%

2,038.34

Above 139,412 to 190,086

5%

6,220.70

Above 190,086 to 316,772

7%

10,022.42

Above 316,772 to 633,453

8%

13,190.14

Above 633,453 to 1,102,920

6%

0

Above 1,102,920

7.5%

0

IMT is calculated using the following formula:

(Taxable value x Rate) – Threshold deduction = IMT to be paid

IMT is payable on the sale and transfer of urban buildings or apartments exclusively for residential purposes and/or intended for letting purposes, but not intended as the buyer's permanent residence, in general at the following progressive rates:

Taxable value (€)

Rate

Threshold deduction (€)

Up to 101,91

1%

0

Above 101,917 to 139,412

2%

1,019.17

Above 139,412 to 190,086

5%

5,201.53

Above 190,086 to 316,772

7%

9,003.25

Above 316,772 to 607,528

8%

12,170.97

Above 607,528 to 1,102,920

6%

0

Above 1,102,920

7.5%

0

To discourage the purchase of real estate in Portugal through offshore companies, IMT is levied at a rate of 10% if the buyer is a company established in a country, territory or region with a preferential tax regime. Further, as of 1 January 2021, the same punitive tax rate applies, when the acquirer is an entity dominated or controlled, direct or indirectly by a company established in a country, territory or region subject to a preferential tax regime. In these cases, no exemptions are made available.

A list of relevant offshore jurisdictions is published by the Portuguese Government.

When property is transferred for consideration it is subject to a flat rate of 0.8% stamp duty. Stamp Duty will be calculated on the price paid in the transaction or on the value of the real estate assessed by the Tax Authority (VPT), whichever is higher.

In principle, the transfer of real estate as such is exempt from VAT. VAT only applies if the seller waives the standard VAT exemption.

Notary's fees are also payable.

According to the current Notary's Fee Schedule, public deeds are subject to a fee of €175, regardless of the value of the sale.

Registration of the public deed in the Land Registry Office costs €9.

Some reductions in the fees may be allowed when rural property is transferred by inheritance.

With the privatization of the notarial profession and where a deed is more complex than expected, notaries may charge an extra fee proportionate to the amount of work involved.

The usual average fee (as scheduled plus the extra fee) amounts approximately €250, plus VAT at the legally applicable rate of 23%.

Other costs include the registration of the transfer with the local land registry office, but land registry fees and related stamp duty are limited and strictly set by law, and should not amount to more than €250 for each registration.

The buyer is normally responsible for the transaction costs. The buyer is also responsible for the assessment and payment of IMT and VAT, when the VAT exemption has been waived. Stamp duty is paid by the buyer (who pays the notary's fees and the VAT levied on them) and is charged by the tax authorities before the public deed of transfer is signed.

Romania

Romania

Romania does not levy any stamp or transfer tax on the direct transfer of real estate (ie asset deals).

The following fees are due in an asset deal involving real estate:

  • The fees of the notary public, which vary depending on the value of the transaction. For example, for real estate with a value higher than RON 600,001, a notarial fee of RON 6,405 plus 0.6% of the real estate value exceeding RON 600,001 is due
  • Fees for registration in the Land Book, equal to 0.5 percent of the purchase price for legal entities, and 0.15 percent for individuals

It is market practice for the purchaser to pay all fees and taxes relating to the transaction. However, the parties can agree to divide the costs.

Slovak Republic

Slovak Republic

In Slovakia, income tax for individuals applies at 19% (but 25% on that part of the income which exceeds 176.8 times the current subsistence level as prescribed by the government),whereas corporate income tax applies at 21% (but 15% for a taxpayer who has earned income (revenues) for the tax period not exceeding €60,000). The rate of 20% applies to VAT, provided the party concerned is a VAT taxpayer under Slovak law. Gift tax and inheritance tax were abolished from 1 January 2004. Real estate transfer tax was abolished from 1 January 2005.

Generally, therefore, real estate owners in Slovakia are only subject to income tax, real estate tax and possibly VAT.

The real estate tax applies to companies and individuals owning land, buildings and non-residential premises in Slovakia and is further determined locally by each municipality. The real estate tax consists of the following types of taxes: land tax, building tax and apartment tax.

In addition, the following costs shall be considered:

  • Fees for legal advice
  • Notary's fees for the verification of signatures on the contract
  • Fees for registration in the Cadastral Registry
  • Agency fees (depending on the value of the real estate)
  • Possible fees for the identification of the plot, procurement and verification of the plans, etc. (these may be agreed as part of the legal or agency fees)
Spain

Spain

The relevant taxes are:

  • Value added tax (impuesto sobre el valor añadido, IVA)
  • Transfer tax (transmisiones patrimoniales onerosas)
  • Stamp duty (actos jurídicos documentados), and
  • Tax on the increase in the value of urban land (impuesto sobre el incremento de valor de los terrenos de naturaleza urbana).

The transfer of land, both land for development and developed land, is subject to VAT at a rate of 21%.

A transfer of rural land or land which cannot be used for development is exempt from VAT but is subject to transfer tax at a rate between 6% and 11% (depending on the location of the property), unless the seller is VAT registered and the buyer is a VAT taxpayer entitled to deduct input VAT in full, in which case the option to make the transaction subject to VAT is available.

The first transfer of a new building, and the second and subsequent transfers of buildings which have been or are transferred with a view to them being substantially refurbished, as well as transfers resulting from the exercise of a call option by a lessee in a financial lease contract, are all subject to VAT.

The second and any subsequent transfer of a building, and the first transfer of a building that has been in continuous use for a period of over two years (under a lease agreement), are VAT exempt but are subject to transfer tax of between 6% and 11%, unless the seller is VAT registered and the buyer is a VAT taxpayer fully or partially entitled to deduct input VAT in full, in which case the option to make the transaction subject to VAT is available. Land and building transactions which are VAT exempt are subject to transfer tax at a standard rate ranging between 6% and 11%. The taxable base is the reference value (valor de referencia) of the real estate property established by the General Directorate of Cadastre (Dirección General del Catastro). However, if the value declared by the parties, the price agreed or both are higher than the reference value, Transfer Tax will be calculated on the higher of these values. If there is no reference value or the reference value cannot be certified by the General Directorate of Cadastre, the taxable base, shall be the highest of: (i) the value declared by the parties, (ii) the price agreed or (iii) the market value.

A transfer of property, other than rural land, is subject to a tax on the increase in the value of urban land as calculated by the town council at the time of sale.

Where the transfer is subject to VAT, the notarial deed is also subject to stamp duty (actos jurídicos documentados) at a rate ranging between 0.5% and 3% depending on the location of the property and the type of transaction.

Under the Spanish Civil Code, the seller pays the notarial fees relating to the transfer deed and the buyer is responsible for those relating to subsequent copies (this means that, in practice, the seller pays around 90% of the notarial fee and the buyer pays the remaining 10%). However, despite this, it is common instead for the buyer to pay all notarial fees.

Sweden

Sweden

Transfer tax (stamp duty) is normally payable on the transfer (actual or deemed) of real estate. This is calculated at 4.25 percent (for legal entities) or 1.5 percent (for individuals) of the transfer value or the tax assessment value of the real estate, whichever is higher. Certain exemptions to the transfer tax apply. Transfer tax is normally paid by the buyer.

A subsequent transfer of real estate on the same terms and conditions as the initial transfer will not trigger transfer tax if it is made within three months of the initial transfer.

Other costs may include legal and financial advice, and estate agency fees. Estate agents normally work on a commission basis which generally varies between 0.5 percent and 5 percent of the agreed purchase price, depending on the type of real estate and the size of transaction. The seller normally pays the estate agent. Other costs are generally met by the buyer.

Thailand

Thailand

The following are tax considerations regarding the purchase of assets:

Corporate income tax

A seller's income derived from the sale of land or real estate will be subject to Thai corporate income tax at a rate of 20% (although the normal rate is 30%) and subsequent years. The tax is applied to the net profits derived from the sale of the land or real estate. The net profit or gain is calculated by taking the gross proceeds from the sale and deducting the direct cost and relevant administrative expenses for the sale of the land or real estate.

Withholding tax

The payment attributable to the price charged on transfer of land or real estate or official appraisal value as recorded by the Land Department, whichever is greater will be subject to withholding tax at the rate of 1% in the event that the seller is a legal person. This withholding tax can be used to offset the corporate income tax payable at the year-end and if it exceeds the corporate income tax payable, the seller can claim a cash refund.

In the event that the seller of land is an individual person, the withholding tax rate will be calculated on the basis of the official appraisal value with a deduction based on 'possession years', which varies depending on the number of years that the seller has been in possession (the more years of possession, the more the deduction), and based on the seller's progressive income tax rate (ranging from 5% to 35%).

Specific business tax

The seller will be subject to specific business tax at the rate of 3.3% (including municipal tax) on the sales price of the land or real estate or the official appraisal value as recorded by the Land Department, whichever is greater.

Stamp duty

The seller is subject to 0.5% stamp duty on the sales price of the land or real estate or the official appraisal value as recorded by the Land Department, whichever is greater. The stamp duty is inapplicable if the Specific Business Tax has been paid on the sale of the land or real estate.

Transfer fee

A transfer fee applies at the rate of 2% of the official appraisal value of the land or real estate and is borne equally by the parties unless otherwise provided in the agreement.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Within Abu Dhabi and outside the Abu Dhabi Global Market free zone

These could include:

  • Registration fees such as those on:
    • Sale and purchase - the seller and purchaser are required to pay registration fees at a rate of between 1% and 4% of the value of the property (typically split equally between the parties). In respect of transfers of off-plan real estate units, the fee is capped at AED 2 million per transaction.
    • Mortgage – one per thousand (ie 0.001%) of the mortgage value and in relation to:
      • Off-plan real estate units: up to a maximum limit of AED 2 million per transaction
      • All other assets: up to a maximum limit of AED 1 million per transaction

These are payable to the Land Registration Department of the Abu Dhabi Municipality.

  • Agents’ fees, as per their terms of business.
  • Surveyors’ fees for carrying out due diligence.
  • Lawyers’ fees for carrying out due diligence.
  • Utility connection fees and such like.
  • VAT (from 1 January 2018) at the following rates:
    • The sale of commercial property (whether new or existing): 5% (standard rated)
    • The first sale of new residential property (within 3 years of completion): 0% (zero rated)
    • The subsequent sale of existing residential property: exempt (no VAT)
    • The sale of bare land: exempt (no VAT)

In the case of investment properties, the transaction may be treated as the "transfer of a going concern" which is considered out of the scope of VAT. The conditions for obtaining this treatment are complex and advice should be assessed on a case-by-case basis.

Within the Abu Dhabi Global Market free zone

In the Abu Dhabi Global Market free zone, fees are payable in respect of the following:

  • Registration of instruments
  • Register search certificates
  • Official register searches
  • Other fees as prescribed by the Board of Directors of the Abu Dhabi Global Market
United Arab Emirates - Dubai

United Arab Emirates - Dubai

VAT is applicable in the United Arab Emirates from 1 January 2018 and the following rates apply:

  • Sale of commercial real estate – 5% (standard rate)
  • First sale of new residential property (within 3 years of completion) – 0% (zero rated)
  • Subsequent sale of existing property – exempt (no VAT)

In the case of investment properties, the transaction may be treated as the ‘transfer of a going concern’ which does not attract VAT. The conditions for obtaining this treatment are complex and advice should be sought.

To register a transaction at the Dubai Land Department (DLD) certain fees apply.

For a sale and purchase, the registration fee is 4% of the purchase price, to be split equally between the seller and the buyer unless otherwise agreed. It is common practice for the seller to insist on the buyer paying the full 4% to the DLD. If the buyer is granting a mortgage over the property to a bank, the mortgage must also be registered and the registration fee is 0.25% of the mortgage amount, up to a maximum of AED 1,500,000.

For long term leases, the registration fee is 4% of the total value of the contract. For musatahas (rights to use and exploit land belonging to another person, along with the right to build on that land) the registration fee is 1% of the value of the contract.

Please note that the above fees are correct as at 1 March 2023. The DLD website can be checked for up-to-date details on fees.

In addition, there may also be agents' fees, surveyors' fees, lawyers' fees, architects' fees (for plans used to obtain a building permit) etc.

UK - England and Wales UK - England and Wales

UK - England and Wales

When acquiring an interest in non-residential real estate, the buyer must pay stamp duty land tax (SDLT). For a non-residential real estate acquisition SDLT is charged at 2% on the part of the value paid for the real estate falling between £150,000 and £250,000 and 5% on any part of the value paid above £250,000. If the asset consists of residential property higher rates of SDLT may apply. For Welsh properties see the website of the Welsh Revenue Authority: there are different rates and thresholds and the tax is referred to as land transaction tax.

Value added tax (VAT) does not automatically apply to the purchase of land, although in a few cases (such as newly built properties) the seller must charge VAT. Sellers will often elect to charge VAT so that they can recover any VAT incurred in relation to the property. Generally, VAT is charged at a rate of 20%.

In the case of investment properties, the transaction may be treated as the ‘transfer of a going concern’ which does not attract VAT on the purchase price, although the conditions for obtaining this treatment are complex.

Where VAT is payable, SDLT will also be payable on the amount of the VAT.

UK - Scotland

UK - Scotland

When an existing interest in real estate is acquired, Land and Buildings Transaction Tax (LBTT) is payable if the price paid for the asset (including any non-monetary value given) is more than £150,000 in relation to non-residential real estate or £145,000 in relation to residential real estate. LBTT operates under the basis of a progressive system (with different bands of the consideration being subject to LBTT at a different rate). For non-residential real estate LBTT is charged at 1% on any part of the consideration between £150,001 and £250,000, and at 5% on any part of the consideration above £250,000. Higher rates can apply in relation to residential property.

VAT does not automatically apply to the purchase of land, although in a few cases (for example newly built properties) the seller must impose VAT. For many commercial property transactions the seller will impose VAT in order to recover any VAT that has been paid in relation to the property. In the sale of investment properties, the transaction may be treated as the ‘transfer of a going concern’, which does not attract VAT, although the pre-conditions for obtaining this relief are somewhat complex.

Where VAT is chargeable on the price, LBTT will be charged on the whole sum inclusive of VAT.

A fee is payable to the Land Register of Scotland for registering the disposition (ie document of transfer) in favour of the buyer. The fee payable is calculated on a sliding scale depending on the price paid. The Scottish system does not use notaries and all legal work is carried out by solicitors. Rates for this vary depending on the complexity of the transaction. Most real estate is sold through property agents, who will also charge commission for their services, normally conditional upon completion of the sale.

The seller invariably pays the selling agent's commission, their own legal costs and any expenses incurred in the sale, for example fees for searches. The buyer pays for his legal costs, site surveys, VAT, LBTT and Land Register fees. Transaction costs will generally be higher for the buyer than the seller, although this may in turn affect the purchase price.

Ukraine

Ukraine

In the case of asset sales, VAT is payable at the rate of 20%. The VATable consideration in respect of such transactions cannot be less than the book value of the property asset as of the beginning of the tax period during which it is disposed of (or the arm's length value if the property asset is not included in the accounts). The sale of plots of land (without buildings and/or other constructions) is not subject to VAT.

State duty (calculated according to the value of the transaction), pension fund duty, state registration fees, legal fees, technical and financial consultants' fees etc may apply.

State duty applies by state notaries as a fee for notary services at 1% of the contractual value of the real estate being transferred. As a matter of practice, private notaries charge fees for their services in the amount no less than state duty.

Pension fund duty is paid by a purchaser of real estate at 1% of the value of the real estate (excluding VAT) indicated in the sale and purchase agreement.

The notary's fees are divided between the parties as agreed by the parties. The amount of the state registration fee varies depending on the procedure for state registration and the type of real estate involved, ie increased fees apply to the state registration of complex multi-element real estate developments and for expedited state registration.

The state registration fee for the registration of title to real property is UAH 227.

Real Estate agencies' charges are around 2.5% to 5% of the contractual price.

United States

United States

Depending on where the property is located the following may be payable:

  • city, county and state transfer and excise taxes;
  • mortgage recording taxes; and
  • sales taxes.

The types and rates of these taxes vary depending on locality, property type and purchase price

In most instances, the applicable state, or the county in which the property is situated, has established customs for the allocation of:

  • allocation of escrow fees;
  • title insurance and survey costs;
  • recording charges; and
  • city, county and state transfer taxes.

In some parts of the country the transfer tax is customarily paid by the seller. and tThe mortgage recording tax is customarily paid by the purchaser borrower (ie the borrower obtaining the mortgage loan).

The SPA should comprehensively describe how costs are to be allocated between the parties.

Zimbabwe

Zimbabwe

Sharing of transaction costs between the parties is on the agreed terms, however liability for taxes and costs is as follows in terms of the law:

  • Stamp duty is payable on the registration of transfer of immovable property. The purchaser is liable for the payment of stamp duty.
  • A rates clearance certificate is required to be obtained from the local authority. This is the obligation of the seller.
  • Capital gains tax is levied on the gain where the immovable property is sold. This is a cost borne by the seller. In the event that the property is a new development, Value Added Tax will be levied upon the purchaser.
  • Conveyancer fees are also payable and are determined according to the Law Society of Zimbabwe By-laws S.I. 28/2020 effective 7 February 2020. The conveyancing fees are payable by the purchaser.