What taxes (if any) are payable by the owner of real estate on a recurring basis and can these be reduced or offset in any way?
When the property is not leased, real estate owners are subject to property tax according to the following rates:
|Up to AOA 5 million||0%|
|Above AOA 5 million (levied on the excess of AOA 5 million)||0.5%|
When the property is leased, property tax is levied on the income from properties (ie rental income) located in Angola at a rate of 25% (the tax amount may not be lower than 1% of the value of the property).
The taxable amount of the property tax, regarding leased properties, is the annual rent minus 40% of expenses related to the property. The property tax code foresees the following expenses: technical assistance with lifts, janitor and cleaning staff salaries, stair lighting, central air conditioning, building administration (when the number of unit owners is not less than 10) and building insurance.
When the tenant is an entity or a person with organized accounting, the property tax is subject to withholding tax.
The property tax levied on leased properties is not deductible for corporate income tax purposes.
Rents received by collective investment undertakings are taxable under the corporate income tax at a rate of 7.5% or 15%, depending on the nature of the CIU.
Land tax may be payable annually by the land owner depending on the unencumbered value of the real estate. The amount of land tax payable depends on the Australian state or territory in which the property is located and various other factors including, among others, the land value and the type of corporate vehicle which owns the land (eg trust or company). For example, in New South Wales land tax is levied at the rate of 1.6 percent to 2 percent of the land value.
Foreign owners of land may also be subject to additional land tax surcharges in New South Wales (for residential property) and Victoria (for all property).
Also, certain exemptions are available in most Australian states/territories (eg land used for primary production such as forestry plantations).
Immovable withholding tax on real estate amounts to 1.25 percent (in Brussels and Wallonia) or 3.97 percent (in Flanders) of the deemed rental income (revenu cadastral/kadastraal inkomen) as indexed on 1 January of the relevant tax assessment year.
Additional provincial and municipal surcharges are levied on top of the (regional) immovable withholding tax, which may increase the effective tax rate to around 30 percent to 50 percent of the cadastral income, depending on the province and municipality where the real estate is located.
Belgian immovable 'withholding' tax is not refundable and cannot be credited against corporate tax. However, it is fully deductible from a company's taxable profit.
For companies using or exploiting real estate, taxable income is determined from the annual accounts and the amount of profit or loss realized.
Profit can be reduced by deducting the expenses associated with the real estate, such as the depreciation of buildings (depreciation of land is not possible), repairs, maintenance, renovation and similar costs, and interest on loans taken out to finance the acquisition of the real estate (with some exceptions).
Corporate income tax and the related 'additional crisis tax', advance payments and withholding tax on income included in the tax base, are not deductible. This is also the case for interest on late payments, fines and any associated prosecution expenses.
Generally, taxes, fees and public service charges payable to the regions, as well as surcharges, penalties and other similar charges, are not deductible, but immovable withholding tax, registration duties on the transfer of the real estate and mortgage duties are tax deductible.
Capital gains from the sale of property (buildings as well as land) are subject to normal corporation tax. However, a system of deferred and spread taxation applies where the proceeds are entirely reinvested within three to five years in depreciable intangible or tangible fixed assets used for business purposes in Belgium or in any other member state of the European Economic Area (EEA). Losses related to real estate can be offset against other income. Tax losses may be carried forward indefinitely but their use in a given tax year is limited to €1 million plus 70 percent of the taxable basis in excess of €1 million. Any carried-forward tax losses that cannot be used due to this limitation may be further carried forward indefinitely.
Resident companies are subject to a standard corporate income tax rate of 29.58 percent. This rate will be reduced to 25 percent as from 2020. The first income band of €100,000 of small companies (see below) is subject to a lower rate of 20.40 percent (20 percent as from 2020).
There are a number of local taxes imposed by the regions, provinces and communes that are linked to the real estate itself or to the use of the real estate.
Capital gains are generally taxable as profit at the rate of 10 percent.
Property tax is payable at the level of the canton. In the Canton of Sarajevo, for example, property tax is payable annually in amounts not smaller than:
The Law on the Taxation of Real Estate in the Republic Srpska, which came into force on 1 January 2016 provides a tax rate on real estate of up to 0.2 percent of the market value of the asset and no tax in relation to the purchase of real estate is mentioned. Exceptionally, the tax rate for real estate where a productive activity is carried on is up to 0.10 percent.
Income tax on rental income is levied by the Canadian federal government and all provincial governments. Canadian municipalities do not levy income tax. Rental income from a rental property is generally the profit from the property, subject to specific rules set out in the Income Tax Act (Canada) (the Act).
Canada generally taxes based on residence. A Canadian resident will be required to pay tax on rental income from a property whether the property is located in Canada or elsewhere. If the property is outside Canada, Canada will generally allow an offsetting foreign tax credit against Canadian taxes in respect of any foreign tax paid on the same income.
A non-resident of Canada typically will be required to pay Canadian withholding tax equal to 25% (unless an applicable bilateral income tax treaty, if any, provides a lower rate) of the gross amount of rental income from real estate situated in Canada. The withholding tax must be withheld from each rental payment and remitted to the Canada Revenue Agency (CRA) for the non-resident’s account. In many cases the non-resident may, by filing an undertaking with the CRA, arrange to pay tax based on net rental income rather than under the withholding tax regime.
The combined rate of federal and provincial income tax on rental income will vary depending on the relevant province, and whether the taxpayer is an individual (including most trusts), corporation, or partnership.
Individuals pay tax at graduated rates. The top rate is approximately 50%, depending on the province.
Corporate tax rates average around 30%, again depending on the province. Certain private corporations will be subject to an additional 10.67% refundable tax on rental income, which is then refunded as the corporation pays certain taxable dividends to its shareholders.
Most trusts pay tax at the top individual rate. However, trusts can and frequently do reduce their income to nil annually by distributing all of their income to their beneficiaries, each of whom is then taxable on the beneficiary’s share of income at the rate applicable to the beneficiary.
Partnerships (including limited partnerships and limited liability partnerships) are not generally taxable, but are required to compute income at the partnership level as if the partnership were a person, and then allocate its income to its partners in accordance with their rights as partners. Each partner then pays tax on the partner’s share of the partnership’s income at the rate applicable to the partner.
Income tax is not a deductible expense. Commercial landlords often factor anticipated income tax cost into the rent charged in order to ensure an appropriate rate of return on their investment.
Canadian provinces levy annual property tax, typically as a percentage of assessed value. Property tax rates vary widely depending on the province, and the location and classification of the property. Property tax is generally payable by the owner of the property.
Property tax expense incurred in the course of earning income from a business or property is generally deductible for income tax purposes. Restrictions on deductibility may apply where the real property is acquired for resale or development.
British Columbia has enacted an annual “speculation and vacancy tax” on residential real estate in the Vancouver region and in certain other specified areas in British Columbia, subject to various exemptions, including property under construction or renovation and property occupied under a qualifying long-term tenancy.
The tax is levied on foreign owners annually at a rate of 0.5% of the property value in 2018, and 2% in 2019 and subsequent years (non-foreign owners will also be subject to the tax, but at lower rates). Foreign owners who report income in British Columbia may be able to offset a portion of the tax with a tax credit against British Columbia income tax (non-foreign owners may also be eligible for a tax credit under certain circumstances).
The following taxes are payable by the owner of real estate:
Real Estate Tax (RET) is applied to the owners of real property at rates depending on how the property is used. RET replaced Urban Real Estate Tax as of 1 January 2009. Generally speaking, if the property is for lease, RET is calculated as 12% of the annual rental income. For self-used properties, RET is levied at a rate of 1.2% of the net value of the property (with a statutory deduction of between 10 and 30% of the original cost). The rate of this statutory deduction is determined by the local government and may vary from city to city.
Companies or individuals that occupy land within cities, counties, townships and mining areas are subject to an annual Urban and Township Land Use Tax calculated against the square metre size of the property. The rate of the tax is set at a local level and can vary from about RMB0.6 per square metre for a poorer town to RMB30 per square metre for a large city.
In the case of companies (including closed end real estate investment funds) capital gains are normally taxed as profit at the rate of 18% and in case of a company with less than HRK 3 mil annual income, 12% (since 1 January 2017) . Capital gains are treated in the same way as rental income and other income from real estate ownership. Tax is payable on rental and other income after the deduction of expenses (including interest, depreciation and administrative costs).
An individual's rental income from real estate in Croatia is subject to personal income tax at the rate of 15%. Tax is payable on rental income after deducting 30% to cover expenses. This deemed amount applies irrespective of the actual expenses incurred. If the individual is not a VAT payer (ie has no registered business that is subject to VAT), the income tax payable on rental income may be determined by the tax authority as a flat rate.
No other taxes apply to the ownership of real estate.
During the ownership of real estate there is a duty to pay a real estate tax consisting of two parts- tax on land and tax on buildings or units.
Tax on land is imposed on plots of land situated in the territory of the Czech Republic recorded in the Cadastral Register and is payable by the person who owns, rents or uses the real estate. Where there is more than one taxpayer, they pay the tax jointly and severally. The annual land tax rate applicable in built-up areas, which applies to courtyards and other areas, is CZK0.20 per square metre. For building plots, the tax rate is CZK2.00 per square metre. This basic tax rate is subject to multipliers ranging from 1.00 to 5.00 according to the number of inhabitants of the municipality.
The value is calculated by multiplying the area of the land in square metres by the value per square metre.
The tax rate for arable land, hop yards, vineyards, gardens and orchards is 0.75 percent of the value of the real estate. The tax rate for permanent pasture, commercial forests and ponds used for intensive fish farming is 0.25 percent of the value of the real estate.
Tax on building or units is imposed on buildings and units situated in the territory of the Czech Republic. The tax rate on houses is CZK2.00 per square metre, on garages it is CZK8.00 per square metre, on buildings used for business activities (ie buildings used for some types of agriculture, industry, construction, transportation or energy infrastructure) it is CZK10.00, and on flats and other self-contained non-residential premises CZK2.00. For houses, flats and non-residential premises the basic tax rate is subject to multipliers ranging from 1.00 to 5.00 according to the number of inhabitants of the municipality.
Property taxes are payable and if the real estate generates income such income is taxable.
Properties used for commercial rental are only taxed at a rate of between 1.6 percent and 3.4 percent, depending on their location. Properties used for commercial activities are taxed on a similar basis, provided none of the owners uses any part of the property for residential purposes. Tax is calculated on the basis of the land value, which is often lower than the value of the whole property. The land value is assessed every second year. The land value assessment system is currently under review and no new assessments are expected to be made until 2019 for residential properties and 2020 for properties used for commercial activities. This tax is deductible against taxable income.
Properties used for commercial activities may be subject to an additional tax (Dækningsafgift) levied by the municipal based on the value of the buildinds. The individual municipal authority is free to choose whether to levy the municipal charge, which may be levied at a rate of up to 1 percent of the value of the building. The municipal charge is levied primarily by municipalities near the major Danish cities. The municipal charge is a taxation of the value of buildings used for offices, shops, hotels, factories, workshops or any similar purpose. The object of the municipal charge is to contribute to the expenditure for roads, streets, parking spaces, fire service etc, inflicted by commercial properties on the municipality.
Income from the ownership of real estate in Denmark is part of the taxable income. For corporate owners such income is taxed at the corporate tax rate of 22 percent. Special rules apply to individuals carrying on business activities, as they may select to be taxed in a similar way to companies.
Liability to income tax can sometimes be reduced but this depends on the specific circumstances and the nature of the property.
Property tax is payable for the whole calendar year by the owner of a property asset on 1 January of each calendar year. The tax base is equal to the net cadastral income (revenu net cadastral) which is obtained by applying to the local rental value (valeur locative cadastrale) (after updating and upgrading) a reduction of 50% (20% for non-developable land). The amount of property tax is calculated by applying the rate of the tax set by each local authority to the cadastral income.
This is payable by the occupier of the property (as of 1 January). Premises used for housing, car parking or for both personal and business purposes, are subject to housing tax. The tax does not apply to premises which are subject to local tax on business activities (with exceptions). The tax is calculated on the cadastral rental value of the dwelling and outbuildings.
This is payable (yearly as of 1 January) by the owner of premises used as offices or for commercial or storage purposes located in the Île-de-France (ie Paris and the surrounding areas):
The tax is calculated by multiplying the area of the premises by the applicable rate which varies according to which of part of the Île-de-France the premises are located in.
A reduced rate applies to premises owned by the State, regional authorities, professional organizations, non-profit associations or private bodies with a social, educational, cultural, sport – related or public health purpose.
There is a specific tax for development of office premises in Paris area whose rates vary from €0 to €431 per square metre depending on the district the office is located in. This tax has to be paid by the owner of the premises. It is not allowed as a deduction in computing rental income because it is deemed to be part of the acquisition cost of the land (neither deductible nor depreciable).
This is payable by the owner of any premises that have been unoccupied for at least one year (as of 1 January). It only applies to premises located in certain areas.
The tax is calculated on the basis of the rental value of the premises at the rate of 12.5% in the first year and 25% thereafter.
This is payable in relation to building, rebuilding or extension projects for all types of premises. The tax is calculated by multiplying the taxable value of the construction surface and the rate set by the local authority. The rate is between 1% and 5% (up to 20% in specific areas for the municipal part).
An annual tax of 3% of the market value of the property owned in France, directly or indirectly, is payable by entities (whether or not they are resident in France and whether or not the entity has a legal personality). The tax is based on the market value of real estate property assets and rights held in France (eg separate property rights such as usufruct or bare ownership).
Are exempt from tax under certain conditions:
The following organizations, that have their headquarters in France, in the European Union or in a country which has concluded a tax treaty or a treaty of reciprocal taxation with France, are exempt from tax under certain conditions:
 Under an exception for low tax income households
Real estate tax (Grundsteuer) is charged by municipalities on the rateable value (Einheitswert) on an annual basis, as assessed by the fiscal authorities, who take into consideration factors such as the type of building, its age and use. The rateable value is usually below the market value. Tax is payable annually by the beneficial owner.
Each municipality can determine its own multiplier for the purposes of real estate tax. The average tax rate in West German states is 1.3% of the rateable value and in East German states (including the eastern parts of the city of Berlin) it is 1%.
Real estate tax is deductible for corporate income tax and trade tax purposes.
Government rent is levied on property owners regardless of whether or not the property is occupied. This cannot be offset in any way and generally speaking, it is calculated at around 3% of the rateable value of the property. The rateable value of the property is a government assessed value used for official purposes including local taxation.
Rates are a form of local taxation payable on a quarterly basis in advance. The amount payable however is determined by the Legislative Council each year and varies accordingly. The payment of rates can be set off against amount of property tax payable as described below.
If the property is to be let and rent is collected then property tax is payable. The exact amount payable is calculated at a percentage of the Net Assessable Value. This percentage has been set at 15% from 2008/09 onwards. The Net Assessable Value is calculated by taking the annual rental income less irrecoverable rent, municipal taxation paid by the owner(s) and a 20% statutory allowance for repairs and outgoings.
The profits generated from a business carried out by a property owner in Hong Kong (including a business of letting real properties) will likely be subject to profits tax.
However, if the rental income from property chargeable to property tax is included in the profits for profits tax purposes as mentioned above, or if the property owner occupies the property for producing chargeable profits, the amount of property tax paid will be set off against the amount of profits tax payable. This may result in greater deductions in the amounts payable as allowances with respect to repairs and maintenance to the property; interest paid in respect of the cost of acquiring the property (subject to anti-avoidance provisions) and the costs of maintaining the corporation are permitted.
Building tax is payable on the ownership of buildings. The taxpayer is the person who owns the building on 1 January of each tax year. Local authorities determine the level of taxation.
The maximum rate of building tax per annum is:
Vacant plots of land situated in inner-city areas may also be subject to tax, depending on the local authority.
The maximum rate of tax per annum is:
The adjusted market value for buildings and vacant plots is 50% of the actual market value.
Rental profits are subject to corporation tax at the rate of 25% where the property is held by an Irish resident company or a non‑Irish resident company carrying on a trade in Ireland through a branch or agency. In computing rental profits deductions are allowed for:
From 1 January 2019 the deduction available for interest on borrowings used by a landlord to fund the purchase, improvement or repair of a residential property increased from 85% to 100%.
Previously deductions could not be made for expenditure incurred before the first letting of the property. However, from 1 January 2018, a deduction for ‘pre-letting’ expenses of a revenue nature (for example, routine repairs and maintenance costs) is allowable when incurred on residential property which has been vacant for a period of 12 months or more (such expenses incurred before the first letting of the property would not currently be considered deductible). The relief will be subject to a cap of €5,000 per property and will be available for qualifying expenditure incurred up to the end of 2021. Deductions should be possible for expenditure incurred between lettings. Where interest costs are incurred by a company prior to the first letting these may be added to the base cost of the property in calculating a gain or loss on disposal where the costs have been capitalized by the company in its accounts.
Depending on the use to which the property is put and the trade, if any, carried on in the property capital allowances in the form of industrial buildings allowances may be available. An "industrial building or structure" is broadly defined and includes buildings and structures used for a great variety of commercial purposes.
There have been many capital allowances schemes in existence in Ireland over the past 30 years, for example, hotel capital allowance schemes, schemes for the provision of student accommodation, urban renewal relief schemes, rural renewal relief schemes and rented residential accommodation schemes. Most of these schemes have now been abolished or are currently being phased out.
Capital allowances may continue to be available on expenditure incurred on the acquisition of a property on which capital allowances have been claimed where the tax life of the property has not yet expired. A full review of the capital allowances position of a property should be conducted prior to its acquisition.
If the property is let with fixtures and fittings and the landlord bears the burden of the wear and tear of such fixtures and fittings, capital allowances should be available.
Rental profits may be taxed at the rate of 20% where the property is held by a non‑Irish resident company that is not carrying on a trade in Ireland through a branch or agency.
Capital gains tax is payable on the disposal of Irish real estate whether held through a company or by an individual and whether the owner of the property is resident in Ireland or elsewhere. The current rate of capital gains tax is 33%. However, there is a relief from capital gains tax for real estate purchased from 7 December 2011 to 31 December 2014 provided it is held for a period of four years. Any gain on real estate purchased in this period which is attributable to the first four years of ownership will not attract capital gains tax. For example, where real estate is acquired in this period and held for 10 years, four tenths of the gain should be exempt. In order for the relief to apply, the property must be acquired for a consideration equal to the market value of the property (or if acquired from a relative, not less than 75% of the market value on the date acquired). This exemption applies to all persons regardless of how the real estate is acquired, ie individual or corporate. The relief does not extend to the disposal of shares in a company which derives its value or the greater part of its value from Irish real estate.
A "household charge" of €100 was introduced for owners of residential property in 2012. This charge was payable to the relevant local authority. The charge was abolished on 1 January 2013 and has been replaced with a Local Property Tax (LPT).
The 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 valuation date used to determine the market value of a property is 1 May 2013 and forms the basis for calculating the LPT for a four-year period from 2013 until 2016. The revised valuation date of 1 November 2016 has been postponed until 1 November 2019, therefore the LPT will continue to be based on the original valuation that applied in 2013.
Certain types of property are exempt from the LPT. New or second‑hand properties purchased by a buyer between 1 January and 31 December 2013 provided the property is occupied as the buyer’s sole or main residence, and new and unused properties purchased from a builder or developer between 1 January 2013 and 31 October 2019 will be exempt until the end of 2019. Other types of property which are exempt include residential nursing homes, diplomatic properties, properties that are fully subject to local taxation of commercial property, properties in certain unfinished housing estates and certain properties used by charitable bodies.
For the purposes of calculating the LPT, property values are organized into market value bands. The lowest band is €0 to €100,000. Higher bands are organized in increments of €50,000 up to €1,000,000. The tax liability is calculated by applying the tax rate to the midpoint of the band. The rate of LPT is 0.18% for properties up to a market value of €1 million. For example, a property valued at €230,000 falls into the €200,000 to €250,000 band, the midpoint of which is €225,000. Therefore, the tax is €405 for a full year (0.18% x €225,000). Local authorities have the authority to amend the rate of LPT and a number have lowered the rate for 2015 and subsequent years.
Residential properties valued over €1 million are assessed at their actual market value at a rate of 0.18% on the first €1 million in value and 0.25% on the portion of the value above €1 million (banding does not apply).
If the real estate is leased to tenants, the rental income generated is subject to corporate tax (IRES) at the rate of 24% (27.5% for fiscal years before 2017) and regional tax (IRAP) ordinarily levied at the rate of 3.9% although the effective tax rate depends upon the Italian region in which the company is located.
Taxable income for IRES purposes is the net revenue after the deduction of costs, as shown in the annual profit and loss account. With some minor exceptions, all costs relating to the activities of a company can be deducted, including interest (as long as this exceeds interest receivable), up to an amount equal to 30% of EBITDA (not including depreciation and financial lease payments).
Property tax (IMU) is deductible for the purposes of IRES up to an amount equal to 20% for commercial properties. 10% of IRAP paid and IRAP due on the cost of employees is deductible for IRES purposes. Depreciation of property is deductible to the extent allowed by law. In certain circumstances, taxable income can be mitigated for IRES purposes by using appropriate leverage. In particular, interest due on loans which are secured by mortgages over real estate for ‘letting’ is not subject to the 30% threshold and is therefore fully deductible.
The income subject to IRAP is the amount of revenue after the deduction of costs, as shown in the annual profit and loss account. However, not all costs related to the company's activities can be deducted, including interest payments, in certain circumstances the cost of employees, IMU and IRES payments.
IMU (property tax) is a wealth tax related to the possession of real estate and is calculated on the basis of the cadastral income of the property (rendita catastale) which is set by the competent local tax authority in whose jurisdiction the property is located, on the basis of certain legally established parameters.
IMU is levied on the cadastral value of the property (valore catastale), that is obtained by applying a multiplier to the rendita catastale (which is recorded in the Cadastral Register and thus is publicly available). Due to the fact that the cadastral income registered in the Cadastral Register is often much lower than the market value, multiplying factors are applied, in order to bring the tax payable more in line with the current market values of properties.
As far as the tax rate is concerned, each municipality is authorized to set the IMU tax bracket within a range from 0.46% to 1.06%. The IMU tax due annually is the result of applying the relevant rate within that range to the cadastral value of the property.
An Italian partnership is a transparent entity for tax purposes. Consequently, income deriving from investments is taxed at the level of individual partners, even if this is not distributed as dividends.
Interests are 100% deductible for the purposes of computing the partnership taxable income to be transferred and taxed at the level of the partner (they are not subject to the 30% EBITDA threshold limitation). 10% of IRAP and IRAP due on the cost of employees is deductible from the partnership taxable income, while IMU is not deductible.
In the case of non-resident partners, the income is taxed as business income at the level of the partner at the rate of 24% (27.5% for fiscal years before 2017).
Regional tax (IRAP) at the rate of 3.9% applies at the level of the partnership. The income and allowable deductions for the purposes of IRAP are the same as for corporate vehicles.
IMU applies to partnerships in the same way as it does to corporate vehicles.
In the case of investment without a permanent establishment in Italy (please note that, in contrast to the position in some countries, owning Italian real estate does not automatically give rise to a permanent establishment in Italy), the income derived from letting property is subject to corporation tax (IRES) payable at the rate 24% (27.5% for fiscal years before 2017). 95% of the gross income derived from letting is taxable and no depreciation or other costs can be deducted. Interest on loans secured on the property is not deductible for tax purposes.
Investors without a permanent establishment in Italy are subject to IMU in the same way as Italian entities.
Real estate investment funds are not subject to IRES or IRAP while for VAT their transactions are subject to VAT whose fulfilments are accomplished by the management company (SGR). IMU is payable by real estate investment funds.
Listed real estate investment companies (SIIQs) are not subject to corporate income taxes (IRES and IRAP) on income from letting property, or on the dividends paid by another SIIQ, if those dividends are related to letting property.
Other income generated by a SIIQ is subject to IRES and IRAP.
IMU also applies to SIIQs.
The fixed assets tax (kotei shisan zei) and the city planning tax (toshi keikaku zei) are imposed on the person or entity that is registered as the owner of the property as of 1 January of each year (city planning tax is imposed only on real property in certain urban districts). The tax rate for fixed assets tax is 1.4%, and the city planning tax is 0.3%. The tax base is generally the value of the real estate listed on the official ledger, while adjustment measures to reduce the original tax base in case a rapid value increases are applicable to land located in the Tokyo, Osaka or Nagoya metropolitan areas.
Municipalities levy property tax on the basis of the value for the purposes of the Value of Immovable Properties Act. The exact rate differs per municipality and on the type of real estate.
Please refer to the Taxation on income question.
Dutch Personal Income Tax (PIT) is payable on the basis of a deemed return on Dutch real estate held as passive investment (so called Box-III income). This deemed return is calculated on the actual value of the real estate owned (minus any debt in respect of such real estate) on 1 January of each calendar year. The percentage of the deemed return varies based on the total value from up to a maximum of 5.60% (2019 figures). Actual income (such as rental income), actual capital gains and actual expenses with respect to the Dutch real estate are disregarded for the purposes of calculating Box-III income.
The Box-III income is taxed at a fixed rate of 30%. A general threshold exemption of €30,360 (2019 figure) applies for each taxpayer.
The recurring taxes outside the transfer costs that are payable by a owner of real estate are the annual charges for land use which includes ground rents, tenement rates and such other levies for development and business premises which the government authorities imposes on owner and occupiers of real property. The rates are uniformly imposed on properties depending on locations and the nature of the building developments.
The Taxes and Levies (Approved List for Collection) Act 1998, provides for state governments to charge and collect business premises registration fee and development levy, annually from property owners. Also, the Personal Income Tax Act and the Companies Income Tax Act, provides that rental payable to the owner of a property Withholding tax and imposes an obligation on the person paying rent to withhold 10% for remittance to the tax authority and collect a tax credit note in favor of the owner of the property to offset its tax liability at the end of the tax year.
Property tax may be imposed by the municipal council. This will in general be at a rate of between 0.2% and 0.7% of the taxable value, normally calculated somewhat lower than the market value.
The owner of real estate (and associated chattels) located in Norway (whether Norwegian or foreign) is subject to annual net wealth tax on the value of the real estate (and the chattels) at a maximum rate of 0.85%. There is a basic tax-free allowance for wealth under NOK1.5 million per person. Companies are not subject to wealth tax.
Land, buildings and construction works associated with a business (eg roads, antenna towers or foundations for machinery), as well as their component parts, are as a rule subject to real estate tax. The basis for calculation of real estate tax is the surface area of the land or building. For construction works used for business purposes, real estate tax is charged on their initial value determined for tax depreciation purposes in a given tax year. Generally speaking, expenditure incurred in relation to the creation or acquisition of a development is the measure of its initial value.
Real estate tax is a local tax and its exact amount is set by a resolution of the relevant Community Council (a local self-governing body). However, rates of real estate tax laid down in the Community Council's resolution may not exceed the following rates: for land connected with business activities – PLN 0.91 per square metre; for buildings and parts of buildings (where they are used for business purposes) – PLN 23.10 per square metre; for construction works – 2% of their market value (the maximum rates are updated annually). Some types of real estate are exempt from this tax (for example, certain property connected with railways or airport infrastructure).
In some circumstances, real estate located in special economic zones may benefit from real estate tax-exemption.
Real estate tax is declared annually by corporations and paid to the relevant community on a monthly basis.
Individuals not carrying on a business activity pay real estate tax on the basis of on the competent authority' decision four times a year.
Special rules apply to agricultural land and forests.
IMI is a municipal property tax, payable by the owner or occupier of the property (excluding tenants), on the VPT (value of the real estate assessed by the tax authority, which currently tends to correspond to the market value, subject to certain concessions) of urban and rural properties.
IMI is payable on the VPT of each property at rates which range between 0.3% and 0.8%, depending on the municipality and on the type of property.
Urban properties solely for the residential use of the buyer, as his primary domicile, may benefit from a temporary exemption from IMI for up to three years, if the property’s value is less than €125,000. To benefit of this exemption, the income of the buyer’s household cannot exceed €153,300.
IMI exemptions are also possible in the case of projects of economic importance or for tourism purposes, or buildings classified as of national, public or municipal interest.
However, these deals may be exempt from IMI or may benefit from tax reliefs in the following cases, among others:
IMI is borne by the owners of property and it is collected by the municipalities according to the valuation of the property determined by the tax authorities.
The Portuguese State Budget for 2017 introduced the Additional to the IMI (AIMI). The AIMI is levied on the sum of the VPT’s of all dwellings owned or in relation to which the taxpayer has the right of use or the surface right.
In the case of individuals, €600,000 should be deducted from VPT, being the AIMI levied on the residual value at a rate of 0.7% where the taxable value is less than €1 million, and of 1% marginal rate if and where higher. A marginal rate of 1.5% is applied when the taxable value is above €2 million.
In the case of companies, no deduction is to be applied, and the AIMI should be levied at a rate of 0.4%,.
The value of buildings held by companies that are affected by the personal use of capital holders, members of company bodies, or their spouses, ascendants and descendants is subject to a rate of 0.7%, where the taxable value is less than €1 million, a 1% marginal rate if higher than €1 million and less than €2 million and a marginal rate of 1.5% if higher than €2 million.
Urban property classified as “commercial”, “industrial” or “for services” and “others” are excluded from AIMI.
For dwellings owned through a company established in a country, territory or region whose tax regime is deemed to be clearly less onerous the AIMI rate is 7.5%.
Dwellings covered by an exemption on IMI are also not subject to AIMI.
For corporate entities the annual rate of building tax is set by the local council and should in principle be between 0.08 percent and 0.2 percent for residential buildings and between 0.2 percent and 1.3 percent for non-residential ones. These rates can be amended each year by the local councils.
In the case of buildings which have not been re-valued in the three years prior to the relevant fiscal year, the building tax is 5 percent.
The value on which the tax is levied is the acquisition value, the final value of construction works or the value established through a valuation report prepared by an authorised expert, as the case may be.
There are relatively few exemptions from building tax. Local authorities are allowed to grant tax exemptions to companies based on certain conditions set forth by each local authority.
Land tax is calculated in accordance with a formula that takes into account the number of square metres, the ranking of the town/village where the land is situated, the area within the locality and the purpose for which the land is used. Instead of a percentage tax rate, the Romanian Fiscal Code uses a fixed 'basis amount' of tax per hectare, which is updated annually. The land within a city is divided into four areas (A-D) depending on their location. For example, the tax per hectare for building land type A – the central areas of Bucharest, is between RON 8,282 and RON 20,706.
As with building tax, local authorities are allowed to grant tax exemptions for companies based on certain conditions set forth by each local authority.
Certain property of corporations (generally, their fixed assets) is subject to assets tax. The assets subject to this tax are all movable and immovable assets which are booked as fixed assets on the Russian balance sheet subject to certain exceptions such as:
If the foreign corporation has no permanent establishment in the Russian Federation, its asset tax liability is limited to real estate located in the Russian Federation. Assets tax is a regional tax levied at varying rates which may not exceed 2.2 percent and applies to net book value of taxable assets.The maximum tax rate - eg the rate applicable in Moscow and St. Petersburg - amounts to 2.2 percent.
Generally, the tax calculation is based on the average annual residual value of the property.However, regional authorities may applyan alternative assets tax calculation method based on the cadastral value of immovable fixed assets, which is similar to the market value of the assets and usually much higher than the residual value.This option may be applied only to (i) administrative complexes, business complexes and shopping malls and/or (ii) offices and premises used for shopping, catering or public services purposes and/or (iii) in certain cases, real estate owned by foreign companies and/or (iv) residential property not booked as fixed assets.
Corresponding tax rates are to be provided for by local laws not to exceed 1.0 percent for 2014, 1.5 percent for 2015 and 2 percent for the following years.
In Moscow the following types of property are subject to taxation based on the cadastral value:
The applicable tax rates are 0.9 percent in 2014, 1.2 percent in 2015, 1.3 percent in 2016, 1.4 percent in 2017 and 1.5 percent in 2018.
Plots of land owned by individuals or organizations are subject to land tax. The tax is based on the cadastral value of the land and is calculated using tariffs established by the municipal authorities. Tax rates may not exceed 0.3 percent for plots of agricultural land, land occupied by housing facilities, or provided for private subsidiary farming, horticulture, market gardening, or animal husbandry. For other plots of land, the tax rate is limited to 1.5 percent.
Real estate tax consists of taxes on land, buildings, flats and non-residential premises. The tax on land is imposed on plots recorded in the real estate cadastre and is payable (subject to certain statutory conditions) by the person who owns, uses or rents the property.
The annual tax rate for land is 0.25 percent of the tax valuation. This can be varied by the tax administration body (for example, the relevant municipality).
The basis for tax on arable land, hop yards, vineyards, meadows, pastures and orchards is the land value. This is defined as the size in square metres multiplied by the value per square metre. This is also the basis for calculating tax on commercial forests and ponds used for fish farming, as well as for gardens, built-up areas, courtyards and other grounds.
The building tax rate is €0.033 per each even initiated square metre of built-up area.
The annual tax rate on buildings can be increased or decreased by the relevant tax administration body. They can also levy a supplement for every floor situated above first floor level, although the maximum amount of the supplement shall not exceed €0.33 per each additional floor except for the first floor.
The tax administration body sets different annual tax rates for particular types of buildings. The maximum annual tax rate on any class of building is 10 times the lowest annual tax rate on buildings set by the tax administration body.
The annual tax rate on flats and non-residential premises is €0.033 per each even initiated square metre of the floor area of the flat or non-residential premises. This can be varied by the appropriate tax administration body. The maximum annual tax rate on flats and non-residential premises is 10 times the lowest annual tax rate on flats and non-residential premises set by the tax administration authority.
Rates in the Slovak Republic vary according to the type of land and its locality. Bratislava, for example, has the highest rates of taxation per square metre.
Owners of real estate must pay real estate tax (Impuesto de Bienes Inmuebles). This is a local tax payable by owners of real estate and the holders of certain other property rights. Real estate tax is calculated on the basis of the cadastral value (valor catastral). This is set by the municipality in which the property is located on the basis of certain criteria established by law. The tax is calculated by applying a certain multiplier to the cadastral value as recorded in the cadastral register. This tax cannot be reduced or offset in any way.
A special tax on real estate owned by non-resident entities applies in Spain. Non-resident entities resident in a tax haven owning real estate or rights over property are subject to a special tax of 3% of the cadastral value (valor catastral) which accrues at 31 December each year. In the case of transfers of real property situated in Spanish territory by entities subject to the special tax, the assets transferred will be subject to the payment of this special tax.
This special tax is not payable provided that the real estate properties are continuously or habitually linked to a business activity in Spain other than the mere holding or leasing of the properties.
For corporations, rental income and other business income are taxed at a rate of currently 21.4% (20.6% in 2021) and property tax is also payable.
A partnership is transparent for income tax purposes. Taxable income is calculated in the same way as for an incorporated company. Corporate partners are taxed at a rate of currently 21.4% (20.6% in 2021) and individuals at a progressive rate of between 30% and 68%. Property tax is also payable.
Recurring taxation related to the mere ownership of immovable property is in the form of:
House and Land Tax is imposed at a flat rate of 12.5 percent of the annual rental value on land, houses, apartments, condominiums etc, if the property is used for commercial purposes (including renting for residential purposes) or industrial purposes. This tax does not apply if a house is owner-occupied and not used for commercial purposes. In situations where the owner is a legal entity, the tax payable can be treated as deductible expenditure in computing liability for corporate income tax.
Local Development Tax is imposed on persons who either own land or possesses land, and who are not subject to House and Land Tax (ie Local Development Tax normally applies to unused land). The taxable value is the median value of the land, excluding buildings, improvements, and material goods produced on the land, if any. The tax is calculated in accordance with a progressive schedule whereby the tax amount increases as the median value increases. This schedule varies from region to region and the extent of allowances permissible depends on the location of the land. As with House and Land Tax, the tax payable can be treated as deductible expenditure in computing liability for corporate income tax.
Recently, new legislation imposing property tax has been drafted and is expected to come into force in the near future. As such, the House and Land Tax and/or the Local Development Tax are likely to be abolished.
None, unless the property is being used for holiday/short term lettings.
Properties being leased out as holiday homes (ie on a short term basis) attract payment of the ‘Tourism Dirham’ pursuant to Executive Council Decision No.2/2014. This is payable to the Department of Tourism and Commerce Marketing. The current charge that arises per night is AED15 for a property classified as a ‘luxury vacation home’ and AED10 for a property classified as a ‘touristic vacation home’.
The tax position will depend upon the type of entity that holds the English or Welsh real estate and whether the real estate is held as an investment or for the purposes of a trade. The following can be noted in relation to certain types of vehicles holding UK real estate as an investment.
If the property is held in a limited partnership, a limited liability partnership or a “bare” trust (that is a trust in its simplest form), the entity will normally be treated as transparent for UK tax purposes and so the partners or members or beneficiaries of the trust (as applicable) will be directly subject to UK tax on income arising from the property. A non-UK unit trust is normally structured so that income is treated as accruing directly to the unit holders and not to the trustees of the unit trust in which event the unit holders will also be taxed directly on any income arising.
Different taxes will apply depending on the circumstances of the individual partners, members, beneficiaries or units holders (as the case may be); for example relevant circumstances include:
If the property is held in a non-UK-incorporated and non-UK tax resident company, the company is not trading in property in the UK and the company does not hold the property for the purposes of a UK trade then the company will be subject to UK income tax on any taxable income at a rate of 20%.
It should be noted from 6 April 2020, non-UK tax resident companies will become subject to UK corporation tax on profits and gains made from the ownership of UK real estate. From that date non-UK companies will be taxable in the same way as UK companies (see below).
If the property is held by a UK tax resident company, the company will be subject to UK corporation tax on any income or gains from the property at a current rate of up to 19%. It is intended that the rate will drop to 17% from April 2020.
Generally, a tax deduction can be claimed for any costs or expenses that are “wholly and exclusively” incurred in connection with a UK property letting business. Subject to UK transfer pricing rules and other anti-avoidance principles, deductions may be available for interest costs on borrowings to fund the purchaser of property in England and Wales.
To reduce or offset taxable income, any person liable to UK tax on the ownership of real estate in England or Wales may also be able to claim a depreciation allowance on certain types of building and on certain types of plant and machinery which are installed within buildings. In the UK, this is known as a “capital allowance”.
The rules do not allow for depreciation to be claimed on the full cost of an item in the year of acquisition but permit an annual writing-down allowance of a certain percentage of the cost.
Capital allowances rules are complex, but the following general comments should be noted:
The value of land cannot be depreciated for tax purposes.
The tax position will depend upon the type of entity that holds the Scottish real estate and whether the real estate is held as an investment or for the purposes of a trade. The following can be noted in relation to certain types of vehicles holding UK real estate as an investment.
If the property is held in a limited partnership, a limited liability partnership or a 'bare' trust (that is a trust in its simplest form), the entity will normally be treated as transparent for UK tax purposes and so the partners or members or beneficiaries of the trust (as applicable) will be directly subject to UK tax on income arising from the property. A non‑UK unit trust is normally structured so that income is treated as accruing directly to the unit holders and not to the trustees of the unit trust in which event the unit holders will also be taxed directly on any income arising.
Different taxes will apply depending on the circumstances of the individual partners, members, beneficiaries or units holders (as the case may be); for example relevant circumstances include:
If the property is held in a non‑UK-incorporated and non‑UK tax resident company, the company is not trading in property in the UK and the company does not hold the property for the purposes of a UK trade then the company will be subject to UK income tax on any taxable income at a rate of 20%.
It should be noted that from 6 April 2020, non-UK tax resident companies will become subject to UK corporation tax on profits and gains made from the ownership of UK real estate. From that date non-UK companies will be taxable in the same way as UK companies (see below).
If the property is held by a UK tax resident company the company will be subject to UK corporation tax on any income or gains from the property at a current rate of up to 19%. It is intended that the rate will drop to 17% from April 2020.
Generally, a tax deduction can be claimed for any costs or expenses that are 'wholly and exclusively' incurred in connection with a UK property letting business. Subject to UK transfer pricing rules and other anti‑avoidance principles, deductions may be available for interest costs on borrowings to fund the purchaser of property in Scotland.
To reduce or offset taxable income, any person liable to UK tax on the ownership of real estate in Scotland may also be able to claim a depreciation allowance on certain types of building and on certain types of plant and machinery which are installed within buildings. In the UK, this is known as a 'capital allowance'.
The rules do not allow for depreciation to be claimed on the full cost of an item in the year of acquisition but permit an annual writing down allowance of a certain percentage of the cost.
Capital allowances rules are complex, but the following general comments should be noted:
The value of land cannot be depreciated for tax purposes.
Legal entities and individuals pay property tax in respect of real estate assets. Property tax applicable to real estate consists of:
The rates of immovable property tax are set by municipalities and may not exceed (per square metre of the area of the property):
The taxable value for immovable property tax includes the total area of residential/non-residential property.
Immovable property tax on individuals is assessed by tax authorities. Legal entities self-assess the tax and file the relevant tax return annually.
Land payment consists of:
The value for land tax purposes is:
The amount of land tax in regions with an established normative valuation cannot exceed the following thresholds (irrespective of where the property is located):
The amount of land tax applicable to plots of land which are located outside developed areas and which have not undergone normative valuation cannot exceed 5% of the normative valuation of a standard unit of arable land established for the relevant region (oblast). For agricultural land plots which are located outside developed areas and which have not undergone normative valuation land tax cannot be less than 0.3% and cannot exceed 5% of the normative valuation of a standard unit of arable land established for the relevant region. For forest plots which are located outside developed areas and which have not undergone normative valuation land tax cannot exceed 0.1% of the normative valuation of a standard unit of arable land established for the relevant region.
The amount of land rent is stipulated in the lease contract between the lessee and state/municipal state authority. The land lease contract is subject to registration.
The law stipulates that land rent cannot be less than the amount of land tax for respective plot and more than 12% of the normative valuation.
Land tax is assessed annually for the following year and is paid monthly by the owners or users of land. Land rent is also paid monthly.
Specific tax exemptions apply to land plots and immovable property located within temporary occupied territories.
The tax system in the US is a complex web of various taxes imposed by different governmental authorities. The multi-layered tax system reflects the US constitutional structure of overlapping federal and state governments, with the result that taxes may be imposed at any one or more of the following levels:
While US federal taxes apply uniformly throughout the country, state and local taxes vary widely from jurisdiction to jurisdiction.
Taxable net income (ie the excess of income over deductions) derived from the ownership and operation of real property is treated as ordinary income and is subject to federal income tax at graduated rates. Effective January 2018, the maximum income tax rate on ordinary income has been reduced to 21 percent for corporations and 37 percent for individuals (note, however, the maximum income tax rate on ordinary income for individuals is set to sunset after 2025 and return to 39.6 percent). In addition, individual taxpayers holding interests in ‘pass-through entities’ such as partnerships and limited liability companies may be entitled to a deduction of up to 20 percent of ‘qualified business income’, subject to certain restrictions, income limitations, and exclusions. As of 2013, US individuals, estates and trusts are potentially subject to an additional tax known as the Net Investment Income Tax (NIIT), which applies at a rate of 3.8 percent on the lesser of net investment income (including, amongst other items, gain from the sale of investment real estate) or the amount by which modified adjusted gross income exceeds a statutory threshold (ranging from US$125,000 – US$250,000 depending on filing status); non-resident aliens, however, are not subject to the NIIT.
Generally, a limited liability company or other unincorporated business entity that has a single owner is disregarded for US tax purposes. The tax consequences of owning real property indirectly through a disregarded entity are substantially the same as if the property were held directly by the single owner of the disregarded entity.
Real property that is owned by an entity that is classified as a partnership for US tax purposes generally is not subject to US federal income tax. Instead, the taxable income from the ownership and operation of the property ‘flows through’ the partnership to the partners, who are subject to tax on the share of that income which is distributed to them.
If real property is owned by an entity that is classified as a corporation for US tax purposes, net income from the ownership and operation of the property is subject to two levels of federal income tax. First, the corporation is subject to tax on any net income at regular tax rates applicable to US corporations. In addition, dividends paid by the corporation to its shareholders are subject to tax at the shareholder level.
US tax law provides a tax-efficient treatment for a corporation (or trust) that qualifies for and elects to be taxed as a real estate investment trust (REIT). To qualify as a REIT, a corporation (or trust) must principally own interests in real estate and satisfy other highly technical organizational, income and ownership requirements. The governance and tax treatment of such entity is very complex. A REIT, assuming that it complies with various REIT requirements, will not be subject to US federal income tax.
Most (but not all) states impose income tax on the net income generated from the ownership and operation of real property owned, and business activities conducted within, that state. Income taxes may also be imposed at the local (city and/or county) level.
Most states and/or localities (cities and counties) impose some form of ad valorem property tax on the ownership of real property. These taxes typically are computed as a percentage of the assessed fair market value of the property, and generally are not subject to offset or reduction.
The states and localities impose a variety of other taxes that may be relevant to the ownership and operation of real property, including sales and use taxes, transfer taxes and taxes on the logging of official records, franchise taxes and gross receipts taxes.
There are no ongoing taxes levied by the revenue authority. The Municipal authority does however have the authority to charge property taxes, however this varies depending on the location of the property.