International Taxation of Real Estate Investments 2020 Survey on Europe, America, Australia and BRIC countries International Taxation of Real Estate Investments 2020 Survey on Europe, America, Australia and BRIC countries About WTS Global Contents With representation in over 100 countries, WTS Global has already grown to a leadership position as a global tax practice oDering the full range of tax services and aspires to become the preeminent non-audit tax practice worldwide. 6 Albania 330 Korea WTS Global deliberately refrains from conducting annual audits in order to avoid 14 Argentina 338 Latvia any conflicts of interest and to be the long-term trusted advisor for its international clients. Clients of WTS Global include multinational companies, international 20 Australia 346 Lithuania mid-size companies as well as private clients and family oGces. 34 Austria 358 Luxembourg 52 Belarus 370 Mexico The member firms of WTS Global are carefully selected through stringent quality reviews. They are strong local players in their home market who are united by the 62 Belgium 380 Moldova ambition of building a truly global practice that develops the tax leaders of the 82 Bosnia & 386 Montenegre future and anticipates the new digital tax world. Herzegovina 392 Netherlands WTS Global eDectively combines senior tax expertise from diDerent cultures 90 Brazil 402 Norway and backgrounds and oDers world-class skills in advisory, in-house, regulatory 100 Bulgaria 416 Poland and digital, coupled with the ability to think like experienced business people in a constantly changing world. 110 Canada 426 Portugal 122 China 442 Romania For more information please see: www.wts.com/global 132 Croatia 454 Russia 140 Cyprus 466 Serbia 152 Czech Republic 474 Singapore 166 Denmark 490 Slovakia 182 Estonia 498 Slovenia 190 Finland 510 South Africa 210 France 520 Spain 230 Germany 532 Sweden 244 Greece 544 Switzerland 260 Hong Kong 554 Turkey 270 Hungary 572 Ukraine 282 India 586 United Kingdom 306 Italy 606 United States 322 Japan of America 2 3 Editorial Dear Readers, We are very happy to present to you the fifth edition of our Real Estate Investment Guide. As usual, our guide provides you with a comprehensive overview of all real estate related tax aspects in 50 countries. The information is based on the experience of dedicated real estate tax practitioners of WTS Global. Global commercial real estate investments reached an all-time high of USD 800bn in 2019 as investors continued to seek out the solid return and relative stability of this asset class. Despite the corona crisis, we do not anticipate major changes in the attractiveness of real estate assets, especially due to the fact that the spending policy of national budgets “stabilize” the low interest environment and the bottleneck of valid investment opportunities. In parallel, the deficit spending increases the importance of taxation for the fiscal authorities. Therefore tax issues related to real estate remain crucial. This guide will for the first time only be available in digital form, with no printed version. This is a humble contribution of WTS Global to the environment. In addition to thanking our readers for your continued support and helpful feedback, we would like to express our gratitude towards all colleagues of the WTS global network who have contributed to this edition and without whom we would not have been able to put together such a concise, yet comprehensive guide. We furthermore extend a special “Thank you!” to our colleague Tamas Dely from WTS Global Business Development for his valuable organisational contribution and the pleasant lay-out of the guide. We hope this Real Estate Investment Guide will not only assist you in avoiding the pitfalls of manoeuvring through the tax jungle of international real estate investments, but also support you in finding new markets and business opportunities. Should you require any further in-depth information on real estate investments into a particular country, please feel free to contact us or the relevant local contact per - son. WTS Global is always at your service. Best regards, Viktor Sandberg Global Head of Real Estate Service Line [email protected] wts.com 4 5 A. Legal/General Real Estate Investment in 1. Are non-residents entitled to acquire real estate in Albania? Albania Does the acquisition have to be carried out by an Albanian corporation? Under law no. 7980, dated 27 July 1995 “On the Acquisition of Plots”, as amended, foreign individuals/entities may acquire and own land which can be built on, as long as it is proven that they have invested in the land not less than three times its value. The value of the land is determined by the Council of Ministers. Until such investment is made, the foreign individual/entity may use the land under a lease contract. Alternatively, foreign individuals/entities may acquire land by establishing a company under the Albanian law, which as an Albanian legal person can then freely acquire and own any type of immovable property. Other immovable property such as buildings can be freely acquired by foreigners. 2. Which importance does the land register have? The law governing the registration of Local contact land is the recently adopted law no. Alketa Uruçi 111/2018 “On the Cadaster”. According [email protected] to this law, all immovable property must T: +355 4 225 1050 be registered in the cadaster register. www.bogalaw.com This register is open to the public and is administrated by the State Cadaster Global contact Agency. Viktor Sandberg [email protected] The cadaster register is composed of all M: +46 70 441 80 36 www.wts.com property records and cadastral maps that contain the following information on the immovable property: identity of the owner, the boundaries of the property, the date of registration and the relative deed of ownership acquisition, and plans that show the location of property. In addition, any mortgage, easement, usufruct, right to use or any other right connected to or deriving from the immovable property that is transferred to any third party, should be recorded in the property record. Any contract or other instrument eJecting transactions involving an immovable property should be filed with the local directory of the State Cadaster Agency within 30 days of its execution, failure to comply will result in a fine of 10% of the fee for each day of delay to a maximum amount of ALL 300,000. 7 The owner of a property disposes freely the property only after registration of Any subsequent measurement of the tangible and intangible fixed assets after the property with the Cadaster and after receiving the Ownership Certificate. their initial recognition is not considered for tax purposes. 3. When is a foreign investor subject to limited tax liability in Albania? B. Income Tax Non-Albanian resident persons are taxed in Albania only for the Albanian-sourced 1. What are the corporate and the personal income tax rates? income, while tax resident persons are liable for tax on their worldwide income. Are there special tax rates for real estate? Are there any participation exemptions? 4. Are asset deal and share deal possible in Albania? Does a tax-grouping exist? If yes, what are the requirements? What are the main consequences? Corporations conducting business in Albania and having an annual turnover Both asset deal and share deal are possible in Albania. exceeding ALL 14 million are subject to a corporate income tax (profit tax) at a rate of 15%. The rate for corporates having annual turnover between ALL 5 million Asset deal and ALL 14 million is 5% (the tax will be 0% on 1 January 2021). In the case of asset deal, the taxes payable depend on whether the seller is an No profit tax applies for a 10-year period for accommodation structures “Four-Star and individual or an entity registered for profit tax in Albania. Five-Star Hotels, Special Status”, benefiting the special status until December 2024. In case of an individual, the personal income tax at the rate of 15% over the capital No tax-grouping rules exist. gain (sale price minus purchase price) is payable at the moment of registration of the sale contract with the Cadaster. If the seller is an entity, the seller will have to pay Personal income tax deriving from the transfer of ownership over real estate is 15% the tax on transfer of real estate (as mentioned in the answer to question C.1. below ) of the capital gain (sale price minus purchase price). In case of corporations, income but also profit tax (15% over the diFerence between sale price and purchase price). from sale of real estate is considered as ordinary income (and subject to profit tax at 15% rate together with the other income). Share deal 2. What is the tax depreciation period for real estate in Albania? In case of share deal, no tax on transfer of real estate is payable. Are there depreciation categories? Which depreciation method is used? As regards capital gain, the following rules apply: The owner of an asset is entitled to depreciation allowances. If during a taxable period direct and/or indirect ownership of stock capital or voting Buildings, structures and machinery with a long useful life depreciate with the rights of a legal person changes by more than 20% in value or number, and if the declining balance method at a rate of 5%. The start date from which depreciation average annual turnover in the last 3 years of this person exeeds ALL 500 million, is calculated is the first day of the month following the month of purchase. the person is treated as disposing of a proportionate part of all the person’s assets immediately before the change.