UHY GLOBAL REAL ESTATE GUIDE OCTOBER 2017 2 TABLE OF CONTENTS Afghanistan 4 Kuwait 85 Argentina 6 Malaysia 86 Australia 8 Mauritius 88 Austria 12 Mexico 90 Azerbaijan 14 Morocco 92 Bahamas 15 Netherlands 94 Bahrain 17 New Zealand 97 Bangladesh 18 Nigeria 101 Belarus 20 Norway 103 Belgium 22 Pakistan 105 Bolivia 24 Panama 108 Canada 26 Peru 112 Chile 28 Philippines 114 Costa Rica 30 Poland 117 Croatia 32 Portugal 119 Cyprus 34 Qatar 122 Czech Republic 36 Romania 124 Denmark 38 Russian Federation 126 Dominican Republic 40 Saudi Arabia 128 Finland 42 Serbia 129 France 44 Singapore 132 Germany 46 Slovak Republic 136 Ghana 50 South Africa 138 Greece 53 Spain 140 Guatemala 55 Sweden 142 Honduras 57 Switzerland 144 Hong Kong 59 Taiwan 147 Hungary 62 Turkey 150 India 64 Ukraine 153 Indonesia 66 United Arab Emirates 156 Ireland 68 United Kingdom 158 Isle of Man 71 United States of America 162 Israel 73 Uruguay 165 Italy 76 Uzbekistan 167 Japan 79 Vietnam 168 Kenya 81 Zambia 170 Korea, Republic of 83 3 FOREWORD As the world becomes more globalised, many investors, both corporate and private, are looking for opportunities internationally. While real estate is one of many investment options, the venture is unique in that it cannot be physically moved as most other assets can. Consequently, investors must conform to the rules and regulations of the country where the property is situated. Like other major investments, proper planning is needed to avoid any pitfalls that may lie along the way and to minimise tax exposure. The purpose of this publication is to make readers aware of regulations (e.g. deduction of expenses and interests) and tax rates (e.g. VAT, wealth tax and inheritance tax) found in various countries that may affect property investments. It also touches upon some tax planning techniques. The scope and complexity of each individual country’s tax laws mean this publication should not be considered a definitive guide to international real estate, but instead be viewed as a tool by which readers may first become familiar with the issues involved. Where more authoritative advice is needed, readers are encouraged to contact the local UHY member firm. The contents of this publication have been carefully compiled and intended for general guidance only. As the information contained in this booklet, by its very nature, is expected to change, reference should be made to the appropriate UHY source or professional adviser for current or specific information. Every effort has been made to ensure the facts in the publication are correct at the time of going to press. However, no responsibility can be accepted for loss occasioned to any person acting, or refraining from acting, as a result of any material it contains. October 2017 UHY International Please note: Some countries will have an equivalent system to VAT, others will have a sales tax, subject to their own in-country legislation, and in some countries no equivalent exists. 4 AFGHANISTAN Property type Requirements Permissions required by All property In Afghanistan, no permission is required to a foreign investor own property. Foreign investors cannot buy land as an individual. Legal entities with foreign capital may buy land. Types of tenure Freehold and leasehold Transfer taxes on A 1.0% stamp duty is payable on the transfer acquisition by sale or exchange of real estate. Value Added Tax on Not applicable acquisition Capital allowances / tax Capital allowances are available for depreciation commercial property at a rate of 25% per annum straight line. Machinery and equipment is depreciated at a rate of 50%. If a depreciable asset is held by the enterprise for less than half of the year, depreciation shall be calculated and deducted for half of the year. If a depreciable asset is held for more than half of the year, depreciation shall be calculated and allowed for one year. Taxation of rents Rent withholding tax on buildings and houses. Payments of rent for buildings and houses which are rented to legal or natural persons and are used for business purposes or offices are subject to withholding tax as follows: Monthly rent of AFN 10,000-100,000: 10% Monthly rent over AFN 100,000: 15%. Deduction of expenses Sale expenses may be deducted, including commission, advertising, documents and other expenses of transferring the asset. Deduction of interest Wealth taxes Inheritance and gift Afghanistan does not have inheritance or gift taxes taxes. Gifts may impact social security entitlements. Other taxes on property There is a restriction on disposal of property by a taxpayer where a person has failed to file a tax return, failed to pay tax on the due date, or failed to withhold and pay tax as required by law. 5 Taxation of profit on Individuals pay a special rate on profit on disposal disposal. Corporations (resident and non‐ resident) are liable to corporation tax at 20%. Gains from assets owned for less than 18 months do not qualify for concessional treatment. Special companies for property investment Tax planning tips For individuals, profits on disposal of real estate are tax exempt if the property is sold before 18 months from the date of acquisition. Any further information UHY MEMBER FIRM UHY Ahmed Hassan Naeem Chartered Accountants CONTACT DETAILS 101 Noor Tower, Charrahi Haji Yaqoob, Shar-e-Naw, Kabul, Afghanistan Contact Zaki Ahmed Email [email protected] Phone +93 784 176 047 Website www.uhy-ahnco.com 6 ARGENTINA Property type Requirements Permissions required by No permissions are required for foreign a foreign investor investors to invest in real estate in Argentina. Types of tenure Freehold and leasehold Transfer taxes on A 1.25% stamp duty is payable on the transfer acquisition by sale or exchange of real estate. Value Added Tax on VAT is chargeable (at 10.5%) only on building acquisition land and on the first sale of a building. Capital allowances / tax Commercial Capital allowances are available for depreciation commercial property at a rate of 2% per annum straight line. Machinery and equipment is depreciated at various rates, usually between 10% and 20% per annum. Residential No allowances are available for residential property. Taxation of rents Resident companies pay corporation tax at the rate of 35% on income from real property after deduction of expenses. Non‐residents (companies and individuals) pay a withholding tax of 21% of the rental income. This represents a presumed profit of 60% taxed at 35%. Deduction of expenses Residents of Argentina (individuals and companies) are permitted to deduct expenses relating to the property. Expenses are not deductible for non‐resident companies and individuals (see taxation of rents). Deduction of interest All interest on loans to acquire real estate is deductible whether the lender is resident or non‐resident. There is a withholding tax of 14% on interest paid to a non‐resident lender. Certain restrictions apply. Wealth taxes Wealth tax is charged on‐resident and non‐ resident individuals. The rate for residents is 1% on assets exceeding ARS 102,000. For non‐residents, the tax rate is 1.5% with no deductible amount. However, if the tax calculated does not exceed ARS 255.75, no payment is due. Inheritance and gift There are no gift or inheritance taxes in taxes Argentina. 7 Other taxes on property There are various provincial taxes on real estate. The rates of tax vary from province to province, but the amounts are not material. Taxation of profit on Companies are taxed at the regular 35% rate disposal on profit from the disposal of real estate property. For individuals, the tax rate on profit on disposal is 1.5% of the gross amount, which is withheld at the time of closing. Special companies for There are no special companies for holding property investment property investment. However, for liability purposes and tax planning purposes, corporations are commonly used by non‐ resident owners. Tax planning tips Investment in Argentina by a non‐resident company or individual may lead to different alternative structures which are worth exploring specifically for each transaction. The structure used may result in tax inefficiencies that could be avoided. Any further information UHY MEMBER FIRM UHY Macho & Asociados CONTACT DETAILS Av. Cordoba 1255, 3er Piso, Buenos Aires C1055AAC, Argentina Contact Roberto Macho Email [email protected] Phone +54 11 4815 8866 Website www.uhy-macho.com 8 AUSTRALIA Property type Requirements Permissions required by Established residential Foreign Investment Review Board (FIRB) a foreign investor real estate approval may be required for non-citizens to buy Australian real estate. Commercial real estate In general, non-citizens can only buy new >AUD 252 million residential property “off the plan”. Agricultural land > AUD Temporary residents can buy established 55 million dwellings for their occupation whilst in Australia. Commercial property acquisitions below the relevant threshold do not require approval. Types of tenure Freehold and leasehold Transfer taxes on Freehold/Long-term Stamp duty is levied by each state and acquisition lease territory at progressive rates up to 7.0% of the purchase price. Surcharges of up to a further 7.0% apply to foreign purchasers of residential real estate in some states. Value Added Tax on There is a 10% GST (similar to VAT) in acquisition Australia. GST applies to new residential transactions and most commercial transactions. Established/old residential dwellings and sales of ‘going concerns’ are exempt from GST. Capital allowances / tax Commercial/Residential Capital allowance deductions apply as depreciation follows to buildings constructed after February 1992: General 2.5% Short term accommodation 4% Industrial 4% Similar rates apply for older buildings. Depreciation deductions for plant and equipment (internal fittings, etc.) are based on the effective life of the items involved.