Donating land is one of the issues worthy of attention, especially with the custom of parents giving land to their children in Vietnam. Land is an asset owned by the entire people and managed on behalf of the state. Therefore, the procedures related to land donation must strictly meet the provisions of the law. So about the matter “The case of tax-free land donation in Vietnam”. Let’s find out with LSX in the article below.
Legal grounds
- Civil Code 2015
- Law on Personal Income Tax 2007
- Circular 111/2013/TT-BTC
- Decree 140/2016/ND-CP
- Circular 85/2019/TT-BTC
Regulations on donation of land use rights
What is a donation of land use rights?
According to the provisions of Article 107 of the Civil Code 2015, land is a type of real estate. Land is according to Article 53 of the 2013 Constitution and specifically mentioned in the 2013 Land Law as follows:
“Land is owned by the entire people, and the State represents the owner and uniformly manages it. The State grants land use rights to land users in accordance with this Law.”
Therefore, it is not possible to determine the right to land. Land users only have the right to use land when they are granted the right by the state. Therefore, it can be understood that the donation of land here is to increase land use rights. So how is the land use right increase regulated?
Donation of land use rights is an agreement between parties whereby, the donor transfers the land use right and the same area of the land plot to the donor without asking for compensation. However, in some cases, the donation of land use rights is also subject to the conditions of the donor.
Conditions for donation of land use rights
Due to the sensitive nature of land use rights, conditions must be met in order to be donated. Specifically:
Pursuant to Clause 1, Article 188 of the 2013 Land Law, a land use right may only be donated when the following conditions are fully satisfied:
– Having a certificate of land use right, except for the following 02 cases:
+ An inheritor whose property is a land use right but is a foreigner or an overseas Vietnamese who is not subject to the purchase of houses associated with land use rights shall not be granted a certificate but may gifting rights.
According to Clause 1, Article 168 of the Land Law 2013, the right to donate land is granted when:
• In case of conversion of agricultural land use rights, the land users are entitled to donate the land after the decision on land allocation or land lease is issued;
• In case of inheriting land use rights, the land user may exercise the right to donate when there are conditions to issue a certificate (no need for a certificate).
– The land use right is not distrained to secure judgment enforcement;
– Undisputed land;
– In the land use period.
Contract for donation of land use rights
Article 459 of the 2015 Civil Code specifically stipulates a contract for gifting real estate as follows:
• Gifts of real estate must be made in writing, notarized, authenticated or registered, if the real estate is subject to registration of ownership in accordance with the law.
• The real estate donation contract takes effect from the time of registration; if the real estate is not subject to registration of ownership, the donation contract shall take effect from the time of property transfer.
Accordingly, the donation of land use rights must be made in writing and certified notarized and registered for ownership.
Fees and taxes to be paid when donating land use rights
According to Clause 4, Article 95 of the 2013 Land Law:
Land users and owners of land-attached assets who donate land use rights or land-attached assets must register for land changes.
In addition, according to Clause 6 of this Article, within 30 days from the effective date of donation, the parties must carry out procedures for registration of land changes.
Accordingly, the donation must register the change of land, along with the procedures to transfer the land use right to the recipient. When carrying out this procedure, the following taxes and fees are required to be paid:
personal income tax
According to Clause 10, Article 3 of the Law on Personal Income Tax 2007, the taxable objects are as follows:
Incomes from receiving gifts are securities, capital in economic organizations, business establishments, real estate and other assets subject to registration of ownership or registration of use.
Thus, income from receiving gifts to real estate is income subject to personal income tax. Except for cases where tax is exempted.
• Determination of personal income tax payable
– Taxable income from real estate transfer is determined by the real estate transfer price for each transfer minus the real estate purchase price and related expenses. Taxable income from gifts is the value of the gift property in excess of VND 10 million that the taxpayer receives each time it is incurred, for real estate being the value of land use rights, the value of the right to use land use is determined based on the land price list prescribed by the provincial-level People’s Committee at the time the individual carries out the procedures for registration of real estate use rights;
– Tax rate: The personal income tax rate for inheritances and gifts is applied according to the Full Tax Schedule with the tax rate of 10%.
– How to calculate the amount of tax to pay
Personal income tax payable = Taxable income x 10% tax rate
Registration fee
Houses and land are subject to registration fee. Prices for calculating registration fees for houses and land are as follows:
• The price for calculating registration fee for land is the land price in the land price list promulgated by the People’s Committee of the province or centrally run city in accordance with the law on land at the time of registration fee declaration. ;
• The price for calculating the registration fee for a house is the price promulgated by the People’s Committee of the province or centrally run city in accordance with the law on construction at the time of registration fee declaration.
– The registration fee for houses and land is 0.5%.
– Registration fee is calculated as follows:
Land payment = (Land area subject to registration fee) x (Land price according to the Land Price List issued by the Provincial People’s Committee) x (Fee 0.5%)
Other costs
In addition to the above fees and taxes, when donating land use rights, the following fees must also be paid:
• Application assessment fee
– Fees will be determined by the People’s Councils of the provinces and cities:
Circular 85/2019/TT-BTC stipulates that the fee for appraisal of documents when transferring real estate is under the jurisdiction of the People’s Council of the province (province, city directly under the central government), so the rate of collection between provinces and cities will be different.
– Fee: Ranges from 500,000 VND – 05 million VND (normally from 500,000 VND to 02 million VND)
• Certificate issuance fee (fee for making new cover)
– When transferring the name of the house, if the recipient requests and is granted a new Certificate, this fee will have to be paid.
– Rate of collection: Although different provinces and cities, they all collect less than 100,000 VND/time/paper.
Cases of tax and registration fee exemption when donating land use rights
The case of tax-free land donation in Vietnam
According to Article 4 of the Law on Personal Income Tax 2007 (detailed instructions in Article 3 of Circular 111/2013/TT-BTC), income from transfer, inheritance and gift is the right to use land, house and assets. Other property on land between the following persons is exempt from personal income tax (including houses and construction works to be formed in the future), specifically between:
– Wife with husband;
– Natural father, natural mother with natural children;
– Adoptive father, adoptive mother with adopted child;
– Father-in-law, mother-in-law with daughter-in-law;
– Father-in-law, mother-in-law and son-in-law;
– Grandfather, grandmother with grandson;
– Grandparents, grandmothers with grandchildren;
– Siblings with each other.
In addition, at Point b, Clause 1, Article 3 of Circular 111/2013/TT-BTC, it also stipulates: “Income from the transfer of houses, residential land use rights and properties attached to residential land of individuals in the school. In case the transferor has only one house, residential land use right in Vietnam”. In this case, even if it is transferred to another person who does not have the above marriage, blood or rearing relationship, he or she is still exempt from personal income tax if he has only one land use right.
In case of exemption from registration fee
According to Clause 10, Article 9 of Decree 140/2016/ND-CP, a house or land that is inherited or is a gift between the following persons is exempt from registration fee:
– Wife with husband;
– Natural father, natural mother with natural children;
– Adoptive father, adoptive mother with adopted child;
– Father-in-law, mother-in-law with daughter-in-law;
– Father-in-law, mother-in-law and son-in-law;
– Grandfather, grandmother with grandson;
– Grandparents, grandmothers with grandchildren;
– Brothers, sisters, siblings together.
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Frequently asked questions
Donation is formed on a voluntary basis. If the land use right is legally owned by the parents, they naturally have the full right to donate it to anyone; without depending on the will of others. So at this time, even for one child, there is no need for the signatures of the remaining children.
However, if the designated land is owned by the household; then the people in the household who have the right to use the land are identified as co-owners of the land. Since everyone has a right to that land, if a parent gives land to a child, the consent of all members of the household must be obtained. Therefore, in this case, signatures of people living in the same household are required.
Parents who give their children land have the right to reclaim it when the donation is in the form of a conditional donation according to Article 462 of the Civil Code 2015, and is prescribed by law as follows:
Parents may require the child to be donated land to perform one or more obligations before or after the donation. Conditions of donation must not violate the prohibition of the law, not contrary to social ethics.
In case an obligation has to be performed after the donation but the donor (child) fails to perform, the parents have the right to reclaim the given land and demand compensation for damage, even though the procedures for transferring the name have been carried out. and issue the book (Certificate of land use right).
According to Clause 2, Article 17 of Decree 91/2019/ND-CP, fines for failure to register fluctuations are as follows:
– In rural areas:
+ A fine of from 01 to 03 million dong; if within a period of 24 months from the date of overdue without making the registration of volatility.
+ A fine ranging from VND 2 to 5 million; if the time limit is over 24 months from the date of overtime without making the registration of volatility.
– In urban areas: The sanction level is equal to 02 times the sanction level for each corresponding case in rural areas.
Conclusion: So the above is The case of tax-free land donation in Vietnam. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
