Is income from gift being real estate subject to personal income tax in Vietnam?
Is income from gift being real estate subject to personal income tax in Vietnam?
Based on Clause 10, Article 2 of Circular 111/2013/TT-BTC which regulates taxable income as follows:
Taxable income
According to the provisions in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:
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10. Income from receiving gifts
Income from gifts refers to the income received by an individual from organizations, individuals both inside and outside the country. Specifically:
a) For gifts in the form of securities including: stocks, rights to purchase stocks, bonds, treasury bills, fund certificates, and other types of securities as prescribed by the Securities Law; shares of individuals in joint-stock companies as prescribed by the Enterprise Law.
b) For gifts in the form of capital in economic organizations and business establishments including: capital in limited liability companies, cooperatives, partnerships, business cooperation contracts, capital in private enterprises, business establishments of individuals, capital in associations, funds permitted to be established according to regulations of the law, or the entirety of a business establishment in case of being a private enterprise, business establishment of an individual.
c) For gifts as real estate including: land use rights; land use rights with assets attached to land; house ownership rights, including future houses; infrastructure and construction works attached to land, including future construction works; land lease rights; water surface lease rights; other income from real estate inheritance by any form; excluding income from gifts as real estate guided at Point d, Clause 1, Article 3 of this Circular.
d) For gifts in the form of other assets that must be registered for ownership or use rights with State management agencies, such as: automobiles; motorbikes, mopeds; watercrafts, including barges, canoes, tugboats, push boats; boats, including yachts; aircrafts; hunting guns, sports guns.
And based on Point d, Clause 1, Article 3 of Circular 111/2013/TT-BTC which regulates tax-exempt income as follows:
Tax-exempt income
1. Based on the provisions in Article 4 of the Personal Income Tax Law, Article 4 of Decree No. 65/2013/ND-CP, tax-exempt income includes:
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d) Income from inheritance, gifts as real estate (including houses, construction works formed in the future as prescribed by the law on real estate business) between: spouses; biological parents and children; adoptive parents and adopted children; parents-in-law and daughter-in-law; parents-in-law and son-in-law; paternal grandparents and grandchildren, maternal grandparents and grandchildren; siblings.
đ) Income from converting agricultural land for rationalizing agricultural production but not changing the land use purpose of the household, individual directly engaged in agricultural production, allocated by the State for production.
e) Income of households, individuals directly participating in agricultural, forestry, salt production, aquaculture, and fishing activities not yet processed or only through ordinary preliminary processing not yet processed into other products.
Households, individuals directly participating in production activities as guided in this point must simultaneously meet the following conditions:
e.1) Have legal rights to use land, lease land, use water surface, lease water surface for production and directly participate in labor in agricultural, forestry, saline production, aquaculture.
..
Thus, according to the above provisions, income from gift being real estate is subject to PIT.
However, income from gifts in the form of real estate will be exempt from tax in the following cases:
- Spouses
- Biological parents with biological children
- Adoptive parents with adopted children.
- Parents-in-law with daughter-in-law.
- Parents-in-law with son-in-law.
- Paternal grandparents with grandchildren, maternal grandparents with grandchildren;
- Siblings with each other.
Is income from gift being real estate subject to PIT in Vietnam? (Image from the Internet)
How to calculate PIT on income from gift being real estate in Vietnam?
According to Clause 4, Article 16 of Circular 111/2013/TT-BTC the calculation is regulated as follows:
Tax calculation basis from inheritance, gifts
The tax calculation basis for income from inheritance, gifts is taxable income and tax rate.
1. Taxable income
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2. Tax rate: The personal income tax rate for inheritance, gifts is applied according to the whole schedule with a tax rate of 10%.
3. Timing of determining taxable income
The timing of determining taxable income from inheritance, gifts is the time when the individual completes procedures for registration of ownership rights, use rights of the inherited or gifted assets.
4. How to calculate the tax payable
The personal income tax payable = Taxable income x Tax rate 10%
According to this regulation, the method for calculating the personal income tax payable on income from receiving gifts as land use rights is calculated according to the formula below:
| Personal income tax payable = Taxable income x Tax rate 10% |
How to determine the basis for calculating PIT on income from gift being real estate which are architectural works on land in Vietnam?
Based on Point c.2, Clause 1, Article 16 of Circular 111/2013/TT-BTC, the basis for calculating PIT on income from gift being real estate as architectural works on land is determined based on the regulations of the competent State management agency concerning classification, standards, and basic construction norms issued by the competent State management agency concerning architectural works at the time of registration procedures for ownership rights.
*Note: In the case of inability to determine based on the above criteria, the calculation will be based on the registration fee calculation price specified by the provincial People's Committee.
