What are cases of tax exemption on personal income from real estate transfer in Vietnam?

What are cases of tax exemption on personal income from real estate transfer in Vietnam?

Pursuant to Article 4 Decree 65/2013/ND-CP stipulating tax-exempt income as follows:

Tax-exempt income

1. Income from real estate transfer (including housing, construction works formed in the future as stipulated by the law on real estate business) between: Husband and wife; biological father, biological mother and biological child; adoptive father, adoptive mother and adopted child; father-in-law, mother-in-law and daughter-in-law; father-in-law, mother-in-law and son-in-law; paternal grandfather, paternal grandmother and paternal grandchild; maternal grandfather, maternal grandmother and maternal grandchild; siblings.

2. Income from the transfer of housing, the right to use homstead land, and assets attached to homstead land of an individual in the case where the transferor has only one housing unit or one parcel of homstead land in Vietnam.

The individual transferring the only housing unit or the only parcel of homstead land in Vietnam according to this Clause must satisfy the following conditions:

a) At the time of transfer, the individual owns the rights to only one housing unit or one parcel of land (including cases where there is a housing unit or construction works attached to that land);

b) The individual must have owned the rights to the housing unit or homstead land for at least 183 days by the time of transfer;

c) The housing unit or homstead land must be transferred in its entirety;

The determination of ownership rights, usage rights to the housing unit or homstead land is based on the certificate of ownership, usage rights of the housing unit, or homstead land. Individuals transferring the housing unit or homstead land are responsible for declaring and bearing the legal responsibility for the accuracy of the declaration. If errors in the declaration are discovered by competent authorities, the tax exemption will not be applied, and the individual will be dealt with as per legal regulations.

3. Income from the value of land use rights granted by the State without payment or with land levy reduction according to the law.

4. Income from inheritance or gifts which are real estate (including housing, construction works formed in the future as stipulated by the law on real estate business) between: Husband and wife; biological father, biological mother and biological child; adoptive father, adoptive mother and adopted child; father-in-law, mother-in-law and daughter-in-law; father-in-law, mother-in-law and son-in-law; paternal grandfather, paternal grandmother and paternal grandchild; maternal grandfather, maternal grandmother and maternal grandchild; siblings.

Therefore, pursuant to the regulations, tax exemption on personal income from real estate transfer is applicable in the following cases:

>>> Real estate transfer between: Husband and wife; biological father, biological mother and biological child; adoptive father, adoptive mother and adopted child; father-in-law, mother-in-law and daughter-in-law; father-in-law, mother-in-law and son-in-law; paternal grandfather, paternal grandmother and paternal grandchild; maternal grandfather, maternal grandmother and maternal grandchild; siblings.

What are cases of tax exemption on personal income from real estate transfer in Vietnam? (Image from the Internet)

What are 4 cases where incomes from real estate transfer in Vietnam are taxable?

Specifically: the income mentioned in Article 3 of the Law on Personal Income Tax 2007 (amended by Clauses 1 and 2, Article 2 of the Law amending Tax Laws 2014 and further amended by Clause 1, Article 1 of the Amended Law on Personal Income Tax 2012) as follows:

Taxable income

Taxable personal income includes the following types of income, except for tax-exempt income stipulated in Article 4 of this Law:

1. Income from business, including:

a) Income from production, business of goods, services;

b) Income from independent professional activities of individuals who hold practice licenses or certificates in accordance with the law.

Income from business specified in this Clause does not include the income of individuals doing business with an annual revenue of VND 100 million or below.

2. Income from wages, salaries, including:

a) Wages, salaries, and amounts of a similar nature;

b) Allowances, subsidies, except for: allowances, subsidies stipulated by law for people with meritorious services; defense, security allowances; hazardous, dangerous occupation or job allowances; attraction allowances, regional allowances stipulated by law; unexpected difficulty subsidies, work accident subsidies, occupational disease subsidies, one-time subsidies when giving birth or adopting a child, subsidies due to reduced labor capacity, one-time retirement subsidies, monthly survivor's allowance, and other subsidies as per the law on social insurance; severance, job loss allowances as stipulated in the Labor Code; social protection allowances and other allowances, subsidies not of a wage, salary nature as stipulated by the Government.

3. Income from capital investment, including:

a) Interest from loans;

b) Dividend shares;

c) Income from investment capital in other forms, except for interest from the Government bond.

4. Income from capital transfer, including:

a) Income from transferring capital in economic organizations;

b) Income from transferring securities;

c) Income from capital transfer in other forms.

5. Income from real estate transfer, including:

a) Income from transferring the right to use land and assets attached to land;

b) Income from transferring ownership or use of housing;

c) Income from transferring land lease rights, water surface lease rights;

d) Other income received from real estate transfer in all forms.

6. Income from winnings, including:

a) Lottery winnings;

b) Winning from promotional activities;

c) Winning from betting;

d) Winnings from games, contests with prizes, and other forms of winnings.

7. Income from royalties, including:

a) Income from transferring intellectual property rights or right to use intellectual property;

b) Income from technology transfer.

8. Income from franchising.

9. Income from inheritance which is securities, capital in economic organizations, business establishments, real estate, and other assets subject to ownership or usage registration.

10. Income from gifts which are securities, capital in economic organizations, business establishments, real estate, and other assets subject to ownership or usage registration.

The Government of Vietnam stipulates in detail and provides guidance on implementing this Article.

Therefore, 4 cases of real estate transfer that are subject to personal income tax include:

[1] Income from transferring the right to use land and assets attached to land;

[2] Income from transferring ownership or use of housing;

[3] Income from transferring land lease rights, water surface lease rights;

[4] Other income received from real estate transfer in all forms.

How to determine the taxable period for income from real estate transfer in Vietnam?

Pursuant to Article 7 of the Law on Personal Income Tax 2007 (amended by Clause 3, Article 1 of the Amended Law on Personal Income Tax 2012) stipulating the taxable period as follows:

Taxable period

1. The taxable period for resident individuals is defined as follows:

a) The annual taxable period applies to income from business, income from wages and salaries;

b) The taxable period by each occurrence of income applies to income from capital investment; income from capital transfer, except income from transferring securities; income from real estate transfer; income from winnings; income from royalties; income from franchising; income from inheritance; income from gifts;

c) The taxable period by each transaction or by year for income from securities transfer.

2. The taxable period for non-resident individuals is determined by each occurrence of income and applies to all taxable income.

Therefore, based on the above regulations, the taxable period for income from real estate transfer is determined by each occurrence of income.