What are the 5 incomes from real estate exempt from personal income tax in Vietnam?

What are the 5 incomes from real estate exempt from personal income tax in Vietnam?

According to specific provisions in Article 3 of Circular 111/2013/TT-BTC as amended by Article 12 of Circular 92/2015/TT-BTC, it is as follows:

[1] Income from the transfer of real estate that is off-the-plan housing, off-the-plan construction works, as per regulations between spouses; biological parents and children; adoptive parents and adopted children; in-laws with sons/daughters-in-law; grandparents and grandchildren; siblings.

In cases where real estate (including off-the-plan housing, off-the-plan construction works as per real estate business law regulations) created by either spouse during marriage is deemed shared property, if divided upon divorce either by agreement or court ruling, such division is exempt from tax.

[2] In cases where an individual possesses only one housing, or land use rights in Vietnam, they are exempt from income tax from transferring the said housing, or homestead land use rights and attachments thereon.

[3] Income from the value of land use rights provided to individuals by the State without payment or with reduced land levy.

[4] Income from inheritance, gifts being real estate, including off-the-plan housing, off-the-plan construction works, as per regulations between: spouses; biological parents and children; adoptive parents and adopted children; in-laws with sons/daughters-in-law; grandparents and grandchildren; siblings.

[5] Income from the conversion of agricultural land to streamline agricultural production without changing land use purposes, allotted by the State to households or individuals directly engaged in agricultural production.

What are the 5 incomes from real estate exempt from personal income tax in Vietnam? (Image from the Internet)

What is the application for tax exemption for off-the-plan real estate Income?

It is evident that the application for tax exemption for personal income from transferring, inheriting, or receiving gifts of real estate (including off-the-plan housing, off-the-plan construction works) is processed per Decision 2780/QD-BTC of 2023 as follows:

(*) Cases involving spouses, biological parents and children, adoptive parents and adopted children; in-laws with sons/daughters-in-law; grandparents and grandchildren; siblings. The tax exemption dossier includes:

- Personal income tax declaration Form No. 03/BDS-TNCN issued with Appendix II of Circular 80/2021/TT-BTC.

>>> Download Form No. 03/BDS-TNCN

The tax authority will extract information from the national population database as per regulations to resolve the procedure. If unable, the taxpayer must provide documents related to identifying the tax-exempt party specific to each case. Specifically:

+ For real estate transactions, inheritance, gifts between spouses: Confirmation of residence or Individual Identification and Citizen Information Notice from the national population database or a copy of the marriage certificate or Court's divorce, remarriage decision (for property division due to divorce; consolidation of ownership due to remarriage).

+ For real estate transactions, inheritance, gifts between biological parents and children: Confirmation of residence or Individual Identification and Citizen Information Notice from the national population database or a birth certificate copy. In cases of children born out of wedlock, a copy of the Decision recognizing parent-child relationships from a competent authority is required.

+ For real estate transactions, inheritance, gifts between adoptive parents and adopted children: Confirmation of residence or Individual Identification and Citizen Information Notice from the national population database or a copy of the Adoption Decision from a competent authority.

+ For real estate transactions, inheritance, gifts between grandparents and grandchildren (paternal): Copies of the grandchild’s birth certificate and the father’s birth certificate; or Confirmation of residence or an Individual Identification and Citizen Information Notice in the national population database showing the relationship between grandparents and grandchildren; or other documents with certification from a competent authority about the grandparent-grandchild relationship.

+ For real estate transactions, inheritance, gifts between grandparents and grandchildren (maternal): Copies of the grandchild’s birth certificate and the mother’s birth certificate; or Confirmation of residence or an Individual Identification and Citizen Information Notice in the national population database showing the relationship between grandparents and grandchildren; or other documents with certification from a competent authority proving the grandparent-grandchild relationship.

+ For real estate transactions, inheritance, gifts between siblings: Confirmation of residence or Individual Identification and Citizen Information Notice from the national population database showing the relationship of common parents or same father different mother or same mother different father or other documents with certification from a competent authority proving blood relationship.

+ For real estate transactions, inheritance, gifts between in-laws with sons/daughters-in-law: Confirmation of residence or Individual Identification and Citizen Information Notice from the national population database detailing the relationship between in-laws and sons/daughters-in-law; or copies of the marriage certificate and birth certificate of the spouse to identify the relationship between in-laws and sons/daughters-in-law.

+ For real estate transactions, inheritance, gifts subject to tax exemption, besides the documents above, those involved can use other documents with certification from a competent authority about the relationship between the transferor and the transferee, inheritance, gifts as a basis for identifying tax-exempt income.

• In cases where the State allocates land to individuals without payment or reduces land levy as per regulations, the dossier includes: A copy of the land allocation decision from a competent authority.

• For the exchange of agricultural land positions among households or individuals allocated land for production by the State, the dossier includes:

- A document agreeing on the land exchange or an agricultural land exchange contract between parties certified by a competent authority.

Copies of documents concerning tax-exempt real estate transactions, agricultural land conversions must be notarized or certified by a competent authority.

If unavailable, the transferor, or land exchange parties must present the original for the tax authority to verify and compare.

• In cases where an individual transfers the sole housing, homestead land use rights in Vietnam exempt from personal income tax according to regulations, the individual submits a tax declaration document as per point 9.3 of Appendix I Tax Declaration Dossier List issued with Decree 126/2020/ND-CP.

What are the 3 steps for exempting personal income tax on real estate income?

Based on Decision 2780/QD-BTC of 2023, the procedure for exempting personal income tax for individuals earning from transferring, inheriting, or receiving real estate gifts (including off-the-plan housing, off-the-plan construction works) is as follows:

Step 1: Individuals transferring real estate subject to tax exemption (including off-the-plan housing, off-the-plan construction works) prepare one dossier and submit it alongside tax filing documents under the one-stop-shop mechanism or directly to the Tax Department where the real estate is located.

Where localities have not implemented the one-stop-shop mechanism, submit documents directly to the land use rights registration office where the transferring real estate is located.

In cases of transferring off-the-plan housing, off-the-plan construction works, individuals must file tax declarations and pay personal income taxes at the local Tax Department where the off-the-plan housing or construction works are located.

Step 2: The tax authority receives the dossier:

For dossiers submitted directly to the tax authority or sent via postal services: the tax authority processes and resolves the dossier as per regulations.

For dossiers submitted via electronic transactions, receiving, checking, accepting, processing, and delivering results are conducted through the tax authority's electronic data processing system.

For transactions, inheritance, gifts comprising real estate (including off-the-plan housing, construction works, housing used but not yet granted land use rights, housing ownership, and attached property as per regulations) between spouses, biological parents and children, adoptive parents and adopted children; in-laws with sons/daughters-in-law; grandparents and grandchildren; siblings. The tax authority must extract information from the national population database as regulated in Article 84 of Circular 80/2021/TT-BTC amended by Clause 6 Article 7 of Circular 43/2023/TT-BTC to resolve tax exemption for taxpayers.

If unable to extract information about citizen residence from the national population database, the taxpayer must provide documents related to identifying the tax-exempt party specific to each case.

Step 3: The tax authority reviews, resolves the dossier, and delivers results according to regulations.