What is the disposition of land-use right? Is it subject to personal income tax in Vietnam?

What is the disposition of land-use right in Vietnam?

Pursuant to Clause 12, Article 3 of the Land Law 2024, the disposition of land-use right is defined as the disposition of land-use right from one person to another through forms such as transfer, inheritance, gifting of land use rights, or using land use rights as capital contribution.

Thus, transferring land use rights is understood as a land user (transferor) transferring their land use rights to another person (transferee).

What is the disposition of land-use right? Is it subject to personal income tax in Vietnam? (Image from the Internet)

Is the disposition of land-use right subject to personal income tax in Vietnam?

According to Clause 5, Article 2 of Circular 111/2013/TT-BTC, income from real estate transfer is the income received from transferring real estate, which includes:

Taxable Income Items

As stipulated in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

...

5. Income from real estate transfer

Income from real estate transfer is the income received from transferring real estate, which includes:

a) Income from transferring land use rights.

b) Income from transferring land use rights and assets attached to the land. Assets attached to land include:

b.1) Housing, including future-formed housing.

b.2) Infrastructure and construction works attached to the land, including those to be formed in the future.

b.3) Other assets attached to the land include assets which are agricultural, forestry, and aquaculture products (such as crops and livestock).

c) Income from transferring housing ownership rights, including future-formed housing.

d) Income from transferring land lease rights, water surface lease rights.

dd) Income from capital contribution with real estate to establish an enterprise or increase business production capital of the enterprise in accordance with the law.

e) Income from authorizing the management of real estate wherein the authorized party has the right to transfer the real estate or holds rights akin to the property owner as prescribed by law.

g) Other income received from transferring real estate in any form.

Regulations on housing, construction works formed in the future as mentioned in Clause 5 of this Article follow real estate business laws.

...

Therefore, income from transferring land use rights is subject to personal income tax, unless exempted.

When is the disposition of land-use right exempt from personal income tax ikvn?

According to Clause 1, Article 3 of Circular 111/2013/TT-BTC (supplemented by Clause 4, Article 12 of Circular 92/2015/TT-BTC, amended by Clause 1, Article 12 of Circular 92/2015/TT-BTC), the cases exempted from personal income tax when transferring land use rights are as follows:

[1] Income from transferring land use rights between: spouses; biological parents and biological children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren; maternal grandparents and grandchildren; siblings.

Additionally, in cases where real estate is land created by the husband or wife during marriage and is determined as the couple's shared property, upon divorce, if this property is divided according to the agreement or court's decision, the division of this property is exempt from tax.

[2] Income from transferring housing, homestead land use rights, and attached assets of an individual in which the transferor possesses only a single housing, homestead land use rights in Vietnam.

Individuals transferring housing, homestead land use rights are tax-exempt if they fulfill the following conditions simultaneously:

- Possess only a single ownership of housing or a homestead land use right (including housing or construction works attached to that land parcel) at the time of transfer. Specifically:

+ The determination of housing ownership rights, homestead land use rights is based on the Certificate of land use rights, housing ownership, and other assets attached to land.

+ In case of transferring jointly owned housing or homestead land use rights, only individuals with no housing ownership or homestead land use rights elsewhere are tax-exempt; individuals with joint ownership who have other housing ownership or homestead land use rights are not exempt.

+ For couples with joint ownership of housing, homestead land use rights, which is their only joint property, but in case either spouse has separate housing or homestead land, when transferring the joint property, the spouse without separate housing ownership or homestead land is tax-exempt; the spouse with separate housing ownership or homestead land is not exempt.

- Ownership of housing, homestead land use rights counted to the transfer date must be at least 183 days.

The timing to determine housing ownership, homestead land use rights is the date of issuance of the Certificate of land use rights, housing ownership, and other assets attached to land. In cases of reissuance or renewal as stipulated by land laws, the timing is determined according to the original issuance of the Certificate before reissuance or renewal.

- Transfer the entire housing, homestead land.

In cases where individuals have the sole or joint ownership of housing or homestead land but transfer only a portion, the tax exemption does not apply to the transferred portion.

Note: Transfer of future-formed housing or construction works is not eligible for personal income tax exemption.