Absolute Rights Transfer Tax and all about it
Upon the purchase of real estate, if you do not qualify for the tax exemption and if that turnover is not subject to value added tax, the buyer pays the Absolute Rights Transfer Tax.
The following are considered to be real estate:
• residential, commercial and other buildings, flats, business premises, garages and other (above ground and underground) buildings, or parts thereof
• land: construction, agricultural, forestry and other;
The obligation to pay this tax starts from the day you conclude the Real Estate Sale Agreement. You are required to file a tax registration within 30 days and your rescript will be received within 15 days.
According to the law of the Republic of Serbia, the seller is a taxpayer. However, in practice, the buyer can also settle the tax registration, if the Real Estate Sale Agreement so provides.
The tax base for the Absolute Rights Transfer Tax is the contracted price at the time when the tax liability arises, unless it is lower than the market value. If the contracted price is lower than the market value, the tax base is the market value.
The Absolute Rights Transfer Tax rate is 2.5%.
Exemption from The Absolute Rights Transfer Tax arising from the purchase of the first apartment by an individual
- What is considered to be the purchase of the first apartment?
The purchase of the first apartment is considered the purchase of the apartment, the family residential building, the ownership share in the apartment, as well as the ownership share in the family residential building, of individual person who is of legal age and who buys the first apartment from 1st July 2006. until the date of certification of Real Estate Sale Agreement on the territory of the Republic of Serbia.
- How is the right to exemption from The Absolute Rights Transfer Tax achieved?
The buyer encloses all necessary documentation along with the tax registration.
The area of the tax-exempt apartment is up to 40m² for the buyer and 15m² for each member of his family.
- Procedure for exercising the right to tax exemption
Within 30 days from the date of tax liability:
1. File a tax registration file PPI-4 completed by the seller of the home
2. Submit a certified statement of the buyer that he is buying the first apartment for himself and certain members of his family household on the Form IKPS –PPAP, certified by a public notary
3. Give the Real Estate Sale Agreement certified by a public notary
4. Birth certificate of the buyer
5. Buyer's citizenship certificate
6. A certified photocopy of the ID card and a movement of residence
7. Certificate of the competent local self-government on which the buyer of the first apartment had his / her residence that he / she was not in charge of the property tax
For family members of the buyer of the first apartment it is necessary to submit:
8. Marriage certificate - if the right to tax exemption is exercised for the spouse
9. Birth certificate for the child or the child of the spouse - if the right to tax exemption is also exercised for those persons
10. A certified photocopy of the ID card or the certificate of residence of the family members who are entitled to the tax exemption
11. Certificate from the Tax Administration from the municipalities where the family members had their residence that they were not in charge of the property tax.
To obtain the documentation from number 3 through 11, you can make a written statement that you agree that the Tax Administration may obtain the documentation for you.
Sometimes this process takes more time than you are willing to set aside. The main reasons are the lack of information. The time saver can be a professional agent, who will guide you through the whole process and help you. At West Properties we have teams of experienced agents and legal services at your service. Just call us.