One of the interesting topics that investors must consider is real estate investment planning and varying tax laws from one country to another, along with inheritance. Despite the complexity of the subject, it is a realistic and necessary approach. In this article, we will outline countries that offer citizenship or residency through real estate investment and their respective tax laws, emphasizing the importance of obtaining specialized advice in each country based on the investor’s circumstances.
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Cyprus
Cyprus is one of the European countries that provides a permanent residency program through real estate investment. Tax planning for properties is considered an advantage for foreign investors, as they benefit from tax exemptions granted before any income tax is paid on the investment.
In addition to specialized real estate planning using inheritance tools such as wills, credit funds, through which the inheritance can be distributed according to the owner’s request in case of death, the Cypriot government offers a full exemption from inheritance and gift tax, making it an ideal tax solution.
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Spain
Spain offers a golden visa program through real estate investment. Generally, real estate investment there requires consideration of the associated costs and taxes, which vary depending on many factors such as the location and type of the property. If the property is new directly from the developer, a 10% value-added tax and a 1.5% stamp duty are applied. If the property is resold, a property transfer tax is applied, varying from one region to another based on the property’s location.
As for inheritance, non-resident heirs in Spain (less than 6 months per year) are subject to inheritance tax on properties located in Spain, in addition to gift tax and value that depends on the property’s location in Spain.
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Caribbean Countries
Citizenship-by-Investment (CBI) programs are well-known among many investors, especially those interested in real estate investment. It is one of the investment options available to investors to obtain citizenship directly from one of the following countries: (Saint Kitts and Nevis, Saint Lucia, Dominica, Grenada, Antigua and Barbuda).
One of the benefits offered by these programs, aside from citizenship and passport, is the tax exemptions granted to citizenship holders, including exemptions for inheritance tax, gifts tax, foreign income, and profits.
According to some Caribbean countries, inheritance distribution is based on the property owner’s will. In the absence of a will, inheritance is transferred to the spouse by 50%, with the remaining inheritance distributed equally among the children. Each Caribbean country has its own laws and methods for inheritance distribution, but they all agree on providing tax exemptions to investors.
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Greece
Greece offers residency to foreign investors through the Greece Golden Visa program through real estate investment starting from €250,000 in specific areas in Athens and some Greek islands. The real estate transfer tax has been reduced to 3% instead of 10% since 2014 for new buildings that received a building permit before 2006, and a 24% property transfer tax for buildings with a permit after that year.
There are other property taxes to consider, such as annual property tax, which depends on the property’s location, age, size, and other factors. Greece follows the inheritance laws of the nationality of the property owner. If the owner holds multiple nationalities, the laws of the country associated with Greek nationality apply unless the owner is a Greek citizen.
The inheritance law in Greece allows heirs to claim their inheritance within 6 months if they reside in Greece or within 12 months from the date of death if they reside outside Greece.
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Malta
Although Malta’s Permanent Residency Program through investment does not require investors to purchase property, granting them the option to rent a property at a specified value, most investors who obtain residency or citizenship eventually choose to buy property. Therefore, real estate and tax planning are important considerations that should be carefully examined.
Properties in Malta are subject to tax upon purchase, sale, and rental according to Malta’s tax law. Both the seller and the buyer are subject to tax under the sales agreement, with a 1% tax applied to the buyer based on the sale value. The seller is subject to capital gains tax on the sale of the property, in addition to stamp duties, which are evaluated by an architect compared to the property’s sale price.
Malta provides exemptions on inheritance tax, gifts tax, and wealth tax. However, a stamp duty of 5% on the market value of the property is paid by the heirs. In the absence of a will from the property owner, Malta’s tax and inheritance laws are adopted, as the property is located there, and inheritance is distributed equally among the heirs (spouse and children).
If you are interested in residency or citizenship through real estate investment, please contact us to schedule a free consultation by clicking on the link here.
