Real estate investment income of natural persons and its relationship to corporate tax

The persons in the corporate tax code are divided into:-

* A friendly natural person who expresses one person and means a living person, whether resident or non-resident in the country

* The legal personality expresses a company entity separate from the natural person and has different types such as one-person and several-person limited liability companies, Companies of persons and Joint Stock Companies

If you are a natural person according to the corporate tax law, if the income exceeds one million dirhams during a fiscal year, you must register within 3 months of the end of the fiscal year

* Remuneration

* Private investment

* Real estate investment

When the real estate investment income of natural persons is caused by

1. An activity resulting from the existence of a commercial license of a natural person

The natural person is then subject to corporate tax and is required to comply with the provisions and requirements of the corporate tax law, even if the income is due to a real estate investment, refer to the commercial license

Example

2. An income-generating activity that does not require a commercial license

Then the income generated from the real estate investment activity is not subject to corporate tax

Example

o if a natural person owns a building from which he obtains rents for his own account and there is no commercial license in his name, the income is not subject to corporate tax

o if you own a piece you sold it or rented it, whether directly or indirectly through a brokerage company that rents it on behalf of the owner, this is considered a real estate investment that does not require a license دة and the income is outside the tax scope in the UAE

* Sale

* Leasing

• And sub-leasing

1 - are the revenues of real estate management companies and real estate brokers exempt from corporate tax

Here, real estate management companies and real estate brokers who manage real estate on behalf of other owners should separate rents from their own income for real estate management, as:-

* The rent returned to the owner is not subject to corporate tax

* The management fee is subject to corporate tax and is recognized by the real estate management company in its approval

2-What if a natural person owns a license of an individual institution to manage real estate for his own real estate are rents and returns from real estate investment subject or not subject

The individual institution does not separate ownership from the legal personality of the company, and the individual institution belongs to a natural person, then the returns of real estate investment are subject to corporate tax

3. will only residential real estate be outside the scope of tax, commercial will be subject to such as VAT

Commercial and residential real estate will be outside the scope of corporate tax

4 - does it exclude only citizens or residents only from corporate tax

The law makes it clear that the exception is for a natural person, whether:-

o citizen

o resident

Example 1

A natural person who owns a property inside the country and a property outside the country and receives rent from them and does not have a license for a company here, income is outside the scope of corporate tax

Example 2

A natural person owns a property, leases it to a commercial company, and a natural person with a license here income is considered a real estate investment and is not subject to corporate tax

5-OK, the famous question of my time

If a natural person owns a property in Dubai and rents or sells it and exceeds one million dirhams a year, do I register for corporate tax or not

We refer to the definition of the law, the income from real estate investment belonging to an individual natural owner and not exercised through a commercial license, such as lease or sale contracts in the name of the owner, the natural person is not included in the calculation of the base of one million dirhams per year.

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