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Norway, Malta & India Most Highly Taxed Locations For Commercial Property Sales

Norway, Malta & India Most Highly Taxed Locations For Commercial Property Sales
10 Mar 2011

Research conducted by Taxand, the world's largest global organisation of tax advisors to multinational businesses, has shown that India is the third most expensive country in the world in which to sell commercial real estate, with Norway and Malta also taking lead positions.

The Taxand Total Tax Take (T3) research into the real estate market, conducted across 23 countries across the globe, reveals that taxes on commercial property sales will swallow up 21.17% of the value in Norway, 18.93% in Malta and 15.5% in India, making them the three most expensive countries surveyed in which to develop and sell commercial property, in terms of taxes charged.

India has a high rate of tax owing to the high VAT/transfer tax rate of 10% on sale and also the income-tax rate of 34%. Once the Goods and Service Tax (GST) regime is introduced in India, the overall tax is expected to come down.

Norway's expensive rate is predominantly due to the high rate of VAT on construction which swallows 25% of the sale value. Malta also has a high VAT rate on construction (18%) and a high rate of income tax (35%).

Keith O'Donnell, Head of Real Estate at Taxand, said: "These rates are abnormally high given that the average tax take on commercial sales is 9.50% and in some countries it comes in as less than 5%, notably Cyprus (2.74%), Romania (4.02%) and Poland (4.28%).

"This is the first year our research has included the total tax take on commercial sales which has revealed some interesting insights, with Norway, Malta and India topping the rankings as the most expensive countries, and Cyprus, Romania and Poland the least expensive countries for commercial sales".

Also featured in the The Economic Times (India) on 10 March 2011, and The Indian Express on 12 March 2011

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Taxand T3 research methodology

Taxand has updated and expanded last year's T3 data.

To arrive at the figures, Taxand has taken into account VAT (or its local equivalent), corporate income tax, and property taxes. The property taxes were usually subject to various country-specific assumptions and modifications as they often differ on municipality basis or sometime just location basis. Those were reviewed by the coordinating Taxand team to assure comparability. Administrative fees, notary fees, court fees were excluded as having a relatively low impact on the overall tax take.

To ensure comparability of the results, certain data has been fixed such as size of the building, investment costs, and 100 percent non-interest bearing equity financing. With all of that built into the model, Taxanders adopted it to the local law.

Your Taxand contact for further queries is:
Abigail Tarren, Global Operations Director
T. +44 (0)207715 5243


Taxand's Take

Taxand's Take Author