Agreement on the Change of the Taxpayer of the Real Estate Transfer Tax

As we already informed you in January 2014, provision of Sec. 1 Subsec. 1 letter a) of an Statutory enactment of the Senate No. 340/2013 Coll., on Real Estate Acquisition Tax Act, consequently approved by the resolution of the Chamber of Deputies No. 379/2013 Coll., has allowed the contracting parties which are concluding a purchase or a exchange (barter) contract to stipulate that the acquirer of the ownership right (i.e. the purchaser) is the taxpayer of the real estate transfer tax.

 In the legal practice it had not been clear how exactly this agreement should be worded. Due to these inconsistencies the General Financial Directorate has issued an opinion regarding this matter.

 According to the opinion of the General Financial Directorate, the agreement on the change of the taxpayer must be involved into the purchase or the exchange contract; separate agreement is not admissible. The contract must be clear about the fact that the seller and the purchaser are willing to stipulate that the acquirer of the ownership right is the taxpayer; it is not sufficient if they are willing to transfer/delegate only some of the taxpayer’s obligation/duties. Commonly used wordings like “The tax is to be paid by the acquirer” or “The acquirer shall file a tax return/declaration and pay the tax” were therefore found inconvenient and were not recommended; if used, the purchaser is not to be considered as the taxpayer.

 The General Financial Directorate recommends the usage of the following wording: “The acquirer of the ownership right is the taxpayer of the real estate transfer tax”.