Money is one of the most common types of assets that is given as a gift, and income from giving is one of the taxable incomes. So how is gifting property understood? Do we need to pay tax when donating property as money? The article below will help you answer the above questions.
1. What is a donation of assets?
To be able to grasp the concept of donating property, we must grasp the concepts of “donation” and the concept of “property”. “Giving” according to the Vietnamese dictionary is the act of transferring things one owns to another person without exchanging anything. The act of giving is intended to praise, encourage and express one’s affection. the giver and the recipient. From a legal perspective, most countries recognize gifting property as an act of a subject with property ownership transferring to another person with that person’s consent.
Donating property is also considered a civil transaction and is governed by regulations on civil transactions in effect according to the law. Types of assets allowed to be donated include: donating assets that are money, donating assets that are movable property, real estate, and donating assets that are valuable papers. There are two types of gifts prescribed by law: unconditional gifts of property and conditional gifts. In the case of a conditional gift of property, the conditions given must not violate the prohibitions of the law and must not be contrary to social ethics.
2. Do we have to pay tax when donating property as money?
To answer the question of whether giving property as money is taxable, we must first consider what income from gifts must be taxed.
Pursuant to Clause 10, Article 2 of Circular No. 111/2013/TT-BTC, income from receiving gifts is one of the incomes subject to personal income tax, including personal income received from individuals. individuals and organizations at home and abroad. As follows:
- Donated assets are securities including: Individual shares in joint stock companies as prescribed in the Enterprise Law, stocks, bonds, stock purchase rights, treasury bills, fund certificates and other types of securities other according to the provisions of the Securities Law.
- Donated assets are capital in business establishments and economic organizations: Capital in various types of companies: partnerships, cooperatives and limited liability companies, types of business cooperation contracts. businesses, individual business establishments, capital in private enterprises, capital in associations and funds permitted to be established according to the provisions of law, or the entire business establishment if it is a private enterprise or business establishment. individual business.
- Donated assets are real estate: infrastructure and construction works attached to land, including future construction works; the right to own a house and a house to be built in the future; land use rights and assets attached to land, land use rights, land lease rights or water surface lease rights. There are also other incomes from inheritance of real estate in all forms, except for donated real estate assets between: husband and wife, parents and biological children, parents and adopted children, and parents-in-law. and daughter-in-law, parents-in-law and son-in-law, grandparents with grandchildren or grandparents with grandchildren, siblings.
- Donated assets are assets that require registration of ownership or use rights: motorbikes, cars, motorbikes, barges, ships, canoes, push boats, tugboats, boats and yachts, hunting guns , flying boats, sporting guns.
Thus, in this regulation there is no mention of giving property as taxable money. Thus, donating property as money does not fall under the cases of donating property subject to personal income tax.
3. Does giving money as a gift of property require a contract?
According to Article 107 of the 2015 Civil Code, Money is movable property. Article 466 of the civil code stipulates: A contract to donate movable property takes effect when the donee receives the property; For movable property where the law requires registration of ownership, the donation contract takes effect from the time of registration. Accordingly, to donate money assets, a contract must be drawn up and the contract to donate money assets will take effect when the donor executes the contract.
