As soon as you read the title of the article “Where did this come from, is there a tax on those who put their immovables as capital in kind to the company/companies of which they are partners?” you thought, didn’t you? Yes, you may be right, but there has been such a tax surprise for a long time about those who put their immovable property to the company/companies of which they are partners as capital in kind more than once!
The interesting thing is that almost no one even knows about such a taxation event. For this reason, taxpayers are very careless when putting immovables as capital in kind.
What is capital in kind?
capital in kind, “All capital elements such as movable and immovable goods, machinery, goods and rights, which are put in non-monetary value and can be actively included in the balance sheet, by the shareholders during the establishment or capital increase of a company” is defined as. In other words, in cases where a value other than cash is invested in the company as capital, capital in kind is in question.
What can be put as capital in kind?
To commercial companies, unless otherwise provided in the law; Values such as immovables, movables, industrial property rights (legislation certificates, trademarks, licenses, mining exploration and operation licenses, etc.), intellectual property rights, usufruct rights (rights to use and benefit from movable and immovables), brands, inventions and know-how, bond and stocks can be put as capital in kind:.
In practice, most immovables are put as capital in kind. The value of the immovables to be put as capital in kind is determined by the commercial court of first instance in the place where the company’s headquarters is located, by means of an expert. This issue has been regulated by the legislator as a mandatory provision.
Putting the immovables as capital in kind is considered as a divestiture!
Yes, you did not hear it wrong, the fact that the shareholders put the immovables they own as capital in kind to the companies of which they are partners is in terms of taxation. “disposal” is accepted as You ask why? Because the law says so. The regulation regarding this is included in the repetitive Article 80 of the Income Tax Law.
What is the tax surprise in capital in kind about?
Here, the tax surprise is about whether this transaction will be taxed as capital gains or commercial gains in cases where immovables are invested as capital in kind.
If the divestiture is treated as an increase in value, only Income tax, if it is treated as commercial gain Income Tax + VAT is happening. There is no hesitation in cases where the shareholder is a commercial enterprise and the immovables registered in the asset are placed as capital in kind, this transaction is evaluated within the scope of commercial gain (corporate gain).
For this reason, before making the transaction regarding the placement of immovables as capital in kind, it is necessary to know the taxation situation and act accordingly.
In which case is there a capital gain in value increase in kind?
Regardless of the type of acquisition (excluding those acquired gratuitously), the gains arising from the disposal of immovables within five years starting from the date of acquisition are subject to income tax as value increase gain. The term “disposal” refers to the sale of immovables, their transfer and assignment in return for a consideration, bartering, barter, expropriation, nationalization, and investment in commercial companies as capital. (GVK. Penalty Art. 80).
In other words, real person shareholders putting their immovables as capital in kind to the companies of which they are partners, in terms of income tax. “disposal” is accepted as Gains arising from the disposal of real estates acquired by real persons within 5 years from the date of acquisition are subject to income tax as value increase gain. (GVK. Art. Mag. 80). In the event that the immovables are disposed of after the 5-year period, the income obtained is not subject to income tax. In the calculation of the 5-year period, the calculation is made in days. However, the gratuitous acquisition of immovables is not within the scope of value increase gain. In other words, the income obtained if the immovables inherited by the person are subsequently disposed of are not considered as value increase gains.
In which cases is the disposal of real estate considered commercial gain?
The earnings of those who are constantly engaged in the purchase, sale and construction of immovables are considered as commercial income and are taxed. (GVK. Art. 37). The main factors that determine the commercial income in real estate sales; the activity is based on an organization of capital and labor and this in the operations of the organization continuity. This, exceeding the scope and limits of personal needs can be added. If the immovable is sold within a commercial organization, there is commercial gain!
In addition, if real estate is bought and sold continuously, although it is not carried out in such an organization, the income obtained is considered as commercial income. Continuity element is the process of transactions of a commercial nature in the same or separate fields of activity within an accounting period. more than one means to do. In other words, the most decisive criterion of the continuity factor is “Many in the number of profitable transactions”.
Finance, real estate purchase and sale is not carried out in a commercial organization, but the real estate;
– Same person on different dates,
– Different people on the same date,
– in successive years,
– Some of them are collected in the calendar year received, and the other part is collected again in the following calendar year.
is of the opinion that the sale of the property constitutes a presumption that it is constantly engaged in the purchase and sale of real estate, and the income obtained should be considered as commercial income. The Council of State is of the same opinion on this matter!
Finance considers the placement of immovables as capital in kind on different dates as commercial gains!
Finance, The investment of the immovables owned by the companies with separate legal entities as capital should be considered as a partnership share in exchange for the disposal of the immovables,
– These immovables were transferred to the same capital company on different dates. or to different capital companies on the same date put in capital in return for the positive benefit above the acquisition value of the immovables. commercial gain,
– The increase in value is gained by putting all of these immovables to a trading company at once as capital in kind.
of the opinion that it should be considered as (Istanbul VDB dated 08.05.2012 and B.07.1.GİB.4.34.16.01-120[Mük.80-2012/1]-1567 decree).
Does the Council of State have an opinion on this matter?
Unfortunately, there is no decision given by either the Council of State or the tax courts on this issue.
Those who put the immovables as capital in kind on different dates were burned!
Yes, in the opinion of the Financeto the same capital company on different dates or to different capital companies on the same date is considered as a commercial activity, The positive difference between the acquisition values of the immovables and the values determined by the Court commercial gain are subject to income tax, and VAT must be calculated on the price determined by the court. The same applies if the inherited immovables are invested in capital companies as capital in kind on different dates.
As a result,
Real persons who do not tax their real estates in terms of income tax and VAT within the scope of commercial income, although they have invested the same or other companies as capital in kind on different dates, are now under a very serious risk. If these are determined, serious amounts of income tax with tax loss penalty and VAT assessment can be made.
It is useful to think once more when putting immovables as capital in kind. Otherwise, you can have bulgur at home on your way to Dimyat for rice!