Residents and non-residents may invest in Venezuelan real estate, directly or indirectly, through local companies or through foreign companies owning local real estate.
Earnings arising from properties located in Venezuela are subject to the income tax regime. Currently, a regime of worldwide taxation with rules including, among others, a dividend tax and transfer pricing rules, is applicable.
According to this regime the revenues obtained from real property located in the country will be taxable, whether they are received by resident or non-resident taxpayers. The income tax law contains a branch dividend tax, which taxes at 34%, the positive difference between a branch’s accounting and tax income generated after 1 January 2001. This tax applies to deemed distributions, and may only apply if a real estate investment can be considered a branch for Venezuelan tax purposes.
The IT regime provides for various rates depending on the kind of taxpayer. The tax rate for individual residents in the country is progressive, and ranges from 6% to 34%.
The applicable tax rate for individuals who do not qualify as tax residents in the country is 34%, and this rate will be applied to any amount of taxable income deemed as sourced in Venezuela. For the case under review the income generated for properties located in Venezuela will be considered as Venezuelan source. The case under review is the income from properties located in Venezuela.
Source : PWC