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 Question: I have received an offer to use my house for capital contribution to an existing company. What are conditions and procedures for the capital contribution?

Answer:

According to Article 106 of the Land Law, you are entitled to exercise your right to contribute capital by your house and the land use right when the following conditions are met: (1) You have certificate over housing ownership land use right, (2) The land is free from disputes; (3) Your house and the land use right are not inventoried to ensure the execution of judgments.

The procedure for capital contribution by housing ownership and land use right shall be made as follows: (1) You and the company shall enter into the capital contribution agreement. The value of the house may be agreed between the parties. The agreement on capital contribution must be certified by State notary public or authenticated by the People's Committees of communes, wards or townships where the house locates and then (2) The capital contribution must be registered at land use right registries. The application for registering the capital contribution must include the agreement on capital contribution and certificate over housing ownership land use right. Within no more than ten working days as from the date of receiving the complete and valid dossiers, the land use right registries shall have to verify the dossiers; for cases where capital contribution conditions are fully met, they shall register the capital contribution into the cadastral dossiers and the land use right certificates; in cases where the capital contributions give rise to new legal persons, the capital contribution registration dossiers shall be sent to the land management agencies of the People's Committees competent to grant the land use right certificates for granting the land use right certificates to such new legal persons.

In respect of the tax issues, under the laws of Vietnam, if the capital contribution by housing ownership and land use right is made by a company, the Corporate Income Tax shall be imposed on the discrepancy between the value as recorded in the accounting book and the value of the capital contribution as agreed by the parties. However, in this case where the capital contribution is made by an individual, the law is still silent on tax obligations so far. Thus, tax issue in your case is still unclear.

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