Primary residences Beware, the new system doesn’t start until July
Owners who wish to sell their primary residence in the upcoming days do not have to rush to the tax authorities to seek their prior opinion. This system is not yet operational and will not be until July 1, 2023. Article 241 bis-II-C of the General Tax Code provides for a six-month “grace” period before the entry into force of the provision provided for in the 2023 Appropriations Bill, the goal being not to block transactions but to allow the tax administration to configure its information system to be able to handle future requests for prior opinion.
Consequently, pending the operationalization of the measure, owners of primary residences can transfer their main residence in accordance with the usual procedure and are not required to observe the various stages provided for by Article 234 Fifth section of the General Tax Code. This establishes a new mode of taxation and control of income tax in respect of land profits. The principle consists of the possibility for interested persons to request the prior opinion of the tax authorities concerning the elements for determining the net taxable property profit and the amount of tax relating thereto or exemption where applicable. The request, which must be made exclusively online, must be made no later than 30 days after the signing of the sales agreement. The question raised by several practitioners concerns the cases where there is no preliminary sales agreement, This is a point that will still need to be clarified by the circular from the Directorate General of Taxes.
After having received said request, the tax administration has a period of 60 days, from the date of its receipt, to respond by issuing a certificate of liquidation of the tax or an exemption certificate. The document remains valid for six months. If the real estate transaction is not achieved within this period, the taxpayer will have to make a new request for a prior opinion. Many observers wonder what will happen if the tax administration does not respond within the 60-day period. Is the silence of the tax authorities equivalent to a tacit agreement? This is yet another gray area which will have to be explained by the circular of the Tax Administration.
According to the terms of the Appropriations Bill, this step is optional. It will allow the taxpayers in question to be exempted from tax audits after having submitted an income tax return relating to land profits, by taking into account the elements appearing in the liquidation certificate provided by the tax authorities. The fact of not requesting the prior opinion of the tax authorities, – and this is the other side of the coin – entails the obligation to pay, on a provisional basis, to the Directorate General of Taxes the difference between the amount of the declared tax and 5% of the transfer price. The transferor will benefit from a tax deduction at the end of the procedure for rectification of the tax declaration in accordance with the provisions of article 224 of the General Tax Code or will be required to pay the tax differential.
Hassan EL ARIF
