Real Estate Guide 2016: Property purchase in Estonia / Part 3
Paying the state fee for an real estate application in the Land Register
After the conclusion of a purchase agreement, the state fee must be paid at a commercial bank prior applying for further registration. After paying the state fee a notarized application is made to the Land Register to transfer the ownership of the property to the buyer in the Land Register Book. After ownership registration on Estonian Land Register Book the title of ownership is legally effective.
In Estonia, property deeds are not required and not in use in common practice.
State and the notary fees
The notary fee is paid to a public notary in connection to the necessary legal and technical services, and its size depends entirely on the value of the transaction in question, which is determined by the price of the property or the rights as declared by the parties. The fee is based on a table of fixed fees and it must be paid upon signing the deed. Below are some samples:
Transaction value Notary fee
EUR 30 678 EUR 53
EUR 102 260 EUR 160,40
As with the notary's fee, the state fee for submitting an entry in the Land Register is also based on a table of fixed fees, and the fee is usually paid by the buyer. Below are some samples:
Transaction value Notary fee
EUR 30 677,59 EUR 35,27
EUR 102 258,63 EUR 109,92
Taxes in Estonia
The land tax is the only category of real property tax, since buildings and forests are not separately taxed. The land tax is calculated on the basis of the market value of land and it varies normally around 0.1-2.5% of the market value annually. Factors affecting the market value are the location, the use and the environmental characteristics of the land. The land owners and in some cases the land users as well (i.e. local governments or state property) are subjected to pay the land tax.
Commissions charged by different real estate firms vary according to the object in question (e.g. flats and apartments about have the commission rate of 6-8%, and in the case of transfers, the commission is usually 2-4%). The commission fee usually is already included in the final sale price and consequently born by the buyer.
Firms selling improved property are liable to pay additionally the value added tax (VAT). Private persons are not subjected to VAT payments when selling improved property, but the income tax may be born instead in certain cases. The general VAT rate in Estonia is 20% of the taxable value of the real estate in question. Income tax (21%) needs to be paid from the amount of net-profit from the sale of improved property, unless it is the registered address of the owner.
For more information regarding the sale or purchase of real estate in Estonia, please contact our English speaking attorneys and tax consultants to firstname.lastname@example.org.
T: +372 619 1000
F: +372 619 1007