Asset Revaluation, Recommendations on the Draft - American Chamber: Changes to Property Donations and Businesses
The new draft law on the revaluation of real estate, which will allow owners, whether individuals or businesses, to update the value of their properties according to the current market, in the view of the American Chamber of Commerce presents inaccuracies and difficulties in practical implementation.
Through a letter sent to the Ministry of Finance, the American Chamber of Commerce highlights the problems with the draft law and recommends intervention.
Specifically, it is emphasized that there is uncertainty in cases of subsequent transfer of ownership of revalued assets through donation or inheritance.
Therefore, it is recommended that in the event of a transfer of ownership rights over immovable property, including donation and inheritance, pursuant to the law "On Income Tax", made after revaluation, the tax be calculated according to the applicable rates on the realized profit, as the difference between the value at the time of transfer of ownership rights and the revalued value for which the tax was paid.
But changes are also recommended regarding the revaluation of assets that are assets of businesses, since according to the American Chamber of Commerce, it is foreseen that the revaluation will be done starting from the current accounting value of the asset, not from its fiscal value. This formulation may create ambiguity, because accounting standards (national or international) determine different ways of revaluation. According to the American Chamber, the last revaluation law in 2016 had the same formulation and brought great uncertainty for accountants and auditors.
For this reason, it is suggested that legal entities, which have real estate assets recorded in the financial statements, may revalue for tax purposes from the current fiscal value to the market value by September 30, 2026.
The difference between the new value resulting from the revaluation and the book value of the asset must be reflected in the financial statements for 2026, according to the requirements of the accounting standards applied by the legal entity.
Legal entities, to carry out the revaluation, will pay 5% of the difference between the revaluation value and the registered fiscal value for the real estate.
The legal entity must maintain a real estate card, which records the respective value of the property from the moment of revaluation. The difference between the new value and the registered fiscal value is not depreciated for tax purposes. In cases where the legal entity transfers the right to revalued assets, for the purpose of calculating capital gains and tax liability, the revalued value of the property is deducted from the sale price.
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