Kobalt Law LLP Tunisia. Buying Guide September 2015

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1 Tunisia Buying Guide September 2015 [Type text] London Office: Office 5 Fairbank Studios 75/81 Burnaby street Chelsea London SW10 ONS

2 This guide sets out general points only, which should be borne in mind when buying a property in Tunisia. It should not be relied upon in specific cases for which detailed advice should be taken. If you would like this firm to protect your interests, please do not hesitate to contact Kobalt Law LLP. We would be happy to provide you with specific advice applicable to your own particular circumstances. Disclaimer No, liability or loss, financial or otherwise, can or will be accepted by Kobalt Law LLP or any member of the firm, as a result of reliance upon any part of this guide or any mistake or failure to update the guide. Introduction Overview Tunisia is a Republic in Northern Africa, bounded on the north and east by the Mediterranean Sea, on the south by Libya, and on the west by Algeria. The population is largely Berber and Arab. Islam is the dominant religion. Arabic is the official language; although French is widely spoken. Its 1,300 km of coastline, its vestiges from 3,000 years of civilisation, a landscape ranging from northern forests to southern desert and oases, make Tunisia a choice tourist destination. An extensive and diversified tourism base (Saharan tourism, beach holidays, cultural sites, convention centre, yachting, golf and spa activities ), makes it a major tourist destination on the southern rim of the Mediterranean. Independent Solicitor It is essential to use an independent solicitor with a legal knowledge of both the UK and Tunisian legal systems, who are able to translate the documents and explain the terms to your full understanding. It is important to carry out due diligence on the property you are purchasing in order to ensure there are no encumbrances on the property. Your independent solicitor will do this on your behalf.

3 Restrictions on buying in Tunisia Since 2013, the Tunisian government has relaxed the provisions of the law related to real estate acquisition by a foreigner. Indeed, any foreign purchaser must obtain an administrative authorization for his purchase from the local Governor. However, purchase in industrial and tourist areas are exempted from this. Whereas before the administration decision could take one year or more, since recently the administration decision cannot take more than 3 months. This authorization must be obtained before completion of the final completion contract. The date and authorization number will be added in the final completion contract called Acte de Vente. The dossier for approval will comprise the preliminary contract, all required documentation in relation to the property and the parties personal details. The administrative decision can take a maximum of 3 months. The result could be positive (acceptation of the authorization) or negative (refusal). This mandatory authorization is required from the Tunisian Authorities for national security reasons. Call: info@kobaltlaw.co.uk Foreigners cannot buy agricultural land.

4 Specific Steps in buying property in Tunisia In Tunisian property law, we distinguish two kinds of Tunisian Real Estate property titles, commonly called "blue title" in one hand and "Arabic title" in the other. The "blue title", also called "land title" corresponds to title issued by the administration of land conservation, commonly known as "land conservation". It ensures total protection of property against all types of theft. Owned only, by the one whose name appears on the title deed. The Tunisian property law provides a procedure to transform the "Arabic title" to "blue titles." The procedure is expensive and can take several years, so it is important to make due diligence before to purchase a property in Tunisia and make sure that the property is registered under a blue title. The first step of the conveyancing process is the signature of a Promesse Synallagmatique de Vente. It is a preliminary contract by which both parties (the seller and the buyer) agree on the main conditions of the sale (property, price, delivery period ), and on the decision to respectively sell and buy the property. This agreement is a legally binding contract which commits both parties into the purchase. A deposit equivalent to 10% of the sale price is expected upon signature of the preliminary contract. The present contract is conditional upon the authorisation of the Governor in order to purchase a property in Tunisia. In the event the authorisation is refused, the seller will be obliged to refund the purchaser his advanced payments less the administration cost for the necessary authorisation application. Completion of the final completion contract will take place after receiving authorisation from the Governor. The Acte de Vente is the final completion contract signed by both parties. It will be drafted by a Tunisian Notaire or a Tunisian Lawyer. The purchaser will take possession of the apartment from the date of signing the Acte de Vente and will become the legal Owner of the apartment from the registration of the transfer deed by the Notaire or the Tunisian Lawyer at the Tunisian Land Registry. The purchase of off-plan properties is governed by strict laws, which protect the purchasers. The developers must offer a bank guarantee or an insurance to secure purchasers investments. Unfortunately some developers are ignoring them. So clearly, it is primordial to instruct a solicitor who can undertake all the necessary checks before you commit to the purchase of an off-plan property.

5 Costs and Fees The most significant part of the acquisition costs are for registration fees, stamp duties and cost of formalities for the granting of the individual title deed and authorization of governor. The total completion cost associated with the purchase will be approximately 1-2% of the purchase price for an off-plan property and 6-7% for a resale property. Call: info@kobaltlaw.co.uk Inheritance In Tunisia, the civil status of foreigners is determined by the law on nationality. So if you are English citizens, your Tunisian estate will be subject to English inheritance law. It is imperative to discuss with your solicitor on the most appropriate way to prepare your will for your Tunisian estate. Taxation Overview of Tunisian Tax System: Under the Tunisian tax system, non-residents are taxed on income arising from Tunisian sources only and are liable to a number of property related taxes highlighted below. The relief for foreign taxes depends on the double tax treaty concluded by Tunisia. Real Estate tax: registration fees amount to 1% for off-plan properties and 6% for resale property. Tunisian income tax is payable on income arising in Tunisia. Tunisia income tax is payable at progressive rates on income after allowable deductions for expenses incurred in connection with letting, selling or maintaining the property. Capital Gains tax: the capital gains tax is calculated on the real estate profit. The taxable profit is calculated by taking the difference between the price at which the property is sold, reduced by the selling costs, and the purchase price, increased by purchase costs. Capital gains are taxed at 15% if the property is sold within 5 years from purchase and 10% after 5 years.

6 Local Taxes: The tax on the rental value is a municipal tax on buildings. The owner of the property is liable for collection of the tax. The base of this tax is the gross rental value determined in accordance with a general census carried out every three to five years by the local authorities. The rate is fixed per local authority, which may be divided into two zones, urban and suburban (where the rate will be lower). Tunisian Inheritance Tax (IHT): The rate of IHT payable in Tunisia dependent the relationship between the donor / deceased & the beneficiary. Call: info@kobaltlaw.co.uk L For further information on any part of this Guide, please us at info@kobaltlaw.co.uk or call us on +44 (0)

7 London Office: Office 5 Fairbank Studios 75/81 Burnaby Street Chelsea London SW10 0NS Kobalt Law LLP is regulated and authorised by the Solicitors Regulation Authority number VAT number helping you achieve your aims & objectives Please note that the information in this guide is current at the time of production. It is not intended to substitute the need to take accurate and up to date legal advice in each particular case. No liability is accepted by Kobalt Law LLP for incorrect or out of date information in this guide and any loss deriving from the usage thereof by the reader. The information in this booklet cannot be reprinted, photocopied or otherwise reproduced mechanically or with the aid of a computer, in part or in its entirety, without the prior written authorization of Kobalt Law LLP Kobalt Law LLP