In Nicaragua, property owners of any kind, usufructuaries, possessors and owners of improvements or crops are bounded by Decree No. 3-95, published in The Official Gazette No. 21 of January 31, 1995 to pay to the municipality, a rate or aliquot of one percent (1%) on 80% of the property value, this is called Real Estate Tax (RET) and in this article we will tell you more about this taxation.
For RET purposes, the following are considered as real estate:
- The lands.
- Stable or permanent plantations and installations or fixed constructions that exist on the land.
- All assets that, in accordance with the provisions of articles 599 and 600 of the Civil Code, constitute real estate by nature or by accession.
Additionally, it is established that this tax must be declared, settled and paid in the Municipality where the taxed real estate is located, in two equal installments, the first within the first three months of the year and the second before June 30. However, the regulations grants a benefit to taxpayers who cancel the RET in a single payment within the months of January, February and March which consists of a 10% discount on the payable tax.
Regarding the RET payment, it is important to mention that it prescribes after two years, counted from the date on which the payment obligation becomes chargeable.
Another important aspect related to this tax is regarding to the exempt subjects, which are not obligated to the payment of the RET and these are:
– The Government and its Institutions.
– Autonomous Entities.
– Diplomatic Representations.
– International organizations headquarters.
– Churches and religious confessions, in terms of temples and dependencies for religious purposes.
– Municipalities associations.
– Indigenous Communities.
– Charitable institutions and social assistance institutions.
– Retirees by the house in which they live, provided that the retired person or their spouse or partner in a stable de facto union, is the owner or usufructuary of the real estate.
– Universities and higher technical education centers.
– Cultural, scientific, sports and artistic institutions.
– Trade unions and associations of workers and professionals.
– Trade unions, as long as they do not pursue profit.
– Companies that operate under the Free Industrial Export Zones Regime.
– The Fire Brigades.
– The National Red Cross.
In conclusion, excepting for the subjects mentioned above, all natural or legal persons that hold the domain or possession of a real estate must, in accordance with this Decree, pay the RET annually and any failure to comply with this tax obligation carries fines, which could cause economic damages to the taxpayer. Additionally, it is recommended to take into consideration the economic benefits of complying with this obligation within the first three months of the year.
If you have any questions or concerns, please do not hesitate to contact us.