Wealth tax






Caracas, July 10, 2019


The National Constituent Assembly has approved the creation of a Constitutional Law Creating a Wealth Tax, published in Official Gazette No. 41,667 dated July 3, 2019. The main features of this law are:

  1. Purpose of the Tax: Taxing the net assets of special taxpayers with a net worth of:
    1. Individuals: 36,000,000 T.U. or more, namely VES 1,800,000,000.00, given that the T.U. is worth Bs. 50.00.
    2. Corporations: 100,000,000 T.U. or more, namely VES 5,000,000,000.00.
  2. Taxable Event: Ownership or possession of assets ascribed to taxpayers qualifying for this tax.
  3. Territorial Criteria: The criteria stipulated by the legislators in the case of this Law are as follows:
    1. Individuals and corporations classified as special taxpayers who are residents in the country: All assets regardless of where they are located or where the rights vested in them may be exercised.
    2. Individuals and corporations classified as special taxpayers who are foreign nationals, not residents in the country: Assets located within the national territory.
    3. Individuals and corporations classified as special taxpayers who are Venezuelan nationals and do not reside in the country: Assets located within the national territory.
      In the cases covered in sections 2 and 3, if they own a permanent establishment inside the country, they will also be considered taxpayers for all assets attributable to that establishment, regardless of where they are located.
  4. Assets Deemed to Be Located in the Country:
    1. Property rights to real properties located inside the national territory.
    2. Ships, aircraft, boats and the like registered under the Venezuelan flag. Those registered under foreign flags will also be considered located within the national territory if they have remained in the country for at least 120 calendar days during the tax period.
    3. Securities, shares, interest in companies and other securities representing equity capital issued by Venezuelan partnerships.
    4. Assets in the form of precious stones, minerals, works of art and jewelry.
  5. Residence Criteria for Individuals:
    1. Stays in the country for a consecutive or non-consecutive period of more than 183 days in one calendar year.
    2. The main nucleus of activities or economic interests is located in the country.
    3. Is a Venezuelan national or is a government official or government worker.
    4. Is a Venezuelan national and accredits a new tax residence in a country or territory considered a tax haven.
      There are also presumptions in the case of residence criteria for individuals.
  6. Residence Criteria for Corporations:
    1. Incorporated under Venezuelan law.
    2. Has its tax residence in the country.
    3. Has its actual headquarters in the country.
  7. Permanent Establishment: The law has its own criterion regarding permanent establishments for purposes of this tax, stating that an individual or corporation will be understood to be acting through a permanent establishment when all or part of his/its activities are carried out at facilities or places of any kind, even if the taxpayer is not the owner, regardless of whether the activity is carried out by the taxpayer in person or by employees, attorneys-in-fact, representatives or other staff members hired for the purpose.
  8. Timing: The taxable event will be deemed to have occurred on the last day of the respective tax period.
  9. Ascription: The assets will be ascribed to the owner based on public records. In the case of assets not subject to formal registration, they will be ascribed to the person in possession thereof. The law includes different rules for leasing arrangements, trusts and assets for the personal use of shareholders.
  10. Exemptions:
    1. The Republic and other political-territorial entities.
    2. The Central Bank of Venezuela.
    3. Functionally decentralized agencies.
    4. A home registered as principal home for a value of up to 64,000,000 T.U., namely VES 3,200,000,000.00
    5. Household goods and clothing.
    6. Statutory severance benefits and other benefits under a labor relationship.
    7. Community property and rights.
    8. Assets invested in agricultural, livestock, aquaculture, fish farming and fishing activities.
    9. The works of artists as long as they belong to the artist.
      The National Executive has the authority to grant exemptions.
  11. Tax Base: The sum of the total value of the assets and rights, excluding (a) the value of duties and encumbrances on the assets and (b) exempt assets and rights. Tax is paid on the portion of assets worth more than the amounts mentioned in article 1.
  12. Value of the Assets:
    1. Real property in the country: The highest value calculated using the following parameters:
      1. Value assigned by the municipal land registry.
      2. Market value.
      3. Value after updating the purchase price based on rules issued by the Tax Administration.
    1. Real property abroad: Value calculated based on tax rules in the country where the property is located or current market price at the close of each tax period, whichever is higher.
    2. Other real property: In the case of multi-ownership or timeshare properties and the like, the purchase price or the market price at the close of the tax period, whichever is higher.
    3. Shares and interest: If traded on stock exchanges or organized markets, the value posted at the close of each tax period. When not traded on a stock market, the value calculated by dividing capital plus reserves, as shown on the last balance sheet approved before the close of the tax period, by the number of shares.
    4. Jewelry, works of art and antiques: The purchase price updated following the rules issued by the Tax Administration or the current market price at the close of the tax period, whichever is higher.
    5. Property rights:
      i. Mortgages, security interest, antichresis: Amount of the liability or guaranteed capital.
      ii. Other than the above: The principal, price or value agreed upon by the parties when setting them up.
    6. Assets and rights subject to no special rules: The current market price or the purchase price updated following the rules issued by the Tax Administration, whichever is higher.

13. Tax Rate: The tax rate may be changed by the National Executive and must be no less than 0.25% and no higher than 1.50%.

14. Tax Period: Payable annually at the close of each period. In exceptional cases it may end at:

    1. Death of the taxpayer.
    2. Liquidation of the corporation.
    3. Taxpayer’s move abroad.
    4. Change of legal status that entails a change in the type of tax or implementation of a special tax system.

15. Tax Return: The tax return must be filed and the tax paid by the deadlines and following the procedures and methods put in place by the Tax Administration.

16. Obligation to Report: The law provides that judges, registrars, notaries public and other officials, as well as financial and insurance institutions and the like, are under the obligation to provide the Tax Administration with any information requested.

17.Withholding and Collection Agents: The Tax Administration may appoint agents in charge of withholding or collecting this tax.

18. Monitoring of Undeclared or Undervalued Assets: The Tax Authority is granted the authority to make use of any means necessary to determine the accuracy of information provided.

19. Enforcing Collection: The law provides for enforcement of collection, an action that is already provided for in the Executive Decree Enacting the Tax Code.

20. Temporary and Final Provisions: According to these provisions:

    1. This tax may not be deducted from income tax.
    2. The rate is 0.25 %, until the National Executive decides to change it.
    3. The exemptions and other benefits provided for in other rules and regulations are not applicable in this case.
    4. Non-compliance will be penalized as provided for in the Executive Decree Enacting the Tax Code.
    5. The Tax Administration has a term of 60 days in which to issue the rules and instructions for updating the value of assets and for the implementation of this tax.
    6. This Constitutional Law becomes effective on the date on which published in the Official Gazette.

Please do not hesitate to contact us if you have any questions or need assistance in connection with this new tax.

Yours truly,


Ysabel N. Figueira G.

All rights reserved. This work is a contribution of BENSON, PEREZ MATOS, ANTAKLY & WATTS to its clients on legal topics of their interest for purposes of providing orientation. It must not be interpreted as a specific legal opinion.