Venezuela: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Residents are those individuals who spend more than 183 days in Venezuela throughout a given calendar year. Residents are taxed on a worldwide income basis starting 01 January 2001. Residents are allowed personal deductions and allowances.

INCOME TAX

The taxation of residents in Venezuela is in tax units (unitaria tributaria), which is an adjustment index.

The tax bands are all in tax units, whose monetary value changes depending on the changes in the consumer price index. The tax unit or TU (unitaria tributaria) for 2008 is VEB46,000 (US$15.67).

Venezuelan residents whose annual net income is greater than 1,500 TU (US$32,174) are subject to income tax.

The income tax rates for resident individuals are as follows:

Allowances

The following may be deducted from taxable income:

• Interest on loans to acquire residence, up to 1,000 TU (US$21,449)
• Rent payments for housing, up to 800 TU (US$17,159)
• Tuition paid to Venezuelan educational institutions for the taxpayer’s education or for the education of his descendants not older than 25 years of age
• Life, surgery, hospitalization, and maternity insurance premiums
• Medical, dental and hospitalization payments

The tax law gives the taxpayer the option to itemize deductions or to use a standard lump sum deduction of 774 TU (US$16,602). Deductions need to be supported with invoices, which must be attached to the final income tax return. If the taxpayer opts for the standard lump sum deduction, no proof is required.

Tax Credits

Individual resident taxpayers are entitled to a personal tax allowance of 10 TU (US$215). Likewise, they are also entitled to a tax allowance equivalent to 10 TU (US$215) for their non-separated spouse, for each immediate parent residing in the country and who is dependent from the taxpayer, and for each child under age or is currently studying and is 25 years or younger, or in those cases where the child is disabled and cannot work.

However, individual resident taxpayers who have not separated their marital property must make a joint declaration of their income, save in those cases where they choose to file separately income from wages and salaries from professional fees.

In the event that the individuals choose to declare and file separately, they will not be entitled to the 10 TU (US$215) for their non-separated spouses and must divide the credits attributable to their dependents, as well as the deductions corresponding to education and insurance premium expenses.

Foreign Tax Credit

Residents will be allowed to credit foreign income tax paid against Venezuelan tax imposed on their foreign-sourced income.

Capital Gains

Capital gains realized from selling property are treated as ordinary income and taxed at progressive income tax rates. The taxable gain is computed by deducting the costs (acquisition costs, improvement costs, and registration duties) from the gross selling price.

PROPERTY TAX

Land Registry or Real Estate Tax (Impuestos a los Inmuebles Urbanos)

This is payable to the municipality where the real estate is located. The taxpayer is the proprietor. Historically, the value of the property, its productivity or the effective income derived from it was considered as the tax base. The actual tax base applicable depends on the municipality.

Venezuela - more data and information

• Lawyers (attorneys) with property law practices in Venezuela

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