Requirement for Owning Real Estate in the Dominican Republic for Foreign Individuals or Entities

By Alfredo Guzmán Saladín, Guzmán Ariza, Attorneys at Law

In the Dominican Republic, there are no restrictions on foreign individuals or entities owning real estate. The process for purchasing real estate for foreigners is the same as for Dominicans; there are no national defence or security limitations. Foreign individuals and entities, and Dominicans must register locally with the tax authorities before registering purchases of real estate.

Individuals must submit their application directly at the Internal Revenue offce, while entities must first register at the Chamber of Commerce and obtain a mercantile registry certificate, before applying for their tax number. These are mere formal requirements that can be easily fulfilled.

Real estate can be purchased and sold in any currency – usually in the local currency (Dominican pesos) or US dollars. There are neither controls nor restrictions on foreign currency exchange in place. Under current foreign investment laws, foreigners can freely repatriate capital and profits from their investment in the Dominican Republic.

There are no restrictions regarding the structure or legal form of a foreign entity. If it is duly incorporated and recognised in the jurisdiction where it was formed, an entity can do business in the Dominican Republic upon registration at the Chamber of Commerce and Internal Revenue. However, trusts as they are known in most common law jurisdictions are not recognised as legal entities and cannot, therefore, directly hold property in the Dominican Republic.

Local law does not recognise the concept of pass-through entities. Any entity, local or foreign, is taxed as an entity, regardless of its legal structure, except real estate assets held through a closed-end investment fund approved by the Dominican Republic Security and Exchange Superintendency. These funds are considered fiscally neutral investment vehicles and, as such, are not subject to income tax; their shareholders or beneficiaries, however, will pay income tax on income received from the funds. The most common entity used by foreign investors is a local LLC. Some, preoccupied by the complexities of reporting a foreign entity to the tax authorities in their home jurisdiction, prefer to register their domestic entity in the Dominican Republic. Finally, high-income individuals with complex estate planning in place use the structures existing in their estate plan to acquire Dominican assets.


Alfredo Guzmán Saladín

Alfredo Guzmán Saladín

GGI member firm
Guzmán Ariza, Attorneys at Law
Law Firm Services
Santo Domingo and six further offices throughout the Dominican Republic
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Guzmán Ariza is a top-ranked Dominican law firm, servicing clients through seven strategic locations around the country. The firm is customer oriented and offers a full range of legal services, earning the international reputation of being a respected and reliable law firm that produces results.

Alfredo Guzmán Saladín is Guzmán Ariza’s Partner Co-Chair of the real Estate and Corporate Practices. He is the premier real estate practitioner in Casa de Campo, as well as in Bávaro and Punta Cana, where he has acted as counsel to major developers in the construction ventures of the most relevant tourism investment deals in the country.


Published: Real Estate Newsletter, No. 13, Summer 2021 l Photo: Pavel - stock.adobe.com

 

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