The property right is guaranteed by Article 14 of the Tunisian Constitution. It is practiced within the limits provided by laws.
The rules governing the property right are provided by the Real Estate Code (hereinafter referred to as “C.D.R.”) promulgated by Law N° 65-5 of February 12th, 1965.
According to the provisions of Article 14 of the C.D.R. the property confers to the owner the exclusive rights of usus, fructus and abusus.
- Who can own land?
The property right is granted for all nationals (individuals and legal entities).
For foreigners (individuals and legal entities), the right to property depends on the land nature and for which use is intended to be.
- Residential land/property:
Pursuant to the property transactions' decree dated on June 4th, 1957, the purchase and sale of a residential property in Tunisia by a foreigner are subject to prior authorization of the governor of the region where is located the concerned property.
If the land is located in a urban plan’s zone of development, it is deemed to be for residential purpose. The prior authorization of the Governor is required. However, if the land is not a part of the urban plan, it is deemed to be an agricultural land and therefore it is impossible for a foreigner to acquire it.
The sales transactions made by the French nationals related to their properties constructed or acquired in
Before requesting the governor authorization, a promise of sale shall be drafted by a lawyer. The promise of sale shall specify a reasonable deadline (eg six months) for the prospective purchaser to obtain such authorization.
The promise of sale should also force the case of failure to obtain such authorization. Paying an advance amount of the total price may be provided by the promise of sale. In case of failure to finalize the purchase transaction, it can be expected to recover all or a portion of the advance amount.
- Industrial zone land/property:
- Tourist zone land/property:
However, the acquisition of already established tourist units (hotels, restaurants, etc.) shall be subject to the prior authorization of the governor.
- Agricultural zone land/property :
The sale of an agricultural land to a foreign person or entity is absolutely null and utterly void. The foreigners can exploit agricultural land only by rent.
- How is land held?
- by contract
The acquisition of land by contract may be by sale/purchase agreement, by donation or by contribution in a company.
The parties' signatures shall be legalized/authentificated before a public authority under section 378.
- by succession
- by occupation/ prescription
Any person who is charring out an occupation of a building in a peaceful, public, continuous, not interrupted and not ambiguous way for fifteen (15) years, he becomes the owner of that building.
- no one may appropriate property of the State for himself by occupation, prescription or accession;
- The possession in good faith cannot be transformed into ownership if the land is registered in the real estate conservation.
According to Article 23 of the C.D.R., vacant and ownerless buildings become the property of the State.
- by accession
- by other legal way of acquisition
Property can be also transferred by auction.
- How are property rights protected?
For example, anyone who would, by force, deprived others of a property, is punished up to three (03) months imprisonment and a fine of one hundred and twenty dinars (120 TND) without prejudice of more severe punishments incurred for the other offenses committed. It should be noted also that even the attempt of the aforementioned acts is punishable.
- Can security be granted over property?
In case the debtor transfers the ownership/rights of the mortgaged property to a third party, each mortgagee is entitled, at any time, to sale the mortgaged property within a thirty (30) days notice made to the third party holder of the mortgaged property and to the original debtor to pay the due debt or to abandon the property.
- How is international investment supported by the government?
- Certain common tax advantages foreseen in Articles 7 and 9 of the Investment Code may be granted upon a simple request. The said common tax advantages are as following :
Ø Tax relief for shareholders up to 35% of profits or net revenue subject to corporate tax or personal income tax;
Ø Tax relief on profits reinvested back into the company up to a limit of 35% of taxable corporate profits;
Ø Profits that are reinvested are to be recorded in a special investment reserve account under the liabilities column of the balance sheet before the deadline for submission of the definitive tax return relating to profits for the year in which the deduction is taken and added to corporate capital no later than the end of the year in which the reserve is set up;
Ø The corporate tax return shall include the schedule of investments to be made «and a commitment by those taking advantage of the deduction to follow through with investment by the end of the year in which the reserve is set up»;
Ø Assets acquired in the framework of investment cannot be sold until at least one year after the date of effective start up of production;
Ø Capital should not decrease for the first five years following the date on which profits and income have been invested, unless a reduction is required to absorb losses;
Ø « Subject to the terms of articles 12 and 12a of law n° 89-114 of 30 December 1989, which promulgates the code governing personal income tax and corporate tax, the following items can be deducted from the tax base for both personal income tax and corporate tax: income or profits that are reinvested in acquisition of corporate assets or acquisition/subscription of stock or shares leading to holdings of at least 50% of capital in the framework of voluntary transmission by a company following death, inability to pursue management of the company, or retirement as outlined in article 11a of the tax code for personal income tax and corporate tax as well as in the framework of ongoing activity or transmission as outlined in law n° 95-34 relating to recovery at companies encountering economic difficulties as further elaborated and modified by subsequent texts, up to 35% of income or net profits subject to personal income or corporate tax. These terms do not apply to transactions to acquire or subscribe to stock or shares (in the framework of ongoing activity or transmission as outlined in law n° 95-34 mentioned above) by company directors and by the associate who holds the majority share of capital at the date of acquisition or subscription. Calculation of the rate of holdings for the associate with the majority share in capital takes into account the associate’s direct and indirect holdings as well as those of his or her spouse and adult children. »
Ø Exemption from Customs duties and similar taxes and Value-added-tax (VAT at 12%) payments for imported equipment that has no locally manufactured equivalent;
Ø Suspension of VAT for locally manufactured equipment purchased before the enterprise enters into production;
Ø Payment of VAT (12%) for locally acquired equipment after production startup activity.
- Specific advantages may be granted for companies that export 100% of production such as total deduction from the tax base of income or profits from exports for the first 10 years of activity, after which the rate falls to 50%, and Corporate tax at a rate of 10% on profits from export, subject to the terms of article 17 of the present code, for income generated starting 1 January 2011, « including exceptional profits as outlined in paragraph Ia of article 11 of the Code governing personal income tax and corporate tax, with the same conditions applying for both », Other specific advantages may be granted to companies exporting a portion of their production.
- Investment premiums, tax incentives and other specific advantages may be granted to companies acting for regional development, agricultural development and support investment.
- Additional advantages may be granted for activities of particular import for the national economy or border zones and major activities with high added value and a high integration rate after the superior Commission for Investment gives its opinion.
- Furthermore, the State, works for the setting-up of infrastructures, communication networks, and for the establishment of technological poles dedicated to many sectors of technology (such as Elgazala pole of communication technologies and Bio-Tech Pole Sidi Thabet).
- Also, via the industrial real restate agency, the State creates and develops industrial zones equipped with all necessary commodities for the implementation of industrial projects; and constructs flexible industrial premises intended for the Tunisian and international investors.
- Are there any specific risk factors in relation to the Tunisian jurisdiction?
In deed, the State is entitled to plan by decree perimeters of intervention (PIF) in order to fit out new zones. Among the effects of the PIF is to plan a preemption right for the public real estate agencies to purchase the lands and a non-transferability of the land till the end of the PIF which may lasts up to six (6) years.