An individual transfers real estate, without receiving any payment or other consideration, to a Saudi-incorporated company whose shares are wholly owned, directly or indirectly, by members of their own family. Under Article 3(A.19) of the RETT Implementing Regulations, what condition must be satisfied for this transfer to remain exempt from RETT?
- The company must sell the real estate within 12 months of the transfer, which converts the exemption into a deferral of RETT rather than a permanent exemption
- The transfer must also be separately approved by ZATCA on a case-by-case basis, since no ownership condition applies once a transfer without consideration is properly documented
- The company must obtain a listing on the Saudi stock exchange within 5 years of the transfer, or the exemption is revoked retroactively
- There must be no change in the shareholding percentages of that company for a period of 5 years from the date the real estate was transferred
Why D? And why not the others?
Correct answer: D. There must be no change in the shareholding percentages of that company for a period of 5 years from the date the real estate was transferred
Article 3(A.19) of the RETT Implementing Regulations exempts a transfer of real estate made without consideration to a Saudi-incorporated company that is wholly owned, directly or indirectly, by a private family or a charitable endowment, on condition that there is no change in that company's shareholding percentages for 5 years from the date of the transfer. The rule is aimed at genuine intra-family estate and succession planning rather than a disguised sale, so a shareholding change within that 5-year window undermines the basis for the exemption. The option requiring a sale within 12 months describes the opposite of what the exemption is meant to protect against, since a quick sale (rather than a shareholding change) is not itself the condition Article 3(A.19) targets. The option requiring case-by-case ZATCA approval invents a procedural step that is not part of the published condition, which is a fixed ownership-continuity test rather than a discretionary review. The option requiring a stock exchange listing within 5 years has no basis in the exemption at all, which turns on shareholding stability, not on ever becoming a listed company.
Source: RETT Implementing Regulations, Article 3(A.19), family/charitable-endowment company exemption