Things to note when contributing land use rights to a business

Things to note when contributing land use rights to a business is an important content that helps parties ensure the legality and safety of capital contribution transactions. Understanding the requirements for legal documents, asset valuation, name transfer procedures and capital contribution conditions will help businesses avoid risks and disputes over ownership rights, and optimize the value of contributed assets in long-term business operations.

What is capital contribution using land use rights?

Contribute capital with land use rights is a form of investment in an enterprise through the transfer of land use rights. This is a popular method of capital contribution in Vietnam, especially in the field of real estate and large investment projects. Land use rights when contributed as capital will be evaluated to determine the value of the corresponding capital contribution in the enterprise.

The Land Law 2024 has specific regulations on cases of capital contribution using land use rights. Accordingly, land users can contribute capital with land use rights to the enterprise through a capital contribution contract. When making a capital contribution, the land use rights will be transferred to the enterprise and the capital contributor will receive the corresponding shares or percentage of capital contribution.

The form of capital contribution using land use rights brings many benefits to both the capital contributor and the receiving enterprise. As for capital contributors, they can participate in the business activities of the enterprise without having to contribute capital in cash. For businesses, receiving capital contributions in the form of land use rights helps businesses obtain valuable assets to develop investment projects and increase charter capital.

Conditions for contributing capital and receiving capital contribution using land use rights

To exercise the right to contribute capital with land use rights, the prerequisites that land users must meet are the basic land conditions specified in Clause 1, Article 45 of the Land Law 2024. Specifically, they include:

• There is a Certificate of land use rights or Certificate of house ownership and residential land use rights or Certificate of land use rights, ownership of houses and other assets attached to land or Certificate of land use rights, ownership of assets attached to land, except in cases of inheritance of land use rights, conversion of agricultural land when consolidating fields, exchanging plots, donating land use rights to the State, residential community and cases specified in Clause 7, Article 124 and point a Clause 4, Article 127 of the Land Law 2024;
• The land is not in dispute or the dispute has been resolved by a competent state agency, the judgment or decision of the Court, or the decision or award of the Arbitration has taken legal effect;
• Land use rights are not distrained, other measures are applied to ensure judgment enforcement according to the provisions of the law on civil judgment enforcement;
• During the land use term;
• Land use rights are not subject to temporary emergency measures according to the provisions of law.

In addition to the conditions for capital contributors, enterprises receiving capital contributions also need to meet certain conditions such as enterprises receiving capital contributions must be approved by the Provincial People’s Committee through the appraisal process. Enterprises need to prove that capital contribution is in accordance with land use planning, construction planning and other provisions of law.

Issues to note when contributing land use rights to a business

Procedures for receiving capital contributions as land use rights require businesses to master current regulations. Below are the contents businesses need to pay attention to:

Note on determining the value of contributed capital as land use rights

The value of land use rights must be determined objectively and transparently to ensure the interests of both capital contributors and businesses. Inaccurate determination of value can lead to disputes between parties and affect business operations.

According to the provisions of Article 36 of the Law on Enterprises 2020, the valuation of contributed assets must be carried out according to the principle of agreement between the enterprise and the capital contributor or by a professional valuation organization.

Normally, businesses and capital contributors will hire an independent valuation organization to determine the value of land use rights. This organization will base on location, area, land use term, land use purpose and other factors to determine value. The valuation certificate will be the basis for the parties to agree on the value of capital contribution.

After determining the value of land use rights, the enterprise needs to carry out procedures to increase charter capital corresponding to the value of land use rights contributed as capital. This includes amending the business charter, registering changes to the business registration content with the business registration agency and other procedures according to the provisions of the Law on Enterprise 2020 and Decree No. 01/2021/ND-CP. Detailed procedures will depend on the type of business you register.

Note about taxes and fees when contributing capital or land use rights to a business

When contributing capital with land use rights to an enterprise, related parties must fulfill tax and fee obligations according to the provisions of law. Understanding these obligations helps businesses make financial plans and avoid tax risks. Taxes and fees related to capital contribution using land use rights include personal income tax, corporate income tax, registration fees and notary fees.

• According to the provisions of Clause 4, Article 3 of the Law on Personal Income Tax 2007, capital contributors may have to pay personal income tax if the value of capital contribution is higher than the initial value of land use rights.
• For businesses receiving capital contributions, they must pay registration fees when registering land changes. According to the provisions of Clause 1, Article 8, Decree 10/2022/ND-CP, the registration fee calculated according to regulations is 0.5% of the value of land use rights. In addition, businesses also have to pay fees for notarizing capital contribution contracts and land change registration fees.

An important note is that businesses need to declare and pay taxes on time to avoid being fined for administrative tax violations. Late tax payments not only lead to fines, but can also affect a business’s reputation and make it difficult to carry out other transactions in the future.

To ensure full compliance with tax and fee obligations, businesses should consult tax consultants or contact tax authorities directly for specific instructions. This is especially important in cases where the capital contribution is of large value or involves many different taxes and fees.

Procedure for transferring name from individual contributing capital to enterprise

Name transfer, also known as land change registration, is an important process, playing the role of legalizing the land use rights of the enterprise receiving capital contributions. The change registration procedure includes the following steps:

Step 1: Prepare documents

According to Article 29 of Decree 101/2024/ND-CP, land change registration documents when contributing land capital to the company include:

• Application for land change registration (according to form No. 11/DK).
• Original Certificate of Land Use Rights (Red Book or Pink Book).
• Notarized or authenticated capital contribution contract with land use rights.
• Minutes of valuation of contributed assets (if any).
• Documents proving the legal status of the organization receiving capital contribution (Business registration certificate, company charter).
• Certificate of no land dispute certified by the Commune People’s Committee.
• Document of representation (if done through a legal representative or authorization).

All documents must be submitted in full according to regulations to be received and processed by state agencies.

Step 2: Submit application

Individuals and organizations submit applications at: One-stop shop of the district People’s Committee if they are individuals or households.

Organizations and businesses submit applications at: One-stop shop or Land Registration Office under the Department of Natural Resources and Environment.

If the dossier is incomplete, the receiving agency will provide additional instructions within 3 working days.

Step 3: Check and confirm fluctuations

The receiving agency checks the validity of the dossier. If the application meets the conditions, the competent authority will update the changes in the cadastral records.

In case it is necessary to re-measure the land area, the Land Registration Office will coordinate and re-determine the actual land area.

Step 4: Appraise and approve the application

After inspection, the dossier is transferred by the competent authority to the Department of Natural Resources and Environment for approval. If the file is valid, the change content will be updated in the land management system.

Step 5: Issue a new Land Use Rights Certificate

After completing the update, the Land Registration Office will issue a new Land Use Rights Certificate recording capital contribution information.

Processing time is usually within 10 – 15 working days according to Article 21 of Decree 101/2024/ND-CP.

Complying with the provisions of the Land Law 2024 and Decree 101/2024/ND-CP not only ensures legality but also limits the risk of future disputes.

Procedures for capital contribution using land use rights to implement investment projects

According to Article 60 of Decree 102/2024/ND-CP, the process of receiving capital contributions using land use rights to implement investment projects includes four main steps.

Step 1: Prepare documents

Economic organizations wishing to receive capital contribution must send a written request for capital contribution using land use rights accompanied by an extract of the location of the land where the investor proposes to implement the project. This written request must be made according to Form No. 07 attached to Decree 102/2024/ND-CP.

Step 2: Appraisal of documents

Within no more than 03 working days from the date of receiving the written request, the Provincial People’s Committee assigns the agency with provincial land management function to preside and coordinate with relevant agencies to appraise and submit to the Provincial People’s Committee for consideration and decision.

Within 15 days from the date of receiving the direction of the Provincial People’s Committee, the agency with the function of provincial land management must submit an appraisal document to the Provincial People’s Committee. The appraisal document includes the following contents:

• Conditions for conformity with district-level land use planning or general planning or zoning planning or construction planning or rural planning that have been approved and announced;
• Meeting the conditions specified in Point c, Clause 2, Article 122 of the Land Law 2024;
• Meeting the cases specified in Clause 1, Article 127 of the Land Law 2024;
• Information in the cadastral records of the land plot or land area where the investor proposes to implement the project;
• Conclusion on eligibility for economic organizations to transfer, lease land use rights, receive capital contributions using land use rights to implement investment projects; In case of ineligibility, clearly state the reason;
• Propose approval or disapproval for investors to transfer, lease land use rights, or receive capital contributions using land use rights.

Step 3: Issue written approval

Within no more than 05 working days from the date of receiving the appraisal document submitted by the agency with land management functions, the Provincial People’s Committee shall consider and issue a written approval or disapproval for the economic organization to receive capital contribution using land use rights to implement the project and send it to the economic organization with the written request. The content of the written approval must clearly state the scale, area, location, time limit for completing the agreement and other relevant contents.

Step 4: Receive capital contribution

Based on the written approval of the Provincial People’s Committee, the economic organization shall receive capital contribution in the form of land use rights to implement the project according to regulations.

>>> See more at: Order and procedures for contributing capital with land use rights to an enterprise.

Consulting services when businesses receive capital contributions and land use rights at Long Phan Consulting Company

Long Phan Consulting Company specializes in providing in-depth consulting services in the field of land and businesses. With a team of experienced and highly specialized experts, Long Phan Consulting Company is committed to supporting businesses in resolving issues related to capital contribution with land use rights. Consulting services are performed professionally, ensuring legal compliance and protecting customers’ rights.

Our comprehensive consulting and support services include:

• Comprehensive advice on conditions and procedures for receiving capital contributions and land use rights for businesses;
• Support in checking the legality of contributed land use rights such as: checking land use rights certificates, dispute status, distraint and other conditions;
• Support businesses in preparing dossiers requesting approval for receiving capital contributions using land use rights;
• Represent customers to coordinate with competent state agencies in the appraisal process;
• Support participation in the process of negotiating and drafting capital contribution contracts, ensuring the interests of businesses and complying with legal regulations;
• Support businesses in carrying out procedures for transferring land use rights;
• Advise businesses on increasing charter capital and implementing registration procedures to change business registration content.

With many years of experience in the field of land and businesses, Long Phan Consulting Company is committed to providing customers with high-quality consulting services, helping businesses receive capital contributions with land use rights in a convenient, safe and effective way.

Frequently asked questions

Below are frequently asked questions about contributing capital with land use rights to a business.

What are the benefits of contributing capital with land use rights to businesses?

Contributing capital with land use rights helps businesses have more valuable assets to develop projects and increase charter capital without needing initial cash capital.

What types of businesses often receive capital contributions using land use rights?

Enterprises operating in the fields of real estate, construction, or large investment projects often receive capital contributions in the form of land use rights.

How is the value of land use rights determined when contributing capital?

The value of land use rights is determined through an agreement between the enterprise and the capital contributor or through appraisal by a professional organization.

Are businesses required to hire a valuation organization when receiving capital contributions using land use rights?

It is not required, but hiring an independent valuation organization is often recommended to ensure objectivity and transparency.

After contributing capital with land use rights, what procedures do businesses need to carry out related to charter capital?

Enterprises need to carry out procedures to increase charter capital corresponding to the value of contributed land use rights and register to change the business registration content.

What taxes and fees may businesses incur when receiving capital contributions using land use rights?

Enterprises may have to pay registration fees, notarization fees for capital contribution contracts and land change registration fees.

How long does it take to evaluate capital contribution documents using land use rights?

The Provincial People’s Committee has a maximum of 03 working days to assign the competent authority for appraisal and the competent authority has a maximum of 15 days to submit the appraisal results.

What content must be clearly stated in the document approving capital contribution by land use rights from the Provincial People’s Committee?

The approval document must clearly state the scale, area, location, deadline for completing the agreement and other related contents.

What documents do businesses need to prepare when requesting to contribute capital with land use rights to implement an investment project?

Enterprises need to send a written request for capital contribution with an excerpt of the land location according to Form No. 07 of Decree 102/2024/ND-CP.

Conclude

Things to note when contributing land use rights to a business is a complex issue, requiring a deep understanding of land and business law. Long Phan Consulting Company with a team of experienced experts will support customers in the entire process from assessing legality, determining value, to completing name transfer procedures. Customers can immediately contact the hotline: 1900636389 for detailed advice and to resolve all related problems.