Imposition of Transfer Fee on All Movable and Immovable Rights and Assets

A transfer fee shall be imposed on all rights and movable and immovable property that devolve to third parties, excluding the State and municipalities, by way of inheritance, bequest, gift or waqf, or by any other means without consideration equivalent to their true value. Estates arising from events that occurred prior to 13/10/1994 shall be exempt from transfer fees, and the competent judicial authorities shall be permitted to issue estate adjudication orders and execute bequests for interested parties without the production of a clearance certificate from the competent departments of the Ministry of Finance in respect of events that occurred before 13/10/1994.(1)

The fee accrues on the date of death or the judgment declaring the absence of a missing person, or upon the coming into force of a gift or waqf, or upon the termination of a waqf. The limitation period shall not begin to run until the date on which the competent financial departments receive the final judgments relating to the devolution of the estate or to the execution of the bequest, gift, or waqf, or the termination of the waqf.(1)

The fee shall apply to: a) All movable and immovable property situated in Lebanon that is transferred from a Lebanese or foreign national, regardless of his place of residence.(2) b) All movable and immovable property situated abroad that is transferred from a Lebanese national resident in Lebanon.(3) c) All movable and immovable property situated abroad that is transferred from a foreign national resident in Lebanon. The risk of double taxation on the property referred to in paragraph (c) of this Article shall be addressed by international agreements.

Movable and immovable property that the deceased donates or disposes of during the two years preceding his death, whether directly or through an intermediary, to a person who has become an heir by a cause that existed at the time of the gift or disposal, shall be deemed, for the purposes of computing the fee, as having devolved together with the other elements of the estate on the day of death, provided that registration or transfer fees already paid in respect of such property shall be deducted from the fee due on the estate. Where the disposal was made for consideration provided by the interested party from his own funds, he shall have the right to contest the matter before the courts and to prove the payment of such consideration, in which case the amounts collected without right shall be returned to him.

Financial instruments found in the possession of one of the heirs that were, up to one year before the death of the deceased, deposited in his name at a bank, company or other institution, or whose income the deceased had collected or which had been collected on his behalf or for his benefit, shall be considered, for the purposes of collecting the fee, as part of the estate, unless the person possessing such instruments proves that they were legally transferred to him for consideration equivalent to their true value.

All sums and financial instruments deposited at a bank, institution, or with individuals in a joint account or in the name of a group of joint and several debtors shall, for the purposes of collecting the fee, be deemed to be owned equally by the depositors and shall be included in the estate of each of them accordingly, unless the contrary is proved.

All sums, financial instruments, and other items deposited in a safe rented in the name of several persons shall, for the purposes of collecting the fee, be deemed to be owned equally by the depositors, unless the contrary is proved. Sealed bags and locked boxes deposited with a bank, money-changer, or any other person who customarily holds such items shall likewise be deemed to be owned equally by the depositors, unless the contrary is proved.

The mukhtar (local official) shall notify the financial departments of the death of a person in his area within no more than 30 days from the date of death. The notice shall clearly set out the available information on the nature and place of business and activities of the deceased and the names and addresses of the heirs. The mukhtar shall be compensated at the rate of twenty-five Lebanese pounds per notice and shall be penalised for each violation of this Article by a fine of up to two hundred Lebanese pounds.(1) Where there is more than one mukhtar for the same area, the fine shall be imposed on the mukhtar who issued the death certificate to the personal status departments. A new period of six months shall be opened for the mukhtars concerned by this Article to notify the financial departments of deaths that occurred and were not declared up to the date of entry into force of this Law. Mukhtars shall in such cases be entitled to the above compensation. The Minister of Finance may extend this period to no later than 31/12/1986 by a decision taken on his initiative upon the proposal of the Director-General of Finance. Interested parties mentioned above shall also submit all documents and proof relating to their declaration within a maximum of six months from the date of the event giving rise to the fee (death, bequest, gift, waqf, termination of waqf). The competent department shall complete the estate file and issue the relevant assessment order within a maximum of three months from the date of submission of the declaration documents and proof. Where the declaration or supporting documents are not submitted, the competent department shall proceed with direct assessment, completing the estate file and issuing the assessment order for the tax and applicable penalties within six months from the expiry of the deadline for submitting documents. This penalty shall not apply where heirs submit their declaration within the statutory period.

Heirs, donees, waqf beneficiaries, executors of wills and waqfs, or their legal representatives(2) shall submit to the competent financial departments within 90 (ninety) days from the death, gift, execution of the bequest or waqf, or judgment declaring the absence of a missing person, a declaration containing the name of the deceased, donor, waqf founder, or testator, the names of the heirs, donees, legatees, waqf beneficiaries, and executors of the will or waqf, the place of residence of each, and an itemised description of all transferred property of any kind, together with its location and its accurate declared value. Interested parties shall attach to the declaration the supporting documents (death certificate, family registration records for the deceased and the heirs, title deeds or land certificates, the will or gift deed). Interested parties shall also submit all documents and proof relating to their declaration within a maximum of six months from the date of the event giving rise to the fee (death, bequest, gift, waqf, termination of waqf). The documents of proof required for each type of event giving rise to the fee shall be determined by decisions of the Minister of Finance. The competent department shall complete the estate file and issue the assessment order within a maximum of three months from the date of submission of the declaration documents and proof. Where no declaration or documents are submitted, the competent department shall proceed with direct assessment as at the date of death, completing the estate file and issuing the assessment order for the tax and applicable penalties within six months from the expiry of the deadline for submitting documents.(1)

The deadline for submitting the declaration or the remaining documents and proof shall not run against heirs, donees, legatees, and waqf beneficiaries(2) in respect of any estate, gift, bequest, or waqf that is the subject of pending litigation, except as from the date on which the final judgment in the dispute becomes enforceable.

Each right-holder shall submit the declaration individually. However, a single declaration by one of the right-holders shall suffice without imposing a penalty on the others, where the transfer of property and rights to them arose from a single event (death of the deceased, testator, or founder) or from the execution of a single document (the will or gift deed).

The competent financial departments may extend the declaration deadline by up to one year in respect of obligated persons who were outside Lebanon at the date of the death, bequest, gift, or waqf, or where the events giving rise to the transfer of property to them occurred outside Lebanese territory. Where interested parties, after having submitted the declaration, become aware by any means of new information requiring an amendment to the declaration, they must submit a supplementary declaration within thirty days of becoming aware of such information. The limitation period shall not run on the administration's right to claim from persons liable for the fee in respect of property and rights not declared by each person obligated to declare.(1)

Every person who is indebted to an estate in money, instruments, shares, or any other rights, and every person who holds or has possession of any such item, must declare this to the competent financial departments within two months of becoming aware of or being notified of the death of the estate owner. Such debtors may not deliver to the interested parties anything in their charge or possession except after producing a certificate from the competent financial department attesting to the payment of the fee or its non-liability. However, the debtors referred to may deposit what is in their charge or possession in the Treasury chest or at a bank designated by the competent financial department or the interested parties with the approval of that department; such deposit shall discharge their liability without prejudice to any rights they or the interested parties may have. The provisions of this Article shall not apply to banks subject to the Law of 3/9/1956 on banking secrecy.(2)

If one of the persons referred to in the preceding Article delivers something in his possession in violation of the provisions of that Article, he shall be held liable to the Treasury for the fee due on what he has relinquished, in addition to a penalty equal to the value of that fee. If the estate is not subject to the transfer fee, a penalty of three hundred thousand Lebanese pounds shall be imposed on the violator.(3)

Notwithstanding the provisions of the preceding two Articles and Article 51 below, the financial departments may, where there is a delay in assessing and collecting the fee, authorise interested parties to dispose of a portion of the estate, subject to a guarantee equivalent to twice the maximum fee relating to the portion not covered by the authorisation. This reserved amount shall be set off when the fee is imposed on all elements of the estate on a final basis.(1)

Persons who lease safe-deposit boxes or strongboxes and have a box leased wholly or partly to a deceased person shall notify the competent financial departments of the matter within one week of becoming aware of the death. As from the date of death, such boxes may be opened without the presence of a representative from the said departments. Violators shall be fined between two hundred thousand and five hundred thousand Lebanese pounds and shall be held jointly and severally liable with the persons liable for fees due on the property deposited in those boxes or strongboxes.(2)(3)

Every creditor of the estate, or person holding a registered or unregistered right thereon, shall submit to the competent financial departments within three months of becoming aware of the death a statement setting out the original and current amount of the debt, its nature, source, and conditions, together with any documents, instruments, or overt or concealed mortgages he holds. If the creditor fails to submit the statement within the specified period, a penalty equal to the value of the fee that would have been payable by the heirs had such debt been deducted from the estate base shall be imposed on him. If the estate is not subject to the transfer fee, a penalty of three hundred thousand Lebanese pounds shall be imposed on the non-compliant creditor.(4)(5)

Estate inventories may only be conducted in the presence of a representative from the competent financial departments, and the relevant authorities shall invite him for that purpose. The competent financial departments may proceed to re-inventory any estate and impose on the non-compliant inventory taker a penalty equal to twenty percent of the total fee that may arise from the difference between the two inventories.(1) This penalty shall range between twenty thousand and one hundred thousand Lebanese pounds where the estate is not subject to the transfer fee.(6)

The competent financial departments may, when necessary, take precautionary measures(2) to safeguard the rights of the Treasury, including attachment, affixing of seals, and appointment of a court-appointed administrator.

Where there is a dispute as to heirship and a court-appointed administrator is in place, the highest fee shall be imposed in the name of the heirs and collected from the court-appointed administrator, with the final fee to be settled upon resolution of the dispute, regardless of the statute of limitations. The same provisions shall apply where no court-appointed administrator is in place, in which case the fee shall be collected from the heirs who shall be deemed jointly and severally liable therefor.

Where interested parties fail to submit declarations with their attachments, or fail to submit the remaining documents within the time limits specified in Article 21 of this Legislative Decree, or are late in submitting them, they shall be subject to a penalty for each of the two violations equal to five percent per month of delay or fraction thereof of the value of the fee payable on the undeclared property, rights, or values, provided that the penalty for each of the two violations shall not exceed the value of the fee on which it is based, and shall not in any case fall below one hundred and twenty thousand Lebanese pounds per violation per event, including events occurring prior to the entry into force of this Law for which the fee has not been settled.

Any person who wilfully conceals part of the property subject to the fee or who makes false declarations regarding debts or rights relating to the estate, gift, bequest, or waqf shall be penalised by a fine of between one million and five million Lebanese pounds.(3) Where the violator is among the taxpayers subject to the fee, the fee shall be imposed on him at double the rate on the concealed property, in addition to the fixed penalty referred to in the first paragraph, without the right to invoke the statute of limitations.

Petitions, statements, and documents submitted to the competent financial departments for the purpose of imposing the fee shall be exempt from stamp duties. The competent financial departments may accept copies of documents produced to them after verifying their conformity with the originals produced and returned to the interested parties, provided they are endorsed with a note indicating that they are specific to the transfer fee and may not be used for any other purpose.

The values of the transferred property and rights shall be assessed by reference to prevailing prices at the following dates: – 31/12/2006 for events that occurred up to that date. – The date of entry into force of this Article for events occurring from 1/1/2007 up to the date of its entry into force. – The date on which the event occurs, for events occurring from the date of entry into force of this Article onward.

Where the declaration is in doubt, the competent financial departments may adjust it in accordance with the following bases:

1. 1)The value of immovable property shall be assessed taking into account all factors affecting the true value of the real estate, such as the price of land relative to its location, the cost of construction, the annual rent, etc.
2. 2)The usufruct shall be valued as a proportion of the full value of the property based on the age of the right-holder according to the following table:

Age | Usufruct proportion Up to 30 years | 6/10 30 to 40 years | 5/10 40 to 50 years | 4/10 50 to 60 years | 3/10 60 to 70 years | 2/10 70 and above | 1/10

The same principle applies to usufruct in movable property. Where the duration of the usufruct is fixed, the assessment shall be based on one-tenth of the value of the property per ten-year period, without regard to any period beyond that duration. No fee shall be due where the right of leasehold merges with the reversion of the property, whether as a result of the lessee's death or the expiry of the fixed term.

3. Life income consisting of an annual or monthly annuity shall be valued based on the age of the right-holder according to the following table:

Age | Multiple of annual annuity Up to 20 years | 15× 20 to 30 years | 12× 30 to 40 years | 10× 40 to 50 years | 8× 50 to 60 years | 6× 60 to 70 years | 4× 70 and above | 3×

1. 1)The waqf entitlement shall be valued as a usufruct. Where the waqf deed provides for a fixed annual or monthly amount, the waqf entitlement shall be valued in accordance with the table in the preceding paragraph.
2. 2)Financial instruments shall be valued and foreign currencies converted to Lebanese pounds at the average exchange rate for the month preceding the death or gift.
3. 3)In all other cases, the competent department shall carry out the assessment after reviewing the documents and statements submitted by the interested parties, and may where necessary conduct additional investigations and appoint experts.

The provisions of this Article shall apply to cases subject to the fee that have not yet been referred to the special valuation committees.(1)

The head of the competent financial department shall amend declarations based on the observations of inspectors and may refer the matter with his reasoned opinion to the head of the Revenue Department, who shall issue a binding decision thereon. The responsible inspector shall notify the obligated taxpayers or their representatives of the amount of the amendment and its reasons, together with the tax assessment, by registered letter with acknowledgement of receipt.

Each of the obligated interested parties may object to the assessment issued if he considers it erroneous or excessive. Objections shall be accepted within two months from the date on which interested parties receive the notification referred to in Article 37 above. An objection filed by some of the interested parties shall benefit the remaining co-owners. If the financial departments consider that the objection filed within the statutory period is well-founded, they shall correct the assessment by way of monthly reduction orders. If the department does not agree with the objector's view, it shall notify the taxpayer accordingly by registered letter and refer the objection together with its observations to the committee referred to in the following Article.

A primary committee(2) to review and adjudicate objections shall be established in each governorate by decree, composed of: – A judge (appointed upon the proposal of the Minister of Justice), as chairperson – An official of the third category at the Revenue Department of the Ministry of Finance(1), as member – One of the taxpayers in the governorate (selected by the Minister of Finance upon the proposal of the Director-General of Finance), as member – The head of the competent financial department or his representative, as rapporteur An inspector from the competent financial department shall be attached to each committee as secretary.

The rapporteur shall notify the committee's decision to the competent financial department and to the taxpayer within 15 days from the date of its issuance. Either party may appeal this decision before the Council of State within twenty days of notification. Appeal briefs shall be submitted directly to the Council of State. The admissibility of an appeal filed by the taxpayer is conditional upon the deposit of a security equal to ten percent of the fees imposed; if the appeal brief is not accompanied by a receipt proving payment of the said security, it shall be dismissed on formal grounds. This security together with the court fees shall be paid into the fund held at the Council of State within the appeal period. If the Council of State's decision is in favour of the taxpayer, he shall be entitled to recover the security referred to in the preceding paragraph; if it is in favour of the Treasury, the security shall be deemed a right vested therein.

The transfer fee shall be imposed on the net inherited share from estates and on the net bequeathed share to an heir in accordance with the rates set out in the table annexed to this Legislative Decree, after applying the deductions specified in Article 9 above.

The transfer fee shall be imposed on gifts, waqfs, and bequests made in favour of a non-heir, and on other gratuitous transfers, in accordance with the rates set out in the table annexed to this Legislative Decree, after applying the deductions specified in Articles 16, 18, and 19 above.

In addition to the transfer fees set out in the table annexed to this Legislative Decree, a fixed transfer fee of five per mille shall be imposed on all rights and movable and immovable property devolving to third parties, excluding the State and municipalities, by way of inheritance, bequest, gift or waqf, or by any other means without consideration equivalent to their true value. This fixed additional fee shall be payable on the net portion of the aggregate value of the transferred rights, property, and values exceeding forty million Lebanese pounds,(1) and shall be deemed a debt and obligation on all such elements. At the request of the interested parties, this fee may be distributed in proportion to the shares of the heirs without treating it as an estate liability, without prejudice to the provisions of the preceding paragraph of this Article.

The fee shall be payable on property devolving to charitable institutions and to sports, cultural, artistic, or charitable associations by way of gift, waqf, or bequest or the equivalent, after the deduction specified in Article 16 above, at the rate prescribed for the third category in the table annexed to this Legislative Decree.

Where the property of a deceased person devolves to a single person by inheritance, gift, bequest, and waqf simultaneously, the rate of the fee shall be determined on the basis of the total amount that has devolved to that person.

Payment of the fee in a single lump sum shall be required, in accordance with the provisions on collection of direct taxes and equivalent fees, where the taxpayer's share includes cash and marketable financial instruments whose value exceeds the transfer fee payable by him. Where the taxpayer's share does not include cash or marketable financial instruments of that value, the General Directorate of Finance may, upon the request of the interested parties within two months of their receiving notification of the fee, proceed to pay the transfer fees imposed in five equal annual instalments, the first of which shall be due three months after the date of receipt of the assessment order, with the instalment notation entered on the land register.(2)(3) No interest shall be due on the first two years of the instalment period; interest at the five-year Treasury bond rate shall accrue on the remaining years. All instalments shall become due in full upon failure to pay any instalment on its due date. In the event of disposal of any of the transferred assets, the proceeds shall be applied to satisfy outstanding fees, unless Treasury assets are secured by a guarantee equal to at least twice their value. The statute of limitations provisions shall not apply during the instalment period. In the event of default in paying instalments on their due dates, all instalments shall become due in full and an annual interest rate of 12% shall accrue thereon. For the purpose of calculating interest, a fraction of a month shall be treated as a full month.

The waqf administrator shall pay the fees due by the beneficiaries from their share of income within two months of the date of the notification referred to in the preceding Article, such income being prior to any attachment in favour of the Treasury whatever its value. However, the instalment paid by the waqf administrator in discharge of the fees may not exceed one quarter of the beneficiaries' share of income if they belong to the first or second category specified in the table annexed to this Law, or one half of the share if they belong to any other category.

The Treasury shall have a privilege over the transferred property of each taxpayer equal to the fees imposed on him. In respect of real property, this privilege shall be exempt from registration in the land register and shall rank after the three privileges specified in Article 118 of Decision No. 3339 of 12 November 1930.

The financial departments shall be responsible for imposing the penalties specified in this Legislative Decree. These penalties and the fees imposed pursuant to this Legislative Decree shall be collected in accordance with the Law on Collection of Direct Taxes.

The competent judicial authorities shall be prohibited from issuing estate adjudication orders before the interested parties obtain a special authorisation from the competent financial departments. The said departments may exercise the rights of the heirs and directly request from the competent authorities the issuance of estate adjudication orders for any estate free of charge. The competent judicial authorities, both religious and civil, shall also be required to deposit with the Ministry of Finance (Revenue Department) monthly nominal registers of all estate adjudication transactions they issue.

Notaries public, officials of property registration departments, and all other officials are prohibited, under pain of disciplinary sanctions, from drawing up, registering, certifying, or recording contracts, declarations, rights, and other transactions relating to an estate or to rights that have devolved to their owners by way of inheritance, bequest, gift, waqf, or any other means without consideration, unless the interested parties obtain a special authorisation from the financial departments. Such authorisation shall only be granted after payment of the fees or the provision of a security equal to twice the maximum amount thereof in accordance with the provisions of this Legislative Decree.

Any person whose function, authority, or competence requires him to intervene in the imposition, collection, or review of objections relating to the fees established by this Legislative Decree shall be bound by professional secrecy in accordance with the provisions of Article 579 of the Penal Code and shall be subject to its penalties for any violation.

The modalities for the implementation of this Legislative Decree shall be determined by decree.

The previous transfer fees specified in Legislative Decree No. 20 of 18 December 1939 shall not be collected on immovable property subject to the transfer fee provided for in this Legislative Decree. No registration fee shall be collected on vehicles transferred by inheritance upon their registration in the names of the heirs.

Estates, bequests, gifts, and waqfs in respect of which transfer fees were not settled in accordance with the laws previously in force up to 26 December 1951, the date of application of the provisions of the Law of 21 December 1951, shall remain subject to the outstanding decisions. The Minister of Finance may settle the outstanding penalties provided that the settlement covers no more than half of such penalties.(1)