In brief
A real estate transaction arises where a person, or a group acting in agreement, disposes of a total of 30% or more of the shares of a real estate company through one or more related transactions within any three-year period starting on or after the date their holding reaches 30%. Disposals that do not meet this test are not real estate transactions.
Most share trading in real estate companies is outside RETT. Article 2(i) brings it in only when control-sized blocks change hands, at 30% or more within three years. The threshold is simple to state. The aggregation rules behind it are where advisers need to take care.
The Provision: Exact Text
What It Means in Plain English
Under the RETT 30 percent rule, if you, alone or with people acting with you, held at least 30% of a real estate company and then dispose of 30% or more within three years, the disposals are a taxable real estate transaction. Anything less is outside RETT altogether.
Breaking Down the Provision
Two thresholds
- Holding: the person or group’s holding reached 30% or more.
- Disposal: they dispose of 30% or more in total within any three-year period starting on or after the date their holding reached 30%.
ZATCA’s Guideline confirms that both conditions must be met: “the interest holder’s ownership … has reached (30%) or more, and … the transfer itself involves (30%) or more”.
Aggregation
- Related transactions (Article 1): several transfers that form part of one agreement or series, or are made by persons acting by agreement.
- Agreed disposal (Article 1): any cooperation, binding or not, formal or informal. Related persons are presumed to act together.
“Shall not be considered real estate transactions”
Below the threshold, a disposal is outside scope, not exempt. There is no RETT, and no RETT registration is needed.
ZATCA’s Position
- Example 1: a partner sells his entire 9% to an investor. Not taxable.
- Example 2: an investor sells 10% (January 2023), 15% (June 2024) and 10% (June 2025), a total of 35% within three years. Tax becomes due as of June 2025, the date the disposals reached 35%.
Worked Examples
Example 1: Single block sale
A shareholder holding 40% sells 30% to a fund. Both thresholds are met. RETT applies on 30% of the company’s real estate FMV (Article 2(e)), payable within 30 days.
Example 2: Family sell-down
A father holds 20% and his two sons 10% each. Within two years they each sell their entire holdings to one buyer, a total of 40%. As related persons, they are presumed to act in agreement. Combined holding: 40%. Combined disposal: 40%. Taxable.
Example 3: Below the threshold
An investor holds 25% and sells it all to an unrelated buyer. The holding never reached 30%. Outside RETT.
Grey Areas
| Situation | Our view |
|---|---|
| Which transaction bears the tax when the threshold is crossed in stages | ZATCA’s Example 2 dates the tax to the crossing transfer. Expect the base to cover all the related disposals. |
| Holding falls below 30% and later rises again | A new three-year window starts from each date the holding reaches 30%. |
| Shares issued in a capital increase | Not a disposal by existing shareholders. See Article 2(j). |
Compliance Checklist
- Confirm the company is a real estate company (Article 2(h)).
- Map the seller’s holding, and that of any persons acting in agreement, over time.
- Track cumulative disposals in rolling three-year windows.
- When the threshold is crossed, value the transaction under Article 2(e), and register and pay within 30 days (Articles 5(A)(1) and 11(a)(7)).
Common Mistakes
- Treating each sale separately instead of aggregating.
- Ignoring the related-person presumption.
- Overlooking the holding condition and assuming any 30% transfer is taxable.
The Bottom Line
Article 2(i) keeps minority trading outside RETT and taxes transfers of control. The thresholds sound simple, but aggregation across time and across related persons makes careful tracking essential.
Key takeaways
- Share disposals in a real estate company are taxable only if they reach the 30% threshold.
- Two elements: the seller's holding (alone or with those acting in agreement) reached 30%, and they disposed of 30% or more within a three-year period from then.
- Disposals are aggregated across related transactions and across persons acting in agreement. Related persons are presumed to act together.
- ZATCA Example 2: 10% + 15% + 10% sold within three years totals 35%, and tax becomes due on the date of the transfer that crosses the threshold.
- Disposals that never reach 30% are outside RETT, not merely exempt, so they need no registration.
- Once taxable, the base follows Article 2(e) and payment is due within 30 days (Article 5(A)(1)).
Frequently asked questions
When is selling shares in a real estate company subject to RETT?
When a person or group acting in agreement, whose holding has reached 30% or more, disposes of 30% or more of the company's shares through one or more related transactions within any three-year period (Article 2(i) of the RETT Implementing Regulations). Below that, the transfer is outside RETT.
Do several small share sales count together?
Yes, if they are related transactions within three years. ZATCA's Guideline, Example 2, aggregates sales of 10%, 15% and 10% over three years to 35%. Tax becomes due on the date of the last transfer, which takes the total to 35%.
If I own 25% and sell all of it, is RETT due?
Generally no. The test requires the seller's holding to have reached 30% or more. ZATCA's Guideline states that both conditions must be met: ownership of 30% or more, and a disposal of 30% or more. If you act in agreement with others whose combined holding and disposals reach 30%, the answer can change.
Do family members' share sales count together?
Related persons are presumed to act in agreement unless proven otherwise (Article 1, 'Agreed Disposal'). Disposals by family members who are related persons are therefore aggregated towards the 30% threshold by default.
Sources
Based on the RETT Law (Royal Decree No. M/84, effective 10 April 2025), the RETT Implementing Regulations (ZATCA Board Resolution No. 01-03-25 dated 24 March 2025, unofficial English translation) and ZATCA's Detailed RETT Guideline Version 6 (May 2026). The Arabic text prevails. This article is general information, not advice on any specific transaction. dariba.co is an independent knowledge platform and is not affiliated with ZATCA.
