In brief
A real estate transaction made to implement a documented legal will, in accordance with the rules in force in the Kingdom, is exempt from RETT. The will must be formally documented and valid under Saudi law, including the limits on bequests. Selling property to raise cash for a bequest is a normal taxable sale.
A will (wasiyya) lets a person direct part of their estate to people or causes outside the fixed inheritance shares: a loyal employee, a grandchild who is not an heir, a mosque or an endowment. When the bequest is real estate, Article 3(a)(8) ensures RETT does not reduce it.
The exemption is short, but it contains two conditions: the will must be documented and it must be legal. Both matter in practice.
The Provision: Exact Text
ZATCA’s Detailed RETT Guideline covers this exemption at section 5.1.8.
What It Means in Plain English
The will RETT exemption means that when real estate passes to a beneficiary to carry out a will, no RETT is due. The will must be formally documented and valid under Saudi law. If the executor sells property to fund a bequest, the sale is taxable.
Breaking Down the Provision
“In implementation of”
The exempt transaction is the transfer that carries out the will: the bequeathed property passing from the estate to the named beneficiary. Transactions the executor undertakes for other reasons, such as selling property to pay debts or to fund cash bequests, are not “in implementation of” the will in this sense. They are ordinary sales.
“Documented”
ZATCA’s Guideline frames the exemption around a notarized will. In practice, the safest evidence is a will documented through the notary or the courts. Where a will exists only as a private or witnessed document, its validity may first need to be confirmed by the competent court before ZATCA will accept it.
“Legal … in accordance with the regulations in force in the Kingdom”
The will must be valid under the Sharia-based rules applied in the Kingdom. Two limits are familiar to practitioners:
- bequests are generally limited to one third of the estate, with any excess depending on the heirs’ consent; and
- a bequest to an heir generally requires the consent of the other heirs.
A bequest that exceeds those limits, without the necessary consent, is not a “legal will” to that extent. The excess falls back into the estate and is divided under the inheritance rules, where Article 3(a)(1) applies.
ZATCA’s Position
The Guideline’s Example 30 is brief. A person directs in his will that a plot of land go to one of his relatives after his death, and the will is notarized. The transfer is exempt, because the will is notarized and consistent with the rules in the Law and the Regulations.
Worked Examples
Example 1: Bequest to a grandson
Mr. Hamad’s notarized will leaves a plot worth SAR 1,500,000 to his grandson, who is not an heir because his father is still alive. The estate is worth SAR 9,000,000, so the bequest is within the one-third limit.
The transfer to the grandson is exempt, saving SAR 75,000 in RETT. The executor registers it on ZATCA’s portal before notarization.
Example 2: Bequest to an endowment
The will also leaves a building worth SAR 2,000,000 to a registered charitable endowment. The transfer is exempt under Article 3(a)(8), and Article 3(a)(2) also applies because it is a gratuitous transfer to a registered endowment.
Example 3: Executor sells to fund a cash bequest
The will leaves SAR 1,000,000 in cash to a former employee. The estate does not have enough cash, so the executor sells an apartment for SAR 1,200,000.
The sale is taxable. RETT of SAR 60,000 is payable by the estate as transferor. The will is the reason for the sale, but the transaction is still a sale to a third party.
Example 4: Bequest beyond one third
A testator leaves property worth SAR 5,000,000, out of a SAR 9,000,000 estate, to a friend. One third of the estate is SAR 3,000,000. The heirs do not consent to the excess.
- SAR 3,000,000 worth of the bequest is within the legal limit. In our view, the transfer of that interest is exempt under Article 3(a)(8).
- The SAR 2,000,000 excess is not a legal bequest, so it reverts to the estate. If the heirs later sell their interest in the property to the friend to complete the transfer, that sale is taxable (SAR 100,000).
Grey Areas
| Situation | Our view |
|---|---|
| Unnotarized but witnessed will, later confirmed by a court | Once judicially confirmed, it should qualify as documented. Keep the court decision. |
| Heirs agree to carry out a defective will voluntarily | The heirs are effectively giving their shares away. Look to the gift exemption, Article 3(a)(7), for qualifying relatives. Otherwise it is taxable. |
| Bequest of a long-term usufruct right | Implementation of the bequest should be covered on the same basis as a bequest of title. |
| Bequest of shares in a real estate company | The share transfer can be a real estate transaction. In our view it is covered by Article 3(a)(8) if the will is valid. |
Compliance Checklist
- Obtain the documented will and, where needed, a court confirmation of its validity.
- Check the bequest against the one-third limit and any heirs’ consent requirement.
- Separate exempt transfers (property to beneficiaries) from taxable ones (sales to raise cash).
- Register each transfer on ZATCA’s RETT portal before notarization, citing Article 3(a)(8).
- Keep the will, the inheritance deed, any heirs’ consents and valuations for at least five years.
Common Mistakes
- Treating every sale by the executor as exempt. Sales are taxable.
- Relying on an undocumented will. Without proper documentation, the exemption is at risk.
- Ignoring the legal limits. Bequests beyond one third, or to heirs without consent, need the heirs’ agreement. Without it, the excess is not exempt under this provision.
The Bottom Line
Article 3(a)(8) allows a valid, documented will to pass real estate to its beneficiaries free of RETT. Advisers should check two things: that the will is properly documented and within the Sharia limits, and that the executor transfers property rather than selling it. If both hold, the bequest is fully protected.
Key takeaways
- Article 3(a)(8) exempts real estate transfers made to implement a documented, legally valid will.
- ZATCA's Guideline treats documentation as the key condition: a bequest of land under a notarized will is exempt.
- The will must be valid under the rules in force in the Kingdom. Bequests beyond the permitted share, or to heirs without the other heirs' consent, may fall outside the exemption.
- Transfers that divide the remaining estate among heirs fall under Article 3(a)(1) instead. The two exemptions sit side by side.
- If the executor sells property to raise cash for a bequest, the sale is taxable. Transferring the property itself to the beneficiary is exempt.
- The executor or administrator registers the transfer on ZATCA's RETT portal before notarization, as the transferor's representative.
Frequently asked questions
Is property inherited under a will subject to RETT in Saudi Arabia?
No, if the transfer implements a documented will that is legally valid under the rules in force in the Kingdom. Article 3(a)(8) of the RETT Implementing Regulations exempts it. ZATCA's Guideline gives the example of land bequeathed to a relative under a notarized will, which is exempt.
Does the will have to be notarized for the RETT exemption?
The Regulations require a 'documented legal will', and ZATCA's Guideline frames the exemption around the will being notarized. A handwritten or witnessed will that has not been formally documented carries real risk. If that is your situation, have the will's validity confirmed through the competent court before relying on the exemption.
What if the will leaves property to a charity or endowment?
The transfer to implement the bequest is exempt under Article 3(a)(8). Where the beneficiary is a registered endowment or a licensed charitable association, Articles 3(a)(2) and 3(a)(3) may also apply. Use whichever is easiest to evidence.
Is RETT due if the executor sells a property to pay a cash bequest?
Yes. The sale to a third party is a taxable real estate transaction at 5%, regardless of why it is made. The exemption covers transferring the bequeathed property itself to the beneficiary, not converting it to cash.
Who registers the transfer with ZATCA?
The transferor or their representative. For a will, this is normally the executor (wasi) or estate administrator. The Regulations' definition of 'Representative' covers any person entitled under Sharia or law to represent the transferor, including trustees, guardians and administrators.
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.
