In brief
A real estate transfer by a natural person to a company or investment fund established in the Kingdom is exempt from RETT where that person alone owns, directly or indirectly, all of its shares or units, provided their ownership percentage does not change for at least five years from the transfer.
Many Saudi business owners hold property in their own names: the warehouse their trading business uses, the land their company is building on, a portfolio of rental buildings. When they decide to hold it through a company, whether for liability protection, financing or succession, the transfer is a real estate transaction.
Article 3(a)(17) makes that move free of RETT. The condition is simple to state and easy to break: you must own 100%, alone, for five years.
The Provision: Exact Text
ZATCA’s Detailed RETT Guideline covers this exemption at section 5.1.18.
What It Means in Plain English
This exemption means that if you transfer property to a Saudi company or fund that you alone own entirely, directly or through other wholly owned companies, there is no RETT. Your 100% ownership must not change for five years. Selling shares, gifting them, or bringing in a partner during that period makes RETT due on the original transfer.
Breaking Down the Provision
“By a natural person”
Only individuals can use this exemption. A company transferring property to a wholly owned subsidiary uses Article 3(a)(18) instead.
“To a company or investment fund established in the Kingdom”
The transferee can be a company of any form, or an investment fund, as long as it is established in Saudi Arabia. A foreign holding company does not qualify as the transferee.
“This person alone owns - directly or indirectly - all”
Three points follow:
- 100%. Not 99%, and not majority control.
- Alone. No co-owners, not even a spouse or child holding one share.
- Directly or indirectly. Ownership through a chain of wholly owned companies counts (ZATCA’s Example 50).
Note that some company forms require more than one shareholder. A one-person LLC or a single-shareholder joint stock company under the Companies Law fits naturally.
“No change in that person’s ownership percentage … for … five (5) years”
The lock is on the percentage. Any change breaches it: a sale, a gift, a new shareholder subscribing for shares, or an employee share award.
ZATCA’s Position
- Example 49. Ahmed transfers property to his 100%-owned company (or 100%-owned fund), and his ownership does not change for five years. Exempt.
- Example 50. Ahmed transfers property to Company B, which is 100% owned by Company A, which is 100% owned by Ahmed. His indirect ownership does not change for five years. Exempt.
Worked Examples
Example 1: Incorporating a property portfolio
Mr. Khalid transfers three rental buildings worth SAR 30,000,000 from his personal name to a newly formed single-shareholder LLC that he owns 100%.
Exempt, saving SAR 1,500,000, provided he remains the 100% owner for five years.
Example 2: Bringing in an investor in year two
In year two, an investor subscribes for 25% of the LLC through a capital increase. Mr. Khalid has sold nothing, but his percentage has fallen from 100% to 75%.
Breach. RETT of SAR 1,500,000 on the original transfer becomes payable within 30 days of the change (Article 5(A)(2)), with a correction request to ZATCA within 30 days (Article 11(b)).
Example 3: Joint ownership with a spouse
Mr. and Mrs. Faisal own a company 60/40 and want to transfer Mr. Faisal’s land into it. He does not own the company “alone”, so Article 3(a)(17) does not apply. Article 3(a)(11), an in-kind contribution in exchange for new shares, is the alternative.
Example 4: Company sells the property
In year three, the LLC from Example 1 sells one building for SAR 12,000,000. The LLC pays RETT of SAR 600,000 on the sale as transferor. Mr. Khalid’s original exemption is not affected, because his ownership percentage has not changed.
Grey Areas
| Situation | Our view |
|---|---|
| The individual moves the shares into a new holding company that he wholly owns | His indirect percentage stays at 100%. Given ZATCA’s acceptance of indirect ownership in Example 50, we consider this unlikely to be a breach. Document it. |
| Death of the owner within five years | Not addressed. Inheritance is involuntary, and estate division is exempt in its own right, but the risk remains. |
| Pledge of the shares to a bank | Not a change in ownership percentage. Enforcement would be. |
| Sole proprietorship (muassasa) registered under the owner’s name | A sole proprietorship has no separate legal personality, so property in its name is the individual’s. Moving it into a new company is exactly the case this provision covers. |
Compliance Checklist
- Confirm you are a natural person who will own 100% of the transferee, alone, directly or through wholly owned entities.
- Confirm the transferee is established in the Kingdom.
- Register the transfer on ZATCA’s RETT portal before notarization, citing Article 3(a)(17).
- Adopt a shareholder resolution or internal policy preventing any change in the shareholding for five years.
- Diary the fifth anniversary, and keep the share registers and corporate documents.
Common Mistakes
- Including a nominal second shareholder. The owner must hold everything alone.
- Capital raising in the lock-up period. Dilution breaches the condition.
- Gifting shares to children within five years.
The Bottom Line
Article 3(a)(17) is the simplest route for an individual to move property into their own company: no audit and no restrictions on the asset. In exchange, the shareholding is frozen for five years. If there is any realistic chance of bringing in a partner or investor in that time, Article 3(a)(11) is the more flexible choice.
Key takeaways
- Article 3(a)(17) exempts a natural person's transfer of real estate to a Saudi company or fund that they alone own 100%, directly or indirectly.
- The person's ownership percentage must not change for five years from the transfer. Any dilution, sale or admission of a new shareholder breaches the condition.
- Indirect ownership counts. ZATCA's Example 50 accepts a transfer to Company B, wholly owned by Company A, which is wholly owned by the individual.
- Joint owners, such as spouses or siblings co-owning a company, do not qualify, because the person must own it 'alone'. Article 3(a)(11) may be an alternative.
- There is no audit condition and no restriction on the company dealing with the property. The lock applies to the shareholding, not to the asset.
- Converting a sole proprietorship into a company, with property titled in the owner's personal name moving into it, is a typical use.
Frequently asked questions
Do I pay RETT when transferring my property into my own company in Saudi Arabia?
Not if you alone own 100% of the company, directly or indirectly, and your ownership percentage does not change for five years. Article 3(a)(17) of the RETT Implementing Regulations exempts the transfer. The company or fund must be established in the Kingdom.
Can my wife and I use Article 3(a)(17) for our jointly owned company?
No. The exemption applies only where the transferor 'alone owns' all the shares. A company owned jointly by spouses, siblings or partners does not qualify. Consider Article 3(a)(11), the in-kind capital contribution exemption, which works with multiple shareholders but requires audited accounts.
What breaks the five-year condition?
Any change in your ownership percentage. That includes selling or gifting shares, admitting a new shareholder through a capital increase, or transferring shares to a family member. RETT then becomes due on the original transfer, payable within 30 days of the change.
Can the company sell the property within five years?
Yes. The condition concerns your ownership of the company, not the company's ownership of the property. A sale by the company is a separate taxable transaction, but it does not undo the exemption on your original transfer.
Does indirect ownership through a holding company qualify?
Yes. ZATCA's Guideline, Example 50, accepts a transfer by an individual to Company B, which is wholly owned by Company A, which is in turn wholly owned by the individual. The individual's indirect 100% ownership must remain unchanged for five years.
What if I die within the five years?
Ownership passes to your heirs, which changes the ownership. The text does not address this case. Inheritance is not a voluntary disposal, and estate division is itself exempt, but the risk of ZATCA treating it as a breach cannot be ruled out. Founders with long-term plans should take advice.
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.
