Many foreign investors buying property in the Dominican Republic often inquire about how they should hold it. They’ll ask, “Should I put the property in my personal name or a corporate entity?”
Ultimately, the decision on how to hold your DR property is in your hands, guided by your personal objectives and investment goals. Whether you seek anonymity, asset protection, or a structure for easy transfer of ownership, your choice should align with your vision. Perhaps, you envision the property being used for commercial purposes like a hotel. It’s your objectives that should steer this decision.
The DR allows you to buy and hold your property in your personal name, a Dominican entity (EIRL or SRL), or a foreign entity (corporation or LLC).
However you decide to hold your property, you’ve got to consider two things: 1) How the entity is taxed and 2) The cost of setting up the holding entity and ongoing administrative costs.
For example, if you were to hold your DR rental property in a Dominican EIRL or SRL, your net rental income would be taxed at 27%. The exact property held in a foreign corporation would be taxed at the individual rate of 10%, as foreign entities are treated as individuals.
So, you’ve got to weigh several factors to determine what makes sense for you.
In many cases, it makes sense to keep it simple rather than set up some type of holding entity. The potential costs and tax implications are just not worth it.
That said, you should consult with an attorney and tax specialist before deciding on the entity type in which to hold your property.
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Maria Abreu is the CEO and Managing Attorney of Abreu & Associates, a law firm practicing exclusively in Dominican Republic Immigration and Nationality law. She is also the founder of Retire and Invest DR. This organization hosts conference events for foreigners interested in living, retiring, and investing in the DR. You can contact Maria at: mabreu@abreuimmigration.com.