Guides · 8 min · Updated 27 Sep 2026

RETT on share transfers in Saudi real estate companies: the 50% and 30% tests

When selling shares in a Saudi company triggers the 5% Real Estate Transaction Tax: the real estate company definition, the 30%-in-three-years threshold, how the tax base is calculated, capital increases, and the group, in-kind and M&A exemptions.

The short answer

Selling shares can be a property transfer for RETT purposes. If a company, fund or other entity is a real estate company, and a person or persons acting in concert transfer 30% or more of its interests, in one deal or in linked deals within three years, 5% RETT is due as if the property itself had been sold.

Both tests were tightened in 2025, and the tax base for share deals has its own rule. Getting either wrong usually shows up in due diligence on the next transaction, when the unpaid tax, the 2% monthly fine and the buyer's questions all arrive together.

Test one: is it a real estate company?

An entity is a real estate company if it owns real estate in the Kingdom, directly or indirectly, for the purpose of generating revenue from it by sale or lease, and the fair market value of that real estate is at least 50% of the fair market value of all its assets. The test is met if it is passed on the date of the transfer or at any time in the 365 days before it.

It applies to companies under the Companies Law, sole establishments, investment funds under Capital Market Authority rules and other entities in the Kingdom, whatever their stated purpose.

Fair market value, not book value. A company carrying land at 1990s cost can fail the test on a valuation even when its balance sheet says otherwise.
Only real estate held to earn revenue through sale or lease counts. A hospital, school or factory that owns its own premises is outside the definition, which is a real narrowing from the pre-2025 rules.
The 365-day look-back stops a company selling property just before a share deal to fall under 50%.
Indirect holdings count: a holding company whose subsidiaries own the real estate can meet the test.

Test two: does the transfer reach 30%?

A transfer of interests in a real estate company is taxable when a person, or a group of persons acting in concert, transfers 30% or more of its interests through one transaction or a series of related transactions within three years. Below that, the transfer is outside the scope of RETT altogether.

ZATCA's guideline gives the example of an investor who transfers 10% in January 2023, 15% in June 2024 and 10% in June 2025. The total reaches 35% within three years, so tax falls due on the date of the June 2025 transfer, the point at which 30% was crossed. A single 9% sale, on its own, is not taxable.

Shares listed on the Saudi Exchange are exempt, and so are units in an unlisted investment fund where the transfer is below 50% of the fund's units.

The tax base for a share deal

RETT on a share transfer is 5% of the higher of two amounts: the fair market value of all the real estate the company owns, directly or indirectly, multiplied by the percentage transferred; or the price agreed between the parties and allocated to the real estate.

Take a company whose real estate is worth SAR 80 million out of total assets of SAR 120 million, which puts it at 66.7%, above the 50% test. A 40% stake is sold for SAR 30 million, of which SAR 28 million is allocated to the real estate. 40% of SAR 80 million is SAR 32 million, which is higher than SAR 28 million, so the tax is 5% of SAR 32 million: SAR 1.6 million.

The tax is due on the earlier of the transfer and the signing of an unconditional agreement to transfer, and must be paid within 30 days. The seller of the shares is liable.

Capital increases

Issuing new shares is not a transfer if the existing partners keep their percentages, or if a new investor subscribes while the existing partners keep the interests they held before the increase, without transferring them, for five years from the date of the increase.

If the percentages shift, or an existing partner sells within five years of letting a new investor in, the capital increase becomes taxable. Structure the shareholder agreement so that lock-ups match the five-year window.

Group restructuring without RETT

An individual moving property into a company or fund they own 100%, directly or indirectly: exempt if that ownership is unchanged for five years.
Company to company, or company to fund, where one owns 100% of the other or both are 100% owned by the same person: exempt if the receiving entity stays 100% owned by that person for five years. Groups owned by several shareholders together, rather than by one person, do not fit this wording.
In-kind contribution of property to the capital of a company in the Kingdom, including one with other shareholders: exempt if the contributor keeps the shares for five years and the company is externally audited throughout.
In-kind contribution to a real estate investment fund: exempt if the units are held for five years or until the fund ends.

Mergers and acquisitions

Transfers resulting from a merger between legal persons are exempt when four conditions hold: the consideration is only interests in the surviving or new entity, with no cash or other assets; each owner receives interests in proportion to what they held before; the same owners keep those interests, directly or indirectly, for five years; and any cash or assets paid to a shareholder who objects to the merger and exits are taxed separately.

An acquisition of all the interests of a real estate company is exempt when both sides are legal persons, the consideration is only interests in the acquirer, the sellers keep those interests for five years, and the acquisition is completed in a single transaction. A deal done in tranches, for example 70% and then the remainder, fails that last condition.

What to do before signing

Value the target's real estate and total assets at fair market value on the expected transfer date, and check the previous 365 days.
Map every transfer of interests over the last three years, including those by parties acting in concert with the seller.
Check the history of any property the target received under an exemption: a share sale can break a five-year condition that sits on an earlier transfer.
Allocate the price between real estate and other assets in the agreement, knowing ZATCA will compare the real estate element with market value.
Put the RETT liability, the payment mechanics and the warranties in the share purchase agreement, since the seller is liable but the buyer carries the company's history.

Questions people actually ask

Is selling shares in a Saudi company subject to RETT?

Only if the company is a real estate company (real estate held for sale or lease worth at least 50% of total assets at fair market value, on the transfer date or at any time in the prior 365 days) and 30% or more of its interests are transferred within three years. Listed shares are exempt.

How is RETT calculated on a share transfer?

5% of the higher of (a) the fair market value of all the company's real estate multiplied by the percentage transferred and (b) the agreed price allocated to the real estate. The share-transfer checker runs both tests and the base.

Does a company that owns its own offices count as a real estate company?

Not on that basis alone. Since 2025 only real estate held to generate revenue through sale or lease counts toward the 50% test, so owner-occupied premises of an operating business do not.

When is RETT on a share deal due?

On the earlier of the actual transfer and the signing of an unconditional agreement to transfer, payable within 30 days. Late payment costs 2% a month, capped at 50%.

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Disclaimer

General information for Gulf businesses, not tax advice. Regulations move: verify against the official FTA/ZATCA text or your advisor before acting.

See Hysaab Practice for tax and advisory firms All guides