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How to invest in Land in Cambodia for foreigners, the ultimate guide

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It’s no secret that foreigners can own high rise properties via strata title in Cambodia.

But what is not widely known is that foreigners have additional options to legally own land in the Kingdom.

Here is a guide from Realestate.com.kh to show you the different options regarding how to invest in Land in Cambodia, for foreign investors:

How to invest Land in Cambodia by Forming a company with a Cambodian Citizen

  • What do you need to set up an Limited Liability Company?

How to Invest in Land in Cambodia through a Long-term lease

  • What are the advantages and disadvantages of a long term lease for a foreigner in Cambodia?

How to Invest in Land in Cambodia by Registering Real Property With a Cambodian Citizen – a.k.a Buying via a Nominee

  • What are these documents for in the nominee structure?

How to Invest in Land through Concessions in Cambodia

  • How do I apply for an Economic Land Concession in Cambodia?

How to Invest in Land in Cambodia by Cambodian Marriage

  • What happens when you get a divorce?
  • What are the requirements to get married in Cambodia?

How to Invest in Land in Cambodia by Cambodian Citizenship

Let’s get started…

How to invest Land in Cambodia by Forming a company with a Cambodian Citizen:

Foreigners can set up various businesses in Cambodia. This is easily done.

But they would have to form a limited liability company or a private limited company with a Cambodian citizen/s first if they want to own land in the country under that company. This is because foreigners aren’t allowed to buy land directly, as according to the Cambodian constitution.

However, when a Cambodian citizen owns 51 percent of the company, that company is then entitled to purchase land under its name and can do anything with that land within the legal bounds of the law in Cambodia.  

Chapter VI, Article 16 of the Law on the Investment of the Kingdom of Cambodia states that “ownership of land for the purpose of carrying on promoted investment activities shall be vested only in natural persons holding Cambodian citizenship or in legal entities in which more than 51% of the equity capital are directly owned by natural persons or legal entities holding Cambodian citizenship.”

But this can be a cause for concern for investors as a minority stake in the company appears to remove the controls from the foreign shareholders over those business assets.

However, a careful allocation of the shares and an appropriate draft of the rights that are attached to the share certificates can guarantee full control for the foreigner involved. A foreigner can also opt for an additional mortgage, security, and Power of Attorney documents in order to ensure its full control over the land or other real estate vested in the company.

What do you need to set up an Limited Liability Company?

You need to make sure you meet the requirements first before you set up a limited liability company. This includes the need for two shareholders, a director, and a minimum capital of $1,000. The LLC will also need a corporate bank account, a real office space through a registered agent, and a local Khmer company name. These can usually be arranged with the legal assistance of independent lawyers. An LLC takes around 8 weeks to set up and a separate 4 weeks is needed to set up the bank account. The LLC will then need to file annual tax returns and register for VAT after incorporation.

Foreigners are expected to pay 100 percent of real property purchase costs and construction costs. If a decision is made to sell the real property, 100 percent of what it was sold for goes to the foreigner. It is advised to detail this on the company and sales documentation.

You have to check the uniqueness of your company’s name before setting it up. This will cost $10 through the Ministry of Commerce. You are then required to deposit $494 through an authorized bank under that name if it is unique. Do not lose your deposit slip. The second step requires you to get a company registration form for $5 to $15. This can be obtained through the Cambodian Investment Board. You then have to shell out another $15 to get an official company seal.

The next thing you have to do is to create and publish a company abstract through a recognized newspaper. You also have to wait 30 days after your company’s established before enrolling it into the commercial register through the Ministry of Commerce. After setting up the company, you then need to get your documents stamped. This will set you back $26. You also need to fill out forms and documentations to get your official tax registration. That is the last step to get your company officially set up and recognized.

There are additional documents you can obtain to ensure security of ownership over that company. A security document will set you back $1,000. The Power of Attorney document will cost around $500. Mortgage will be at around $1,000. A registered title deed is priced at $500. Company documents and license will cost a total of $1,200. You may need at least $5,000 for the total process.

How to Invest in Land in Cambodia through a Long-term lease:

Purchasing land isn’t exactly the same as leasing it. But it’s the next best thing. It’s easier and less expensive than setting up a company to buy land.

This method technically allows foreigners to “purchase” real property. But foreigners would need to allow the registered title deed to remain under a Cambodian citizen’s name. Both parties formally enter a long-term rental agreement. Land is able to be leased to the foreign national for periods up to 50 years – however cases of 75 and 99 years are not unheard of.

What are the advantages and disadvantages of a long term lease for a foreigner in Cambodia?

The only downside to this method is that you still do not hold full ownership over the land – and this means that some uncertainty remains for the investor over the security of their asset. You will need to first get the thumbprint and signature of the Cambodian national before you can sell the property.

But proper drafting of property holding and lease arrangements terms help make this a secure means of gaining control over real property. Foreigners can also hold on to the original copy of the title deed as an additional safety measure because the Cambodian national cannot sell the property without it.

A long-term lease provides lessors the rights to develop the land they’re leasing. They will be able to obtain construction permission under their own names. This also entails that the foreigners involved will also be able to sell the property and keep all of the of the sales revenue. The attached financial obligations to this method for the foreigners will be for the legal assistance of a lawyer and any amount agreed upon for the price of the property and the lease agreement. These prices may vary.

How to Invest in Land in Cambodia by Registering Real Property With a Cambodian Citizen – a.k.a Buying via a Nominee:

This is otherwise known as a nominee structure. This structure lets foreign investors enter a trust agreement with the land holder. The land is put up for mortgage after that. It is then leased out to the foreign investor involved.  You need to secure 4 documents first. These are the mortgage agreement, the lease agreement, the loan agreement, and the security agreement.

What are these documents for in the nominee structure?

The mortgage agreement’s registered at the Sangkat. It transforms the buyer into a bank. This prevents further activity by the Cambodian national without the permission of the foreign national. Further activities would require approval from the foreign national.

The loan agreement is a paper loan that’s made between the nominee and the foreign national. It accrues interest over time. The lease agreement gives the foreigner the right to legally reside in the property. The Security agreement lays out the necessary limitations and obligations of each party with regards to the property.

Foreigners are allowed to own any type of property through this structure. But this method is not advisable as it is in violation of the constitutional prohibition on the direct ownership of property by foreigners. It is a sort of loophole that the government is trying to regulate. Costs for the whole process also varies depending on the agreement of both parties involved and the agreement of the buyer and their lawyer.

How to Invest in Land through Concessions in Cambodia:

According to Article 48 of the Land Law, “A land concession is a legal right established by a legal document issued under the discretion of the competent authority, given to any natural person or legal entity or group of persons to occupy a land and to exercise thereon the rights set forth by this law.”

There are three types of land concessions available in Cambodia. These are the Use, Development or Exploitation Concession, the Economic Concession, and the Social Concession.

Social Concession allow beneficiaries to construct residential projects and cultivate State land. Economic Concession allow beneficiaries to clear land for purposes of industrial or agricultural exploitation. Use, Development or Exploitation Concession are not regulated under the 2001 Land Law – specifically, Article 49 and 50. But this type of concession includes port concessions, mining concessions, industrial development concessions, airport concessions, and fishing concessions.

Article 52 and 53 further states that “A land concession may only create rights for the term fixed by the concession contract in accordance with the provisions of this law. A land concession cannot establish ownership rights on the land provided for concession except for concessions responding to social purposes.” It continues, “A land concession can never result from a de facto occupation of the land. The land concession must be based on a specific legal document, issued prior to the occupation of the land by the competent authority, such as the State or a public territorial collectives or a public institution that is the owner of the land on which the concession is being granted. The concession must be registered with the Ministry of Land Management, Urban Planning and Construction.

Land concessions cannot have more than 10,000 hectares and is limited to 50 years but may be revoked by a government decision if there is a problem with compliance.

The most common concession type foreigners go for is the Economic Land concession.

How do I apply for an Economic Land Concession in Cambodia?

An investor cannot apply for economic land concession from abroad. They are required to have a registered company in the country, a valid tax identification number, and an active local bank account. Once this is in place and a piece of land is located, the investors must apply through the Ministry of Agriculture. They will require documentations to prove financial qualification and additional documentation detailing information of the investor.

The Ministry of Agriculture will then review the land details listed on their database. They will decide whether it can be made available for a concession based on the review. The official bureaucratic machinery will come into play if the land is available.

Representatives from the Ministry of Agriculture, Ministry of Environment, the Council for Development of Cambodia, the provincial government, and the Ministry of Commerce will then form a commission to review the feasibility of the application. So, investors will also need to include a business plan and supporting documents during the application process.

The Ministry of Environment is assigned to create an ‘Environmental Impact Assessment” which studies the different factors pertaining to the land. These include elevation, settlements, waterways, and soil. This process takes 3 months. The assessment will include the land designation, religious sites, community property, and settlements mapping.

The local government is in charge of the socio-economic factors and effects.

The Ministry of Agriculture then forwards the application to the Office of the Prime minister after the application is approved. The PM will then sign and authorize the Ministry of Agriculture to go into a concession deal with the investor.

The investor is then tasked to create a master plan or a five-year business plan. The public land of state will then be transferred to a private land of state once the master plan is approved.

The CDC will provide special tax status for the investor’s company such as exemptions and reductions. The company is then going to be noted in the investment register through the CDC.

The approximate duration to complete the process will be 6 to 9 months.

How to Invest in Land in Cambodia by Cambodian Marriage:

Foreigners married to a Cambodian citizen are allowed to register real property using the name of their spouse on the title deed. In case a citizenship has been granted to the foreigner, the Cambodian Law states that the land can be registered under the names of both husband and wife. This follows that there should be a mutual agreement before the land is sold.

What happens when you get a divorce?

Should there some a time when a divorce or separation is needed, the land and property division is dependent upon the conditions of any court ruling that refers to the divorce. Interracial marriages require the participation of the embassy of the foreigner’s home country and different local government agencies such as the Legal and Consular Department of the Ministry of Foreign Affairs and International Cooperation, Ministry of Interior, province officials.

What are the requirements to get married in Cambodia?

For the wedding itself, you would need several documents such as a certified birth certificate copy, a valid passports and its photocopy, a visa and its photocopy, an affidavit of single status, an affidavit of marriage, criminal records, certificate of profession, divorce or death certificates in case of a previous divorce or death of a previous spouse, a medical certificate from Calmette Hospital that’s located in Phnom Penh, and a marriage application form.

Other legal requirements for marriages include a civil or religious ceremony, the woman is considered to be at least 18 years old and a man at least 20. There should be two witnesses for the wedding. A wedding must be registered at the Civil Registry Office in order to be recognized.

How to Invest in Land in Cambodia by Cambodian Citizenship:

One way for well-off individuals to buy land is by getting an honorary Cambodian citizenship. This can be obtained in two ways. Either by donating at least $312,500 for the Cambodian people through the Cambodian Government or by making a significant impact to the country.

Being granted an honorary citizenship allows foreigners to purchase obtain 100 percent of the rights to real properties. But it is important to note that the foreigner’s original nationality is not affected in any way.

Individuals may also gain residential status in the country by living here for 7 years.

Cambodia is breeding grounds for successful developments where land is a main proponent. As more people gain interest in the country’s real estate climate, it is entirely possible to see a number of foreigners included in the same crowd of people who make a profit from land that they own.

 

Source By Realestate.com.kh

 

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