Introduction:
The 1993 Cambodian Constitution reserves land ownership rights exclusively for Khmer nationals. However, this doesn’t deter foreigners from investing in Cambodian real estate. Here, we explore six legal and secure methods for foreigners to buy and own land in Cambodia.
1. Setting Up a Land Holding Company (LHC)
Establishing an LHC is the safest and most legal method for foreign ownership. Under this method, minority shareholders (foreigners) hold 49% of the company and have sole decision-making rights, while majority shareholders (Khmer nationals) hold 51% of the company.
Legislation and Security:
The Law on Investment in the Kingdom of Cambodia (Chapter VI, Article 16) states that land ownership transfers to a legal entity if over 51% of its capital belongs to Cambodian citizens. Extensive security documents ensure the safety of foreign investment, shifting power from majority to minority shareholders.
Costs and Maintenance:
- Company setup: $1500-$3000
- Shareholder fee: Annual or one-time (negotiable)
- Time: 3 weeks โ 1 month
- Maintenance: Requires a registered office address and monthly tax filing ($50-$100 per month).
Selling the Property vs. Selling the Company:
Selling the company instead of the land avoids profit tax. The total cost includes $200 plus 0.1% of the transferred share.
2. Trust Services in Cambodia
The Law on Trusts, established in 2018, introduced trusts into Cambodia’s legal system. Trust companies can purchase and manage land on behalf of foreigners, granting them full ownership rights for a fee.
3. Through a Cambodian Nominee (Not Recommended)
While it’s possible for a Cambodian nominee to hold land on behalf of a foreigner, this method is legally dubious and not recommended. It violates Cambodian law and poses risks to the foreign investor.
4. Acquiring Cambodian Citizenship
Foreigners can acquire Cambodian citizenship through naturalization or marriage to a Cambodian citizen. This grants them full land ownership rights.
By Naturalization:
- Residence: 7 years (3 years if married to a Cambodian citizen)
- Language and cultural knowledge required
- Citizenship can also be acquired by making a $250,000 cash donation to the Cambodian economy.
5. Leasing Land (Leasehold)
Long-term leases, with a maximum duration of 50 years, are a popular method for foreign land control. These leases can be extended and are registered with the Ministry of Land Management, Urban Planning, and Construction (MLMUPC).
Lease Types:
- Long-term leases (up to 50 years)
- Economic Land Concessions (ELC) (up to 99 years)
6. Investing in Land Through Concessions
The Cambodian government grants economic land concessions to private companies for up to 99 years. Foreign investors can sublease land from these companies for up to 50 years.
Costs and Taxes:
- Purchase tax: 4% of the property value
- Annual tax: 0.1% of the purchase price
- Transfer fees: $800-$1000 service fee
Conclusion:
Foreigners have several legal and secure options for owning land in Cambodia. Whether through company ownership, trust services, or long-term leasing, these methods offer avenues for investment and development in the Cambodian real estate market.
