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Tax obligations of private notaries: regulations, amounts
Tax obligations of private notaries: regulations, amounts
According to Article 96.1 of the Tax Code, the fees (excluding expenses) charged by a private notary within one month for notarial acts and related services constitute a taxable object. But how exactly are these amounts taxed? Rafiq Najafli provides clarification.
Under Article 33 of the Tax Code, private notaries are registered with the tax authorities at their place of activity. According to Article 99.3.10 of the Code, the fees collected by private notaries for performing notarial acts and providing related services are considered income derived from non-entrepreneurial activity. As stated in Article 101.4 of the Tax Code, income tax is levied on the taxable object defined in the second part of Article 96.1 at a rate of 10%, and the corresponding income tax declaration must be submitted to the tax authority no later than the 20th day of the month following the reporting quarter.
According to Article 16.1.11-6.3 of the Tax Code, electronic invoices are not issued by notaries for services rendered in connection with notarial acts, and such transactions are exempt from VAT in accordance with Article 164.1.6 of the Code.
Under Article 150.1.9 of the Tax Code, private notaries who certify contracts for the transfer of land, residential, and non-residential properties by individuals (except in cases such as when the property has been the individual's registered residence for at least 3 calendar years, or other exceptions stipulated in Articles 102.1.3.2, 102.1.18, 144.1.1, 144.1.2, and 144.1.4, as well as transfers by individuals engaged in building construction activities) are obliged, as tax agents, to withhold simplified tax at the source of payment.
Furthermore, Article 150.3-1 of the Code states that notaries and specialized auction organizations are required to calculate the simplified tax in accordance with Articles 220.8 and 220.8-1 of the Tax Code, pay it to the state budget within one business day, and submit the tax declaration to the tax authority in the form determined by the relevant executive authority no later than the 20th day of the month following the reporting month.
Example 1: A private notary received a service fee of 25,000 AZN for notarial acts performed in May. According to Article 101.4 of the Tax Code, the income tax to be calculated will be:
25,000 × 10% = 2,500 AZN
Example 2: A private notary earned a service fee of 18,000 AZN in June for notarial services. During this period, they incurred 8,000 AZN in expenses related to income generation. According to Article 96.1 of the Tax Code, the taxable object is the gross fee received for notarial services, regardless of expenses. Therefore, the income tax will be calculated as:
18,000 × 10% = 1,800 AZN
Monthly Social Insurance Contribution:
According to Article 14.5.3 of the Law "On Social Insurance," the monthly social insurance contribution for private notaries is 25% of 10 times the minimum monthly wage.
Example 3: The private notary received 18,000 AZN in June for notarial services. Their expenses for the period totaled 8,000 AZN. The required monthly social insurance amount must now be calculated. Since the minimum monthly wage for 2025 is 400 AZN, the social insurance contribution is:
(400 × 10) × 25% = 1,000 AZN
According to Article 96.1 of the Tax Code, the fees (excluding expenses) charged by a private notary within one month for notarial acts and related services constitute a taxable object. But how exactly are these amounts taxed? Rafiq Najafli provides clarification.
Under Article 33 of the Tax Code, private notaries are registered with the tax authorities at their place of activity. According to Article 99.3.10 of the Code, the fees collected by private notaries for performing notarial acts and providing related services are considered income derived from non-entrepreneurial activity. As stated in Article 101.4 of the Tax Code, income tax is levied on the taxable object defined in the second part of Article 96.1 at a rate of 10%, and the corresponding income tax declaration must be submitted to the tax authority no later than the 20th day of the month following the reporting quarter.
According to Article 16.1.11-6.3 of the Tax Code, electronic invoices are not issued by notaries for services rendered in connection with notarial acts, and such transactions are exempt from VAT in accordance with Article 164.1.6 of the Code.
Under Article 150.1.9 of the Tax Code, private notaries who certify contracts for the transfer of land, residential, and non-residential properties by individuals (except in cases such as when the property has been the individual's registered residence for at least 3 calendar years, or other exceptions stipulated in Articles 102.1.3.2, 102.1.18, 144.1.1, 144.1.2, and 144.1.4, as well as transfers by individuals engaged in building construction activities) are obliged, as tax agents, to withhold simplified tax at the source of payment.
Furthermore, Article 150.3-1 of the Code states that notaries and specialized auction organizations are required to calculate the simplified tax in accordance with Articles 220.8 and 220.8-1 of the Tax Code, pay it to the state budget within one business day, and submit the tax declaration to the tax authority in the form determined by the relevant executive authority no later than the 20th day of the month following the reporting month.
Example 1: A private notary received a service fee of 25,000 AZN for notarial acts performed in May. According to Article 101.4 of the Tax Code, the income tax to be calculated will be:
25,000 × 10% = 2,500 AZN
Example 2: A private notary earned a service fee of 18,000 AZN in June for notarial services. During this period, they incurred 8,000 AZN in expenses related to income generation. According to Article 96.1 of the Tax Code, the taxable object is the gross fee received for notarial services, regardless of expenses. Therefore, the income tax will be calculated as:
18,000 × 10% = 1,800 AZN
Monthly Social Insurance Contribution:
According to Article 14.5.3 of the Law "On Social Insurance," the monthly social insurance contribution for private notaries is 25% of 10 times the minimum monthly wage.
Example 3: The private notary received 18,000 AZN in June for notarial services. Their expenses for the period totaled 8,000 AZN. The required monthly social insurance amount must now be calculated. Since the minimum monthly wage for 2025 is 400 AZN, the social insurance contribution is:
(400 × 10) × 25% = 1,000 AZN