As a common form of capital contribution for start-up companies, land use rights as capital contribution can not only revitalize assets but also optimize the equity structure. However, improper operation may lead to legal disputes and tax risks. Exclusive Easy Finance and Taxation combines accounting standards with auditing requirements, guiding you step by step to avoid common pitfalls, helping entrepreneurs operate in compliance, and master the essential finance and taxation survival guide - save money and comply!

Legal Definition and Core Basis

What is land use right contribution?

        According to Article 27 of the Company Law, shareholders may contribute capital in the form of monetary or non-monetary assets. Land use rights fall under the category of "non-monetary property", referring to the act where enterprises or individuals invest the right to use state-owned land (not ownership) as assets into a company in exchange for equity.

Key legal features:

       Right attribute: Only the right of use is transferred (ownership belongs to the state), and the remaining usage period must meet the legal minimum requirements (residential ≥30 years/industrial ≥50 years).

       Transferability: Clear land ownership and no restrictions such as mortgage or seizure (in accordance with Article 347 of the Civil Code).

       Quantifiable value: It must be valued by a professional assessment agency and no self-pricing is allowed (Article 27 of the Company Law).

Core legal basis：

According to Article 27 of the Company Law, shareholders may contribute capital in the form of monetary or non-monetary assets. Land use rights fall under the category of "non-monetary property", referring to the act where enterprises or individuals invest the right to use state-owned land (not ownership) as assets into a company in exchange for equity.

Two and four standard operating procedures

1.Value assessment stage

It is necessary to select an assessment agency that has been filed with the Ministry of Finance. The validity period of the assessment report is six months.

2.Capital verification and auditing stage

 Accounting firms are required to implement:

       Check the qualifications of the assessment institution

       Review the rationality of the assessment method

       Verify that the property rights are flawless

3.Business change registration

The filing must be completed within the validity period of the assessment report.

4.Property rights transfer procedures

It shall be completed within six months from the date of the approval of the capital contribution resolution.

       Audit focus: Certified public accountants will pay particular attention to the consistency between the items recorded in the "State-owned Land Use Certificate" and the actual situation, as well as whether there are any rights restrictions such as mortgage or seizure.

Four core risk points

Risk of ownership

Typical mistake: Contributing funds with allocated land or collective land.

Pitfall Avoidance Guide: It is necessary to check whether the "Nature of Rights" column of the land certificate is "Transfer".

Assess risks

       Real case: A certain technology company invested industrial land, self-assessed 120 million yuan, but after professional verification, the actual value was only 80 million yuan, resulting in a penalty for false investment.

      The correct approach: Adopt a dual verification method of market comparison and income restoration.

Tax Risk matrix

Program risk

       The key time points: The five steps of assessment → capital verification → resolution → change → transfer of ownership must be carried out in sequence.

       Common loophole: Skipping the resolution of the shareholders' meeting to directly handle the transfer of ownership leads to the invalidity of the capital contribution.

Core Tax and Financial Treatment: Accounting Rules for Land Use Right Contributions

       According to Article 12 of Accounting Standard for Business Enterprises No. 6 - Intangible Assets, when an enterprise accepts the contribution of land use rights, it shall recognize the asset based on the assessed value and make accounting treatments according to the different uses. The following are the accounting entries and key operational points of typical scenarios:

Directly recorded as intangible assets (for production and operation) :

Example：

Company A accepts the contribution of land use rights with an assessed value of 10 million yuan from shareholders, agreeing to hold 20% of the shares (corresponding to a registered capital of 2 million yuan).

Debit: Intangible assets - Land use rights 10 million

Loan: Paid-in capital of 2 million

Loan: Capital reserve - capital premium of 8 million

Audit focus points

       It is necessary to obtain the "Asset Evaluation Report" and the "Capital Verification Report" as original vouchers.

       If the land transfer has not been completed, the "Risk of Title defects" must be disclosed in the notes to the financial statement.

 Warnings from Classic Cases

Case background: In 2019, a certain biotechnology company in the Yangtze River Delta contributed two industrial land plots as capital, with an assessed value of 80 million yuan, holding a 40% stake

The process of falling into a trap

The value was inflated by 30% using an associated assessment company

The transfer of ownership was not completed within six months

Conceal the fact of land mortgage

Processing result

It was identified as false capital contribution and fined 2 million yuan

A total of 5.8 million yuan was paid in back taxes and late fees

The founder bears joint and several liability

Compliance plan

Engage an unaffiliated assessment agency

Lift the land mortgage in advance

Set up performance guarantees for property rights transfer

Three Suggestions for Entrepreneurs

Dual verification mechanism

Conduct cross-checks by separately engaging assessment agencies and tax and finance advisors.

Phased implementation strategy

For land with complex property rights, the model of "partial investment first and then gradual transfer of ownership" can be adopted.

Tax planning in advance

Clearly define the way of tax and fee bearing in the capital contribution agreement to avoid subsequent disputes.