Tax benefits due to lower WOZ assessment
As a property owner in the Netherlands, you will receive a property valuation assessment (WOZ assessment) from your municipality in the coming weeks. Critical review and objection against the WOZ assessment may result in (significant) reduction of taxes.
The WOZ value is relevant for the amount of taxes due and potential tax deductions. Therefore, an excessive WOZ valuation leads to overpayment of tax. DLA Piper regularly advises in the field of WOZ assessments and can assist you with objection to the WOZ assessment and possibly obtaining tax benefits.
WOZ assessment for properties under construction
The valuation of properties under construction or being refurbished is based on the corrected replacement value. The municipality bases its valuation on the land value and the construction costs incurred, and not on the selling price of properties under construction. To estimate the construction costs, the total (expected) construction costs of the property are multiplied by the construction progress rate. For the 2021 WOZ-assessment, the construction progress on January 1 2021 is decisive.
COVID-19 has a major impact on the real estate sector, resulting in vacancy and changed use of properties. However, the value of properties for WOZ assessment purposes is based on the value on 1 January 2020. In specific circumstances is it possible to deviate from this assessment date. Please contact us if you consider objecting to your WOZ assessment on these grounds.
Corporate Income Tax
For Dutch Corporate Income Tax (CIT) purposes, no tax deductible depreciations are allowed for properties, if a certain floor value is reached (100% of the WOZ value). This implies that if the tax book value of a property is equal to the WOZ value, such property can no longer depreciated for CIT purposes. Consequently, a lower WOZ value may result in a considerable CIT benefit.
Local taxes, such as the property tax assessment and the water system levy for buildings, are levied on the basis of the WOZ value. Furthermore, several municipalities also impose sewerage levy, business improvement zone contributions or betterment levy based on the WOZ value of the property.
Attorneys and advisors from our Tax team can assist you with objecting to your WOZ assessment and advise on the potential tax benefits. We emphasize that an objection should be filed within 6 weeks after receipt of the WOZ assessment.