Amendment to the Real Estate Transfer Tax concurrence exemption for certain share transactions
The Dutch government recently published its intention to abolish the RETT concurrence exemption for certain share transactions in a bid to prevent tax avoidance.
The transfer of newly build Dutch real estate can be subject to both Dutch VAT and RETT. To avoid concurrence of both taxes, a RETT concurrence exemption applies for the acquisition of newly build Dutch real estate in both share and asset deals. For real estate investors with no VAT recovery right, it can be beneficial to acquire Dutch real estate (e.g. residential properties or hospitals) as part of a share deal as it triggers neither VAT nor RETT.
As of 1 January 2025, the RETT concurrence exemption will only apply to share transactions involving real estate, which is used for more than 90% VAT taxable activities in a two-year period.
In order to avoid a share transaction resulting in a higher tax burden compared to an asset deal, the acquisition of shares concerning newly built real estate that is used for less than 90% for VAT taxable activities will be subject to a RETT rate of 4% (instead of the standard RETT rate of 10.4%).
As of 1 January 2025, businesses will have to take into account the fact that the acquisition of newly build real property that is not used for VAT taxable activities (e.g. residential buildings) as part of a share deal will no longer be exempt from RETT.