Dutch Ministry of Finance publishes updated VAT Real Estate Decree

The Dutch Ministry of Finance has released an updated version of the Decree, offering insights into the application of VAT on immovable property transactions. While non-binding, the Decree serves as a valuable guide for stakeholders in this sector.

Notable amendments include provisions regarding the normally VAT exempt leasing of immovable property, which is applicable unless both the lessee and lessor opt for VAT and fulfill specific formal and material conditions. Failure to correctly implement these conditions may lead to the lease being VAT exempt. However, the Decree clarifies that a lease might still be subject to VAT if the parties have acted as though a VAT-taxable lease was rightfully opted for.

Additionally, the Decree emphasises the crucial role of the date of first occupation for Dutch VAT and real estate transfer tax considerations. This date, determined by the initial and sustained use of the property, affects aspects like the application of Real Estate Transfer Tax (RETT) concurrence exemption and the VAT status of property transfers. The Decree confirms that early access for fitting-out works by a lessee constitutes a first occupation of the real estate.

Key takeaway

The updated Decree provides new guidance that is relevant for the VAT position of parties operating in the Dutch real estate sector. We recommend our real estate clients to closely review this Decree to assess whether this has any impact on their VAT position.

Reference: Staatscourant 2023, 31602 | Overheid.nl