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Real Estate Taxation

Law Firm in the Netherlands specialised in Real Estate Taxation

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With property transactions and property developments, active support with tax matters is extremely important. By identifying and solving tax pitfalls and developing creative constructions for tax purposes, these transactions and developments can be optimized from a financial point of view.

CMS advises on the purchase and sale of investment property, structuring the purchase and sale of investment portfolios or setting up investment products in property. We also advise you on selecting international REIT structures, including the Dutch FBI (fiscal investment institution). We will also assist you in setting up and structuring public/private partnerships or partnerships between property parties. In addition we can set up innovative tax-effective financing and lease structures.

You can also rely on our services in the area of turnover and transfer tax, corporation tax and income tax. Together with our partners in CMS we can solve your international tax-related property problems.

We assist property developers, building firms, institutional investors, housing corporations, care institutions, municipalities and other (semi-) government bodies, who can rely on our sound advice in all in these practice areas.

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18/08/2022
CMS Tax Global Brochure
Over the past two years, enterprises, governments and citizens have grappled with unparalleled technological evolution and new business models, as well as significant tax reforms, regulatory changes...
12/03/2019
Taxation of the digital economy
This publication aims to identify various aspects of the digital economy and to consider whether income taxes are the most effective and efficient way to tax this economy. Do we need a revolution in the...

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19/09/2023
Dutch 2024 Tax Plan and other Tax proposals
On Tuesday 19 September 2023 the Dutch State Secretary for Finance published the 2024 Tax Plan and related legislative tax proposals. This newsflash primarily discusses the proposals that we consider most relevant for (international) companies. Dividend stripping Dividend stripping is the practice of splitting the economic interest in and legal title to dividends in order to obtain a dividend withholding tax advantage. The 2024 Tax Plan proses to improve the possibilities to combat dividend stripping through the following two separate measures:The introduction of a record date for recording the beneficiary of the dividends and the underlying credits, refunds or reductions of dividend withholding tax; andImproving the burden of proof for tax authorities in cases of suspected dividend stripping. The later measures only apply if the underlying tax amount exceeds EUR 1,000. Dutch tax classification rules for (foreign) entities A new regime for the classification of (foreign) entities for Dutch tax purposes is proposed as of 2025. The regime aims at reducing (hybrid) mismatches between the Netherlands and other jurisdictions and will include the following key elements:the codification of the current tax classification method for foreign entities;the current tax classification method for foreign entities will be supplemented by the 'fixed'-method and the 'sym­met­ric­al'-meth­od for foreign entities that do not have a comparable Dutch legal form, whereby:the 'fixed'-method entails that if an entity established under foreign law is resides in the Netherlands, the entity will always be regarded as tax opaque; andthe ''sym­met­ric­al'-meth­od means that if an entity established under foreign law (with a shareholder relationship with a Dutch resident taxpayer) and that entity does not reside in the Netherlands, the Dutch qualification of the entity will follow the qualification of its country of residence; andthe so-called unanimous consent requirement (toes­tem­mingsvereiste) will be abolished and all Dutch limited partnerships (CV), including the open limited partnerships (open CV) that currently is regarded as tax opaque, will qualify as tax transparent (except for reverse hybrid structures). The change in the tax classification of the open CV from tax opaque to tax transparent will trigger a final settlement which may result in a tax liability. Facilities are proposed to allow for a tax neutral restructuring. The impact of this proposal needs to be assessed as soon as possible with a viewing to benefitting from the special restructuring facilities in 2024. Changes to the tax classification of Dutch mutual funds (fonds voor gemene rekening or FGR) Under the current rules, the FGR can be structured as tax transparent or tax opaque for Dutch tax purposes. An FGR qualifies as tax transparent it the rules relating to the transfer of units are structured according to:the unanimous consent variant –units are only transferable with the prior unanimous consent of all other unitholders. The redemption variant – units can only be redeemed and issued by the FGR, i.e. only be transferred to the fund itself. All other FGRs are currently treated as tax opaque for Dutch tax purposes. Under the proposed new rules, an FGR will only qualify as tax opaque for Dutch tax purposes if the FGR is regulated under the Dutch Financial Supervision Act and the participation units are freely transferable. In this respect, the units will not be considered freely transferable if the units can only be redeemed and issued by the FGR itself. All other FGR's will be treated as tax transparent as of 2025. The change in tax classification from tax opaque to tax transparent will trigger a deemed disposal of the assets and liabilities of the FGR which may result in a Dutch corporate income tax liability. In order to give taxpayers the opportunity to restructure in a tax neutral manner in preparation for the change in the tax classification of FGRs, several facilities are offered. We would advise FGRs that currently qualify as tax opaque and are affected by this proposal to take advantage of the restructuring opportunities in 2024 before the proposed changes take effect from 2025. VBI regime It is proposed that the Dutch exempt investment institution regime (VBI regime) will be limited to entities that are regulated under the Dutch Financial Supervision Act as of 2025. This will eliminate the current possibility of using this exempt regime for Dutch corporate income tax purposes for the investment in private assets. FBI regime It is proposed that Dutch fiscal investment institutions (FBI) will be prohibited from directly owning Dutch real estate. Any FBI directly owning Dutch real estate as of 2025 will be subject to corporate income tax. Any FBI affected by the change in legislation and wishing to avoid such tax obligations will have to complete a necessary restructuring in 2024. During this period, a real estate transfer tax exemption will be introduced for restructurings by FBI to divest any prohibited assets or subsidiaries. Real estate transfer tax on share deals / concurrence exemption From 2025 the so-called concurrence exemption for the acquisition of shares in a real estate company will be abolished (concurrence between VAT and real estate transfer tax). As a result, the indirect acquisition of newly developed real estate will be subject to real estate transfer tax at the new rate of 4%, calculated on the fair market value of the new building or buildings. However, the concurrence exemption remains available if during the first 2 years after the share acquisition the underlying real estate is used for activities that entitle the owner (entity) to recover at least 90% of the VAT. With respect to asset deals, no changes are proposed concerning the concurrence exemption from real estate transfer tax. Environmental measures A number of environmental measures are proposed, the most important of which are an increase in the carbon emissions tax from 2024 and the extension of existing tax incentives (albeit at reduced percentages). In addition, it has been stated that all relevant tax breaks for the 'fossil industry' and their effectiveness have been identified during the last government period. However, due to the caretaker status of the current cabinet, any decisions regarding potential adjustments to these tax incentives will be deferred to the next cabinet. Other tax changes as per 2024 Box 2 tax rates for income from substantial interest As per 2024, the flat rate of 26.9% will be replaced by a general rate of 31%, with a step-up rate of 24.5% applying to the first EUR 67,000 of income from substantial interest. In short, a substantial interest is held if a private shareholder owns 5% of a company (or 5% of a special class of shares). Box 3 – income from savings and investments From 2024, the box 3 tax rate (which applies to income from passive investments) will increase from 32% to 34%. In addition, further guidance has been published on a number of points to determine the relevant tax base for box 3. The introduction of a new box 3 regime based on actual income will be delayed from 2026 to 2027. 30% ruling limited to maximum public sector salary Employees recruited from abroad who have specific expertise that is rare in the Netherlands are offered a favourable tax regime under which 30% of their gross salary can be paid as a net remuneration. From 2024, the application of the 30% ruling will be limited to the maximum salary for the public sector (EUR 223,000 in 2023). For existing 30% rulings with an expiry date after 1 January 2024, a transitional regime will be introduced under which the limit will apply from 1 January 2026. The way forward In the coming months, the 2024 Tax Plan will be discussed in both chambers of Dutch parliament. This means that the proposed measures are subject to change. We will keep you informed of any relevant changes. Please do not hesitate to contact us if case you have any questions.
06/09/2023
European real estate investment proved volatile in 2022, despite a promising...
Total investment across the European real estate market fell by around 14% in 2022 compared to the previous year, coming in at EUR 248 billion, according to global law firm CMS' European Real Estate Deal...
21/09/2022
Dutch 2023 tax plan and other tax proposals
On Tuesday 20 September 2022 the Dutch state secretaries for Finance published the 2023 Tax Plan and related legislative tax proposals. This newsflash discusses the proposals we consider most relevant...
14/06/2022
European real estate investment markets back to pre-corona levels with...
The European real estate investment market appears to have largely recovered from the consequences of the COVID-19 pandemic in 2021, according to the CMS European Real Estate Deal Point Study 2022. Compared...
01/09/2020
Leaked 2021 Dutch tax plans may require real estate transactions to be...
Recently, some plans that apparently are part of the 2021 Tax Plan were leaked to the Dutch press. If proposed and implemented, these plans will have a significant impact on Dutch real estate trans­ac­tions:the...
14/04/2020
CMS Guide to Real Estate Transaction Costs and Taxes in Europe
Comparing real estate investment values across Europe provides only part of the picture. For a true comparison, the investor will also take account of transaction costs and taxes, which can differ widely...
02/10/2018
CMS - Focusing on Funds – Changes for overseas owners of UK real estate
This Focusing on Funds looks at three proposed changes for overseas owners of UK real estate including holding entities and funds. The first change is a tax charge on capital gains on disposals and the...
28/09/2018
CMS - Focusing on Funds - Tougher Tax Rules for German Real Estate
This Focussing on Funds update looks at the continuing hot topic of how tax changes affect fund structures and deals. Following our previous look at the France and Luxembourg double tax treaty, the focus...
04/04/2017
Warranty and Indemnity insurance in the Netherlands: a few tax aspects...
On 2 December 2016, we published an eAlert on the use of Warranty & Indemnity (W&I) insurance. Here we address a few tax aspects purchasers should consider when seeking coverage for tax under W&I in­sur­ance.  In...
22/05/2015
Is the management of real estate investment funds VAT exempt?
Based on the EU VAT Directive, the management of special investment funds is VAT exempt in all EU Member States. The Dutch Supreme Court has referred the question to the ECJ for a preliminary ruling...
17/03/2014
Office conversions - a work in progress
In many regions and cities facing changing demographics and a limited supply of constructible land, conversion is attractive. Factor in rental income differentials between housing and offices, construction...
22/01/2008
REITs
Over the past few years, new REIT regimes have been introduced in Europe, in particular in the UK, Germany (G-REITs) and more recently in Italy (the SIIQ: società di investimento immobiliare quotate)...