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 real estate transfer tax (“RETT”) rate for first time buyers of real estate, to the extent that these buyers are between 18 and 35 years of age, could become (effectively) 0% as of 1 January 2021;
- the RETT rate for residential investment property (including second homes) could increase from 2% to 8% as of 1 January 2021; and
- the RETT rate for non-residential immovable property could increase from 6% to 8% (instead of the previously announced 7%).
The proposed changes could pressure to close Dutch real estate deals before the end of 2020, as related tax savings could range from 2% to 6%.
To avoid such tax implications and given the risk allocation between parties in real estate transactions, several solutions to make a transfer possible before year end, are still thinkable.
A further leaked proposal concerns the reversal of the previously agreed change to the general Dutch corporate income tax rate. It was previously agreed that this general rate would drop from 25% to 21.7%. This rate applies to taxable profits if and to the extent that these are in excess of EUR 200,000. According to the leaked plans, this threshold will be increased to EUR 400,000 over a period of two years and a step-up rate of 15% will apply to the first EUR 400,000 of taxable profits (in 2021: likely the first EUR 300,000 of taxable profits), whereas the general 25% rate will apply to that part of the taxable profits that is in excess of this EUR 400,000 amount. This higher rate would impact the valuation of deferred tax assets and liabilities in share deals.
The actual 2021 Tax Plan will be published on 15 September 2020. We will provide you with an update as soon as further details become known.