Netherlands: Consultation on draft bill to abolish property transfer tax concurrence exemption for share transactions
Comments on the draft bill are due 27 March 2023.
Abolish property transfer tax concurrence exemption for share transactions
The government on 27 February 2023 launched an internet consultation on a draft bill to abolish the property transfer tax concurrence exemption for share transactions.
Comments on the draft bill are due 27 March 2023.
Background
Value added tax (VAT) is, in principle, automatically payable on direct supplies of new immovable property and/or building land for VAT purposes (the current VAT rate is 21%). For property transfer tax purposes, an exemption in principle applies for the acquisition of this immovable property: the concurrence exemption.
Under current legislation and case law, it is possible to use a share transaction to indirectly transfer new immovable property and/or building land (for VAT purposes) without incurring VAT or property transfer tax. The government regards this situation as an undesirable and “unintended tax savings structure.”
Draft bill
The draft bill would address this undesirable situation by making the acquisition of a qualifying shareholding (>1/3) in a real estate entity with new immovable property and/or building land for VAT purposes subject to property transfer tax as of 1 January 2024 (the current property transfer tax rate is 10.4%).
The approvals for immovable property already in use would be canceled, as would the approvals for the acquisition of a participation in a non-legal entity, such as a limited partnership.
KPMG observation
The acquisition of shares in a real estate entity with new immovable property/building land and the acquisition of the immovable property itself would still not be treated the same under the draft bill because the transfer of the immovable property would still in principle be subject to VAT, but no property transfer tax would be payable. In situations where the VAT is recoverable, the draft bill could result in overkill and therefore have a broader, undesired effect on share transactions in the property market.
This unequal treatment was expressly acknowledged. Other measures were considered, such as levying VAT on the indirect supply of immovable property through a share transaction or the reintroduction of the VAT adjustment payment for self-supply (btw-integratieheffing). However, these did not prove to be conclusive, feasible options.
Read a March 2023 report prepared by the KPMG member firm in the Netherlands
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