Netherlands: Report to Parliament on investigation into REIT regime

The Secretary of Finance on June 7, 2024, sent a report to the lower house of Parliament on its investigation into the pros and cons of a new Dutch real estate investment trust (REIT) regime.

• It was noted that the repeal of the real estate fiscal investment institution (FII) regime as of January 1, 2025, after which real estate investment companies investing in Dutch real estate will become subject to the regular Dutch corporate income tax regime instead of the 0% tax rate applicable to FIIs, puts the Netherlands at a disadvantage compared to other European countries that have a REIT regime.
• The report states that advantages of a Dutch REIT regime are that the tax neutrality of a REIT regime stimulates collective investment in Dutch real estate (such as residential real estate) and that the Dutch investment climate as a whole may benefit. However, the design and implementation of a new REIT regime must carefully consider the budgetary losses that led to the repeal of the real estate FII regime.
• The report presents some options that could be considered for a new REIT regime:
  • Tax REITs at a rate of 15% and provide relief of double taxation at the level of the REIT for the withholding tax charged to it and at the level of the (Dutch) participants in the REIT for the taxes charged at the level of REITs)
  • Exempt REITs from corporate income tax and dividend withholding tax, and levy tax on the fair market value of the real estate (a value assessed by the local municipality each year), whether or not in combination with a withholding tax on rent

Read a June 2024 report prepared by the KPMG member firm in the Netherlands