Housing associations fear that they will have to pay more than twice as much in corporate taxes in the coming years as they do now. Corporation umbrella organization Aedes calculated that the housing association sector paid 700 million euros in profit tax this year. If the housing associations comply with the housing agreements with the cabinet, that amount will double to 1.5 billion in 2029.
For housing associations, the increasing tax burden means that there is less money left to invest in housing. It is therefore becoming increasingly less likely that they will be able to meet their share of the national housing construction agreements – and that the national housing construction target of 100,000 new-build homes will not be achieved in the coming years.
Corporation umbrella organization Aedes calculates the profit tax of corporations every other year. This year, 133 housing associations responded to questions from the organization, together accounting for two-thirds of all association homes in the Netherlands.
Aedes has been vehemently opposed to profit tax for years, which it calls “incorrect in principle”. Housing associations operate on a non-profit basis and their only source of income is the (usually low) rental income from their social housing. They invest their operating results, the money they have left over for taxes, in making their homes more sustainable or renovating them.
Yet, like all companies, corporations pay profit tax. They are particularly affected by the ATAD tax scheme introduced in 2019 Anti-Tax Avoidance Directive. These EU regulations are intended to combat international tax avoidance. The rules are intended for multinationals with complex financial structures, but because the Netherlands is stricter than other EU countries, project developers and housing associations also fall under them.
ATAD allows companies to deduct only a small interest rate from their taxes if they invest with borrowed money. Because corporations are fully dependent on outside financing for new construction projects, they are not allowed to deduct their high interest costs.
ATAD’s share in the profit tax paid has grown in recent years. While that was 30 percent two years ago, in 2025 it will be more than half. With the current construction task, Aedes warns of a paradoxical situation: corporations are fiscally discouraged from investing, while investing heavily in new construction is exactly what outgoing Minister Mona Keijzer (Public Housing, BBB) demands of them.
Aedes estimates that 60 billion euros in loans are still needed to achieve the agreements. As a result, profit tax would structurally increase by 460 million euros, Aedes states in the research report: “In practice, corporations are therefore heavily fined for the public housing investments that they agree with the government.”
‘Corporation is stuck’
Isn’t it strange that corporations, which operate as non-profit foundations, have to pay profit tax? In 2008, when Minister Wouter Bos (Finance, PvdA) introduced full profit tax for corporations, this could be explained, according to housing market researcher Johan Conijn. “Corporations had much more financial fat on their bones than they do now. They sold a lot of homes and had lower costs,” says Conijn, emeritus professor of housing market (University of Amsterdam) and now works for the Utrecht agency Finance Ideas. “Moreover, it was not clear what their precise task was, i.e. how many and what type of homes they had to build.”
That will be different in 2025. Due to high construction and maintenance costs and increased interest rates, many housing associations are short of cash. To give the corporations more financial space, the landlord levy was abolished in 2023. From 2013 onwards, this extra tax on social housing led to housing associations building far fewer rental properties.
It is curious that corporations that work exclusively in the Netherlands are affected by taxes aimed at multinationals
In addition, housing associations have been given a major social task: they must make their current homes more sustainable and are the ideal party to build social rental homes that are not built by market parties due to their regulated rental income.
And that is where the problem arises, according to Conijn. The Ministry of Housing instructs corporations to mainly build rental properties below cost price, with the Ministry of Finance ignoring the resulting loss by collecting the full profit tax. They are taxed as if they were renting at market rates. “The corporations are stuck,” says Conijn.
Exceptional position
Aedes would ideally like to get rid of profit tax for corporations, so that they can use the money to invest in new homes. According to chairman Liesbeth Spies, concluding a new coalition agreement is a logical moment: “Abolition of corporate tax is equivalent to approximately 40 billion euros in investment space. Of this, approximately 150,000 social rental homes can be built.”
If that fails, Aedes hopes to at least get out of the ATAD scheme.
This spring, a number of large corporations filed objections with the Tax Authorities; This could be a first step towards ultimately having the contradiction in Keijzer’s policy assessed by the courts.
Also read
Housing associations challenge extra profit tax: ‘Does the government want affordable houses or not?’
It remains to be seen whether the forming parties D66, CDA and VVD will respond to Aedes’ call. The budgets take into account the hundreds of millions per year in profit taxes, and to abolish them money will have to be found elsewhere.
Conijn thinks that the corporations have a point. At least when it comes to ATAD. “It is of course remarkable that corporations that work exclusively in the Netherlands are affected by taxes aimed at multinationals.”
About the profit tax itself, the housing market researcher says: “Remember that every real estate company in the Netherlands pays profit tax. The difference is that they are not forced by their social role to rent their homes at a low social rent. That is where things go wrong.”
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