News item | 23-06-2023 | 16:10
The government is going to amend the bill that should address the structure with real estate share transactions. The government is doing this in response to responses to the internet consultation. These reactions showed that the draft bill led in some cases to excessive taxation and that transitional law is desirable. Both of these points are accepted. The amended bill removes the excessive levy and provides for transitional law. The proposed entry into force of the bill is January 1, 2025.
New insights
Under current legislation, it is possible to transfer new immovable property through a share transaction without VAT or transfer tax being due. However, the legal starting point is that VAT is due on the delivery of new immovable property. In order to combat this structure, the government has drafted a bill that changes the exemption that prevents the concurrence of VAT and transfer tax in such a way that the acquisition of new immovable property through shares is not exempt from transfer tax. In recent months, the government has collected input from stakeholders via an internet consultation.
The input from the real estate sector has given the cabinet further insight into the way in which the sector works and how complex and often long-term projects are affected by the bill. The sector has indicated that it understands the importance of the proposal and has noted a number of specific points on which the government has now adapted the bill.
Adjustments
The input from the sector has led to amendments to the draft bill. For example, immovable property that is used for 90% or more during two years after acquisition for activities for which VAT is due will not be subject to the application of the new measure. In addition, the transfer tax rate of the new measure will be a maximum of 4%. As a result, the combined tax burden often amounts to approximately 21%, which is equal to the tax rate levied on new real estate.
Transitional law will also be introduced for current projects. The transitional law will apply to projects where at least a letter of intent has been signed before the date of submission of the bill. The bill therefore does not apply to those projects and the current legislation continues to apply.
Follow-up
The bill is now being worked out in more detail and is in line with the 2024 Tax Plan. This means that the new bill will be submitted to the House of Representatives on Budget Day 2023. The proposed entry into force of the bill is January 1, 2025.