Application transitional arrangement to apply the RETT concurrence exemption in case of an acquisition of shares in a real estate company after 1 January 2025

On Budget Day in September 2023 the Dutch government presented its (updated) plans to limit the application of the RETT concurrence exemption (in Dutch: ‘samenloopvrijstelling’) when acquiring the shares in a real estate company owning newly developed real estate, where the underlying immovable property is used for less than 90% VAT taxable within two years after the acquisition of the shares (e.g. resi). In that case, the acquisition of the shares in real estate company will be subject to a reduced RETT rate of 4%. The purpose of this bill is to prevent that no VAT and RETT is due on the acquisition of ‘new’ real estate via share deal transactions when certain conditions are met. We refer to our previous alert for more background on this bill.

The commencement date of the legislative proposal is January 1, 2025. In this regard, grandfathering rules have been included in the proposal as a result of which several projects should still benefit from the RETT exemption. Transitional law on the acquisition of shares on or after 1 January 2025, has been provided for projects for which:

1. a letter of intent or a purchase agreement has been signed before the moment of submission of the bill (i.e., 19 September 2023 at 15:15);
2.  the letter of intent or purchase agreement has been provided to the tax inspector within three months after 1 January 2024 (i.e., ultimately 31 March 2024);
3. it can be substantiated that signing the letter of intent or purchase agreement was not done merely to make use of the grandfathering; and
4. the shares are acquired ultimately on January 1, 2030.

We ask your attention especially for requirement II. This request (only available in Dutch) for applying the transitional law should be filled out and send to the tax authorities, with the a signed Letter of Intent (LoI) or SPA attached. At this point, it is not clear yet how such a notification should be sent to the Dutch tax authorities. Therefore, we recommend providing the Dutch tax authorities ultimately 31 March 2024 with a signed Letter of Intent (LoI) or SPA together with a written cover letter. Please note that the Dutch tax authorities should be notified on behalf of the Purchaser, even in case any RETT due will be for the account of Seller based on the commercial agreements.

If the acquisition of shares is planned in 2024, it might be good to still share the abovementioned documents with the DTA ultimately 1 April 2024, so a discussion around the application of the RETT concurrence exemption is avoided in case the project gets delayed (and closing unexpectedly takes place after 1 January 2025).