Demerger exemption for transfer tax purposes also applies to share acquisition in property company
The Supreme Court has confirmed that the transfer tax exemption for a demerger must be interpreted broadly. The demerger exemption (old regime) is not limited to the transfer of assets at the level of the acquiring company. The associated share acquisition in a property company may also fall within the scope of the exemption.
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Case
In this case, the interested party held a 50% interest in a company (hereinafter: the demerging company) that owned immovable property in the Netherlands and Germany. In 2020, a legal demerger took place, with the demerging company ceasing to exist and all of its assets being transferred to two newly incorporated companies. This demerger turned the interested party into the sole shareholder of one of these newly incorporated companies (‘the BV’), into which the immovable property had been transferred. The transfer of the immovable property meant that the BV qualified as a property company. The acquisition by the BV of the Dutch immovable property was exempt under the demerger exemption in Article 15(1)(h) Legal Transactions (Taxation) Act (‘LT(T)A’) (Wet op belastingen van rechtsverkeer). The dispute before the Court of Appeal was about whether the demerger exemption also extended to the interested party in the BV acquiring the shares.
Court of Appeal judgment
The Court of Appeal considered that the legislature had failed to take into account the situation in which a company created by a demerger qualifies as a property company. The Court of Appeal held that neither the wording of the Act nor the Taxation of Legal Transactions (Implementation) Decree (Uitvoeringsbesluit belastingen van rechtsverkeer) provides any basis for disregarding the demerger exemption in the acquisition of the shares. Furthermore, the Court of Appeal ruled that the wording and essence of the Act did not provide sufficient grounds to reach a different conclusion. The State Secretary lodged an appeal in cassation against this ruling, arguing that the Court of Appeal had applied the exemption too broadly.
Supreme Court judgment
The Supreme Court nevertheless upheld the Court of Appeal’s judgment, emphasising that Article 15(1)(h) of the LT(T)A provides, in general terms, for an exemption for acquisitions in the context of a demerger. The issue and associated acquisition of shares constitute an inherent part of a legal demerger and, hence, within the meaning of this exemption this must be regarded as an acquisition in the context of a demerger.
Furthermore, the Supreme Court considered that this interpretation is consistent with the aim and purpose of the legislation, because it is evident from the parliamentary debate that the exemption is intended to ensure that legal demergers based on business motives are not hindered by taxation. In doing so, the legislature sought to take account of the position of shareholders, so that they may be exempt from transfer tax if the demerger is based predominantly on business motives. The Supreme Court saw no indication that the legislature intended to make an exception for shares in a property company. The Supreme Court therefore declared the State Secretary’s appeal in cassation unfounded.
Please note that the proceedings relate to the old demerger exemption regime, which also raises the question of whether this may affect the new regime.
- Supreme Court 27 March 2026, 25/02194, ECLI:NL:HR:2026:494
