Supreme Court renders benchmark ruling: Property transfers not always taxed

The Dutch Supreme Court recently handed down a benchmark judgement that is of great importance to property investors. The Supreme Court held that in specific cases transfer of title is not subject to tax.

The Supreme Court held that Section 31 of the Turnover Tax Act 1968 (“WOB”) applies to property investors who turn to account property for the purpose of generating revenues from it for a long time – termed “quasi entrepreneurs” - who rent out properties in their portfolio to other quasi entrepreneurs. When such a transaction is carried out, no tax is levied while any running review period passes on to the buyer and will therefore not commence anew.

For premises built under ten years ago or if the parties involved opted for transfer subject to tax within the last ten years, a review period may still be applicable. Hence, when applying Section 31 of the WOB, the parties involved no longer have to opt for transfer subject to tax and no new review period of 10 years will be applicable.

For more information, please contact Michelle van Zanten, Notarial Practice.

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