[BUYING AND SELLING REAL ESTATE IN THE NETHERLANDS]
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estate. Participation rights in real estate investment funds are exempt when acquiring interests below one/third in the fund, interests above one/third are subject to transfer tax (including interests already held). So called fictitious real estate, to be distinguished as follows: a. Shares in a (separate) real estate entity, which possessions mainly consist of real estate (acquisition of one/third or more of shares, including interests already held). b. Rights on memberships of association or cooperation in case the rights include the (exclusive) right to use of a building or a part from that building that is meant to be used separately.
Taxable income is profit (rental income, realized capital gains) minus costs and depreciation. Depreciation is limited to 100% of the determined value of the leased real estate of for the purposes of the Valuation of Immovable Property Act. Depreciation of real estate that is used by the corporate entity itself, is limited to 50% of the determined value of for the purposes of the Valuation of Immovable Property Act. Transfer tax is not deductible as costs from taxable profit and is part of the cost price of the real estate on the balance sheet. Interest on loans is in general deductible from profit. The corporate income tax rates for: 15% for taxable income between € 0 - €245.000; 25% for taxable income exceeding € 245.000. The corporate income tax rates for 2022: 15% for taxable income between € 0 - €395.000; 25,8% for ta xable income exceeding € 395.000. Income tax Real estate (not the residence/permanent home in the Netherlands) can be taxed with (personal) Income tax within three categories (Box 1, 2 and 3). Real estate which is part of a personal business (including partnerships that qualify as business) is subject to Box 1 progressive income tax rates with a maximum rate of 49,50%. Box 1 can be applicable for personal held real estate leased to certain affiliated companies. Net income from real estate may also fall under the scope of Box 1 in case the owner performs active real estate management in order to make more return on investment compared to passive real estate management.
III.
Several acquisitions of real estate are under conditions tax exempt for Transfer tax among which: - the acquisition of newbuilding and/or building sites in the phase before occupation (subject to VAT 21%); - acquisitions under the scope of business/family succession; - acquisitions in the event of mergers, restructuring and division of corporate entities. Corporate income tax A Dutch corporate entity investing in leased real estate is subject to corporate income tax. Real estate held by foreign corporate entities is considered as a permanent establishment for corporate income tax purposes.
ILN Real Estate Group – Buying and Selling Real Estate Series
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