designated public registers and checks of various other registers), the civil-law notary releases the funds to the Seller. Each civil law notary is obliged to keep a special account in his name with a bank acknowledged by the Dutch authorities, stating his capacity; this/these account(s) is/are exclusively intended for funds the civil-law notary retains in relation to his activities in that capacity. The aforementioned statutory provision further implies that the funds in this special account, which is called a third-party account, do not belong to the civil-law notary, but to the parties entitled to them. This means that the balances in this account cannot be attached by the civil- law notary’s creditors and that, should the civil - law notary get into financial difficulties or go into involuntary liquidation, the balances in the account cannot be involved in the financial difficulties or the liquidation. The above has been included in the law to protect the interests of the civil- law notary’s clients who need to be able to rely on the fact that the funds they have deposited with the civil-law notary will reach the parties they are intended for. The civil-law notary is the only party who can dispose of this account. Tax issues Value added tax (VAT) In general acquisition of real estate is not subject to VAT (21%), except for newbuilding and/or building sites. In case VAT is applicable, there is usually an exemption from Transfer tax. Newbuilding is considered newbuilding in the building phase, when it is completed and occupied, up until two years after occupation. In the event newbuilding is purchased within two years after occupation and the seller is subject to VAT, VAT and Transfer tax are both applicable. Depending on the tax status from buyer for VAT purposes, VAT can be reclaimed

in the VAT tax return. When a natural person – not subject to VAT - is selling newbuilding within two years of occupation only Transfer tax is applicable. In case seller and buyer are both subject to VAT and buyer will use the real estate for 90% or more for VAT business activities, they can opt for a transfer of real estate with VAT. Transfer tax is also payable. VAT can be reclaimed by buyer in the VAT return. A revision period is applicable for 1/10 of the initially reclaimed VAT in the following nine years. When buyer in any year performs less than 90% business activities for VAT, the buyer has the obligation to partially pay back VAT. Research on the tax history of real estate between a tax advisor and a civil-law notary is highly recommended especially with regard to commercial real estate. Transfer tax Transfer tax is imposed on the acquisition of existing, used immovable property and limited rights in rem thereto (not security rights such as mortgage). The tax rate is 2% for residential properties and 8% (2021 and 2022) for commercial and all other properties. From 2021, persons between 18-35 years can use a one-off exemption for transfer tax on residential property. The exemption is intended to improve the market position of starters. The taxable base is the purchase price or the fair market value of the real estate when this value exceeds the purchase price. Subject to Transfer tax is the transfer of: I. Real estate including rights derived from real estate such as leasehold, right of superficies and apartment right.


An economic ownership in real estate. The economic ownership includes the risks of change of value of the real

ILN Real Estate Group – Buying and Selling Real Estate Series

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