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Netherlands: Acquisition of legal ownership of real estate entities not subject to transfer tax

Netherlands: Legal ownership of real estate entities

The Court of Appeals ‘s-Hertogenbosch held that a fund manager of a German entity had not acquired an interest in three Dutch real estate private limited liability companies for which it had acquired legal ownership of shares and thus was not liable for the Dutch real estate transfer tax.


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The decision, dated 24 January 2020, was published on 27 February 2020.


The taxpayer (a Kapitalverwaltungsgesellschaft incorporated under German law) acquired all the shares in three Dutch real estate private limited liability companies (besloten vennootschappen—BVs). These BVs qualified as real estate legal entities. The shares, therefore, could be classified as deemed real estate.

At the time of the acquisition, the taxpayer acted as the fund manager of a Sondervermögen (SV) incorporated under German law, and the SV was regarded as a segregated fund without legal personality. The SV invested in real estate for the account and risk of its participants. The participants of the SV were each entitled to less than a one-third share of the income and value of the acquired shares in the real estate legal entities.

Pursuant to the provisions of the Kapitalanlagegesetzbuch and the Allgemeine Anlagebedingungen and Besondere Anlagebedingungen (KAGB), the taxpayer acquired the legal ownership of the shares in the three BVs. However, the taxpayer was not entitled to the income from the shares because it distributed the income to the participants in the SV. The shares also did not become part of the taxpayer’s assets, but were kept segregated from them.

The taxpayer and the Dutch tax inspector disagreed about whether the taxpayer, in acquiring the shares in the real estate legal entities, also acquired an interest and thus must pay real estate transfer tax.

The Court of Appeals held that the provisions of the KAGB so severely restrict the legal ownership rights that the taxpayer had no interest in the shares. Thus, although the taxpayer, as legal owner, could exercise the voting rights in those shares, this did not mean that it also had an interest in those shares.

The fund manager was found to hold the shares solely for the account and risk of the SV. The participants in the SV were those who actually have the interest in the shares in the real estate legal entities. However, the participants each held less than one-third of the interest. There was no taxable event, and both the taxpayer and the participants did not have to pay real estate transfer tax.

KPMG observation

The acquisition of shares in real estate legal entities is, in principle, a taxable event—provided that the acquirer also acquires an interest of one-third or more in the shares. The meaning of the term “interest” depends on the facts and circumstances.

The judgment in this case could have implications for shareholdings in real estate legal entities that are acquired by investment funds without legal personality—for example, when a general partner acquires the shares in a real estate legal entity on behalf of the participants in a limited partnership (commanditaire vennootschap).

At present it is not known whether this judgment will be appealed before the Supreme Court.

Read a March 2020 report prepared by the KPMG member firm in the Netherlands

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