Netherlands: Acquisition of real estate legal entity subject to transfer tax

Netherlands: Acquisition of real estate legal entity

The Dutch Supreme Court (Hoge Raad) on 9 April 2021 issued a judgment concluding that real estate transfer tax applies on the acquisition of shares in a “real estate legal entity” (onroerendezaakrechtspersoon), even if this acquisition concerns only the acquisition of the legal ownership of the shares and is not accompanied by any economic interest in the shares or the underlying real estate.


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The Supreme Court based its conclusion on a formal interpretation of the term “interest” (belang) in the Legal Transactions Taxation Act (Wet op belastingen van rechtsverkeer) and rejected the interpretation of “interest" by the "Court of Appeals ‘s-Hertogenbosch" in its January 2020 decision (that accorded an economic meaning to the term “interest”).


In the case, the taxpayer (a Kapitalverwaltungsgesellschaft incorporated under German law) acquired all the shares in three Dutch real estate private limited liability companies (besloten vennootschappen—BVs).

  • The BVs qualify as real estate legal entities, and their shares were classifiable 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 regarded as a segregated fund without legal personality. The SV invested in real estate for its participants, and these participants 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 of the three BVs.
  • 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 the taxpayer’s assets.
  • The taxpayer and the tax inspector disagreed about whether the taxpayer, when acquiring the shares in the real estate legal entities, acquired an “interest” and thus was liable for the real estate transfer tax.

The Court of Appeals held that the provisions of the KAGB so severely restricted the legal ownership rights that the taxpayer had no interest in the shares. The fund manager was found to hold the shares solely for the account and risk of the SV, and it was the participants in the SV who actually had the interest in the shares in the real estate legal entities. Because the participants each held less than one-third of the interest, the Court of Appeals concluded that there was no taxable event and that both the taxpayer and the participants were not liable for the real estate transfer tax. Read TaxNewsFlash

Supreme Court

The Supreme Court held that in accordance with legislative history, the term “interest” must be understood as being “substantial control” and because the fund manager acquired more than a one-third interest in the shares and the related control, the conditions for levying real estate transfer tax were met.

KPMG observation

The acquisition of shares in real estate legal entities is, in principle, a taxable event, provided that the acquirer acquires an interest of one-third or more in the shares. The Supreme Court clarified that the term “interest” may also cover only the legal ownership of the shares in a real estate legal entity.

As a result of this judgment, the acquisition of the legal ownership (of more than a one-third interest) in the shares in a real estate legal entity will be treated as being the same as the acquisition of the legal ownership of the real estate itself.

Read an April 2021 report prepared by the KPMG member firm in the Netherlands

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