Transfer tax changes as of January 1, 2021

What is transfer tax
Transfer tax is a tax levied on acquisitions of real estate located in the Netherlands or of rights to which such property is subject.

You pay transfer tax if you become the owner of:

• a property, such as a home, commercial property or piece of land;
• rights to immovable property, such as a building right or leasehold right;
• Shares in a public limited company (NV) or private limited company (BV) whose assets consist primarily of real estate. We call this an Article 4 entity;
• a membership right of a (cooperative) apartment association.

Exemption
If you have to pay transfer tax, you may be eligible for an exemption. We're happy to help. This exemption is available under certain conditions, such as:

• you must pay both transfer and sales tax;
• real estate is divided between cohabitants;
• you buy an estate;
• there is a transfer of the business to family members (from parents to children, from grandparents to grandchildren and from brothers or sisters to each other);
• there is a contribution to a partnership, general partnership or limited partnership;
• a company is being converted into a public limited company or a private limited company;
• a legal entity merges, splits or reorganises within a group;
• you buy agricultural land (for example, land for arable farming, livestock farming or, as we often see in the Westland, horticulture) or natural land (such as forest land and nature reserves);
• lands are being redeveloped (land consolidation);
• there is urban restructuring.

How do you pay transfer tax?
How you pay transfer tax depends on how you became the owner:

• You have had a notarial deed drawn up by a notary, who then registers it with the Land Registry. You then become the legal owner;
• You have had a notarial deed drawn up by a notary, but that deed is not registered with the Land Registry. You then become the beneficial owner;
• You haven't had a notarial deed drawn up. You then become the beneficial owner;
• you have had a notarial deed drawn up.

If we've drawn up a notarial deed, you don't have to do anything. We'll then file your tax return digitally, collect it, and pay the transfer tax on your behalf. We're even liable for this. We'll then inform the Tax Authorities:

• whether you have to pay transfer tax and, if so, how much;
• whether you are entitled to one or more transfer tax exemptions.

Old transfer tax rate
The old transfer tax rate was:

• 2% for homes and associated appurtenances, such as a garage, shed or garden house;
• 6% for all other real estate, such as commercial properties.

Transfer tax rate differentiation as of January 1, 2021
The Transfer Tax Differentiation Act, which came into effect on January 1, 2021, differentiates the rates as follows:

• change of the general rate from 6% to 8%;
• the 2% rate is only applicable to residential properties to a limited extent; and
• There will be a transfer tax exemption for (0%) starters.

General rate increased to 8%
The general rate has been increased from 6% to 8%. The 8% rate now also includes:

• the acquisition of a home by a non-natural person; and
• the acquisition of a home by a natural person who will not use the home as a principal residence, i.e. as an investment.

When does the 2% rate apply?
The 2% rate only applies if:

• there is a residence; and
• the home is acquired by a natural person; and
• the purchaser will use the home as his/her principal residence; and
• the purchaser declares in writing that he will use the home as his principal residence.

The 2% rate does not apply to the acquisition of economic ownership, even if all the aforementioned conditions are met. In that case, the rate is always 8%.

Loose accessories
The subsequent acquisition of, for example, a strip of land adjacent to the house is now subject to 8% transfer tax.

When does the 0% rate apply (the starter home exemption)?
To qualify for this exemption, the following conditions must be met:

• the conditions for the 2% rate must be met;
• the acquirer is 18 years of age or older and younger than 35 years of age;
• the acquirer has not previously made use of this exemption.

The eligibility for the first-time buyer exemption will need to be assessed for each individual purchaser. The 0% rate does not apply to holiday homes or to transfers of beneficial ownership.

From April 1, 2021, the additional requirement is that the house may not be more expensive than €400,000.

Incidentatlly
While the differentiation of the transfer tax for first-time buyers seems appealing, the proposal is causing considerable unrest in the real estate market. Prices appear to be rising in the tight market now that some buyers can afford to pay 2% more. Investors' returns will come under pressure. They will have to raise rents or write down the value of their properties. Real estate financiers may view this decline in value as an increased risk and raise their interest rates. This will result in a decline in transaction volume, and the consequences for the government will also be negative.

Take action now
Take action. Come by or give us a call. To schedule an in-office meeting or a video call, please call +31 (0)10 44 53 777. We look forward to seeing you.