Budget Day: changes to transfer tax

The so-called anti-abuse provision for the first-time buyer exemption in the transfer tax is being amended. The first-time buyer exemption and the reduced 2 percent rate will now also take into account unforeseen circumstances that arise before the acquisition. An exemption scheme will also be introduced for certain cases of repurchasing a home. These measures are included in the 2022 Tax Plan bill, which State Secretary for Finance Hans Vijlbrief submitted to the House of Representatives on Tuesday during Budget Day.

To prevent homes from being subdivided to remain below the €400,000 property value threshold, an anti-abuse provision has been included in the Transfer Tax Act (WBR) (Article 9, paragraph 7, WBR). This provision is being tightened and relaxed. For example, it has been added that this provision also applies if, within one year of an acquisition in which the first-time buyers' exemption was applied, an accessory property, such as a garage or shed, is acquired. In this case, the combined value of the acquisitions must exceed the property value threshold. On the other hand, the anti-abuse provision will no longer apply to acquisitions by, among others, individuals who inherit from someone who applied the first-time buyers' exemption. The amendment to Article 9, paragraph 7, WBR carries over to Article 14 WBR, where a new paragraph 3 is being inserted.

Unforeseen circumstances
To apply the starter exemption or the reduced rate of 2 percent, the principal residence criterion must be met. The WBR (General Tax Act) allows for consideration of unforeseen circumstances that arise after the acquisition (Article 15a, paragraph 5, WBR), such as death or divorce. It is not stipulated that consideration can be given to unforeseen circumstances that arise after the purchase agreement has been concluded but before the acquisition. The bill proposes to regulate this in Article 15a, paragraph 5, of the new WBR.

Buyback
The State Secretary previously promised the House of Representatives to investigate whether it is possible to waive the higher 8 percent rate in certain cases of repurchase related to a sales regulation clause. Following this investigation, it is proposed to include a transfer tax exemption in the WBR for these cases (Article 15, paragraph t, WBR). This concerns cases in which a residential property is repurchased and acquired from a natural person related to a sales regulation clause imposed on that person upon the previous acquisition. In these situations, it is undesirable – under certain conditions – to tax the acquisition at 8 percent, even though the acquirer (for example, a housing association) will not use the property as their primary residence.

Six bills
The 2022 Tax Plan bill is part of the 2022 Tax Plan Package , which this year consists of 6 bills: Tax Plan 2022, Other tax measures 2022, Act on the adjustment of the tax regime for stock options, Act on the delegation of provisions for compensation in hardship cases, Act on the implementation of the tax liability measure from the second EU Anti-Tax Avoidance Directive and Act on the reduction of the rate of the landlord levy and the monthly adjustment of the amounts of tax reductions.

Follow-up
The House of Representatives' Finance Committee will now process the bills in writing, so they can be debated in plenary session in mid-November. After that, the Senate can proceed with the bill.