The state secretary for Finance has updated the effective policy concerning the chargeable event in transfer tax in a new decision [1]. I discuss the key changes below.
1. When reversing the conversion of shares of a property body into depositary receipts, it is no longer mandatory that the requirement stipulated that all shares at that time were converted into depositary receipts was satisfied when the shares were converted into depositary receipts.
2. On request, an allowance will be granted for the amount of the transfer tax owed when an investment company with variable capital buys back its own shares and temporarily holds these in its portfolio for re-issue. The conditions for this are (i) that the investment company must qualify as an investment company with variable capital in the sense of Article 76a of Book 2 of the Dutch Civil Code or a similar foreign legal scheme; (ii) the shares bought back and re-issued must be identifiable by means of numbering; (iii) after the end of each financial year, the investment company must net the number of shares bought back in the financial year with the number of shares re-issued in the same financial year. To the extent that, after the end of the financial year, the total number of own shares bought back in the financial year exceeds the number of shares re-issued in the financial year, the own shares that have been bought back in the financial year and which are still in the company’s possession at the end of the financial year will be cancelled within two months after conclusion of the financial year. If these shares have not been cancelled within two months, transfer tax will still be owed on the value of the immoveable properties represented at the end of the financial year by the own shares that have not been cancelled (on time); (iv) the financial year must be 12 months. Only the first financial year of a newly established investment company may be longer or shorter than 12 months. If the financial year is longer, it must be maximum the period from the incorporation until the end of the calendar year of incorporation, plus 12 months; (vi) the request for an allowance for the transfer tax is filed with the inspector of the Tax and Customs Administration within two months after the end of the financial year.
3. If the managing partner or administrator/custodian of a (foreign) partnership without legal personality or (foreign) fund for joint account acquires an immoveable property for the account of the partners/participants (resulting in a split between the legal and economic ownership of that immoveable property), the levy of transfer tax on the acquisition of economic ownership can be omitted by the partners/participants if: (i) the acquisition of the legal ownership and the acquisition of the economic ownership take place simultaneously or on the same day in accordance with the statutory or contractual obligations between the managing partner or administrator/custodian and the partners/participants, and (ii) the managing partner or administrator/custodian has paid transfer tax on the acquisition of the legal ownership on the taxable amount as referred to in sections 9 to 13 of the Legal Transactions (Taxation) Act (hereafter: WBR), without taking into account the acquisition of the economic ownership by the partners/participants which took place in immediate and direct connection with the acquisition of legal ownership. The acquisition of legal ownership of the immoveable property must therefore be effectively subject to the levy of transfer tax. This means that no exemption may apply for the acquisition.
4. If, as a result of the statutory or contractual relationships, the economic ownership of an immoveable property is transferred to the managing partner or administrator/custodian by the partners/participants, before that immoveable property is transferred to the end buyer by the administrator/custodian the levy of transfer tax may be omitted upon the acquisition by the legal owner of the economic ownership in the sense of section 2 (2) of the WBR of an immoveable property or rights to which this is subject if subsequently and in immediate and direct connection therewith the legal owner transfers full ownership to a third party. Third party can also denote a legal form without legal personality. In this situation the managing partner or administrator/custodian must transfer full ownership to a third party on the same day and in immediate and direct connection with his own acquisition of the economic ownership. The deed of transfer must also mention that the parties do not take the position in the deed that the legal owner (seller) acquired economic ownership in immediate and direct connection with the transfer to the buyer and that the buyer will not invoke section 13 of the WBR in relation to that. It will also be documented in the deed that the agreement that the buyer waives any reliance on section 13 of the WBR must be regarded as a third party clause in favour of the Tax and Customs Administration and that this third party clause is accepted by the parties in the deed as voluntary deputy for the Tax and Customs Administration.
5. The decision also discusses the alternative that has been developed in the notarial practice for the current system of buying and transferring immoveable properties. In this system, the civil-law notary draws up the contract of sale in a single (notarial) deed which also contains the transfer of the immoveable property subject to a number of suspensive conditions. The most important of these is the payment of the purchase price followed by the drawing up and registration of the deed of discharge. In his decision, the state secretary addresses a number of transfer tax aspects in this alternative system. In the alternative system for purchase and transfer, at the moment the contract of sale and deed of transfer have been signed, the buyer only acquires the right to transfer of the immoveable property. The state secretary indicated that economic ownership has not (yet) been acquired at that moment. When the contract of sale and deed of transfer have been signed, therefore, transfer tax is not (yet) owed, unless the buyer acquires more than just the right to transfer (such as a key certificate, for instance). In the alternative system for purchase and transfer, the acquisition for the purposes of transfer tax takes place at the moment the deed of discharge is drawn up and signed. That is the moment at which transfer tax is owed. If the deed of discharge is not drawn up immediately after the suspensive condition of payment of the purchase price has been satisfied, there can be a case of acquisition of economic ownership in the sense of section 2 (2) of the WBR at the moment the purchase price is paid. It is not assumed that economic ownership has been acquired if the deed of discharge is prepared within two weeks after payment of the purchase price.
[1] Decision of 3 June 2014, BLKB/2014/194M, Government Gazette 2014/15967. This decision replaces the decision of 14 December 2011, BLKB2011/1803M