NETHERLANDS Law and Practice Contributed by: Coco van Zuiden, Marijn Bodelier, Sabine Schoute and Simone Wijngaard, Greenberg Traurig, LLP
8.3 Municipal Taxes Owners and users of real estate are liable for a variety of local taxes and charges imposed by municipalities, provinces and water boards (which are a distinctly Dutch institution). Municipalities impose an annual property tax on real estate owners and/or users (at varying rates). In principle, these taxes are based on the property’s fair market value. This value (called the “WOZ value”) is determined by the local authorities based on the Dutch Property Valua - tion Act. Taxpayers can file an objection if they do not agree with the assessed WOZ value. Other local taxes and charges include permit fees, energy tax and sewerage charges, as well as water system levies and pollution levies (the latter two being imposed by the water boards). 8.4 Income Tax Withholding for Foreign Investors If an investment in Dutch real estate is held by a foreign investor through a Dutch company own - ing the real estate, dividend withholding tax at a general rate of 15% applies to distributions made by such Dutch entity to the foreign inves - tor. A lower treaty rate may be available. Dis - tributions to qualifying corporate shareholders (with an interest of 5% or more) resident in the EU or jurisdiction that has concluded a tax treaty with the Netherlands, may be fully exempt from dividend withholding tax, subject to certain anti- abuse provisions. There is a conditional withholding tax on inter - est and royalties in abusive situations at a rate of 25.8%. Briefly put, abusive situations arise if interest or royalties are paid to an entity in a low-tax jurisdiction, or if there is an artificial con - struction set up to avoid tax.
seller may be recoverable from the Dutch tax authorities if the real estate is used for activities subject to VAT (for example a VAT taxable lease). In the event VAT is due because parties have opted for a taxable supply, the purchaser must account for the VAT by reporting it as reverse- charged VAT in its VAT return. If real estate is sold by means of the transfer of shares in a company owning the real estate, no VAT is due on such transfer, since share transac - tions are generally exempt from VAT. 8.2 Mitigation of Tax Liability No stamp duties apply in the Netherlands. The acquisition of real estate located in the Netherlands is generally subject to 10.4% RETT. In addition, the acquisition of shares in a quali - fying real estate company is a deemed acquisi - tion of real estate, which is subject to RETT if the acquirer obtains a “substantial interest” (of at least one third) in such company. A qualifying real estate company is a legal entity, of which at least 50% of the assets consist (or consisted during the preceding year) of real estate, and simultaneously 30% of the assets consist(ed) of real estate located in the Netherlands, provided that the real estate as a whole is (or was) for at least 70% conducive to the acquisition, aliena - tion or exploitation of the real estate. Under certain conditions, a RETT exemption may apply in case the transfer of real estate is subject to VAT by virtue of law (ie, in case of newly constructed real estate or building land, see above). The RETT exemption may under cer - tain conditions also apply upon the acquisition of shares in a real estate company that owns newly constructed real estate or building land.
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