NETHERLANDS Law and Practice Contributed by: Coco van Zuiden, Marijn Bodelier, Sabine Schoute and Simone Wijngaard, Greenberg Traurig, LLP
7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Additional forms of security to guarantee a con - tractor’s performance on a project, such as step- in arrangements, credit letters, bank guarantees, parent guarantees, escrow arrangements and/or specific payment arrangements, are common. 7.6 Liens or Encumbrances in the Event of Non-Payment Under Dutch law, a contractor working on or still exercising actual control over its work on site of a property, can exercise a right of retention for its unpaid invoices for work done, or suspend working on the development until payments are made. By means of rather strong right, the contractor can take possession of the property and con - tinue to do so until it gets paid, but parties can deviate from this (so a waiver/restriction is often agreed upon). 7.7 Requirements Before Use or Inhabitation There are requirements that must be met (under certain conditions) before a project can be inhabited or used for its intended purpose, such as notification of fire-safe use, notification in the sense of the Activities Degree – a report to the competent authority about, among other things, the location, activities, processes and layout, and the performance of a company that must be submitted by specific types of companies – and a valid energy label. 8. Tax 8.1 VAT and Sales Tax The supply of real estate is exempt from VAT, but exceptions apply:
• the supply of newly constructed real estate is subject to VAT by virtue of law if the supply takes place before or within two years after the asset was first occupied; • the supply of building land is subject to VAT by virtue of law; and • if the purchaser of the real estate is entitled to at least 90% deduction of input VAT incurred during the period elapsing between the time of supply and the end of the calendar year following the year in which supply took place, parties may under certain conditions opt for the supply to be subject to VAT. In addition, the supply of real estate that has been leased out may qualify as a transfer of a going concern. In that case, provided certain conditions are met, the transfer will not be treat - ed as a supply for VAT purposes. The VAT rate is 21% and VAT is generally levied by the seller. VAT due by the purchaser to the 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.
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