NETHERLANDS Law and Practice Contributed by: Coco van Zuiden, Marijn Bodelier, Sabine Schoute and Simone Wijngaard, Greenberg Traurig, LLP
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 “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. However, if the real estate owned by the target company will for at least 90% be used for VAT- exempt purposes, the acquisition of a substan - tial interest in such company will be subject to 4% RETT. 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. Foreign corporate investors as well as Dutch companies investing in Dutch real estate are generally liable for Dutch corporate income tax on rental income and/or capital gains realised from real estate located in the Netherlands, at a rate of 19% on profits up to EUR200,000 and 25.8% on profits exceeding EUR200,000. A special tax regime exists for FBIs. FBIs are only allowed to directly invest in real estate located abroad and/or to hold indirect invest - ments in Dutch real estate properties. Under the FBI tax regime:
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