Spring Memorandum 2024 - indirect tax update from the Dutch parliament

This month, the Spring Memorandum 2024 was published by the Dutch parliament. It contains tax policy measures for 2024 and 2025. Although rumours circulated that the real estate transfer tax rate of 10.4% would be reduced, no reduction has been proposed. The note partly reiterates what was already published in the Tax Plan 2024 and the Spring Memorandum 2023.

Two of the most relevant topics in the field of indirect taxation may be summarised as follows:

• Short-term rental schemes in VAT: As from 1 January 2026, a new VAT adjustment period of 5 years will be introduced for (extensive) refurbishment works (not resulting in a newly build property). Currently a real estate developer could renovate an existing building and temporarily use this property for a VAT taxable lease and thus obtain a full VAT deduction right on the costs of the refurbishment. After one year, the developer can use the property for VAT exempt services (e.g. sale or lease) which does not affect the VAT recovery right on the refurbishment works already deducted. To combat abuse of short-term rentals (and thus VAT deductions), a five-year adjustment period might be introduced, which requires the developer to repay part of the initially deducted VAT if it uses the immovable property for VAT exempt activities within 5 years after the year in which the refurbishment is carried out.
• Amendment of the concurrence exemption in real estate transfer tax: As of 1 January 2025, the concurrence exemption will no longer apply to share transactions in which less than 90% of the real estate is used for VAT-taxed services. A new rate of 4% will be created for these transactions. For more information on the rule, see our previous article.

Key takeaway

Even though the Spring Memorandum did not announce any new measures, businesses will have to consider the abovementioned changes in their Real Estate planning.

Reference

• Voorjaarsnota 2024 (only available in Dutch)