Netherlands may introduce VAT revision principles on Real Estate services over a EUR30.000 threshold

The Dutch Ministry for Finance issued an internet consultation on VAT. It relates to a plan to introduce so-called “VAT revision” principles for VAT on Real Estate services herziening op kostbare diensten, akin to capital goods adjustment rules.

This had been proposed in 2017 when it encountered a lot of criticism and was put on hold. The project was considered far too complex and an undue imposition on stakeholders.

The current project still entails a significant increase in compliance obligations, since it requires any party that incurred high costs for real estate services (for instance for property renovation or maintenance) to monitor the use of the property for four years following the year in which the works were completed.

If the use changes from VAT-taxed use to VAT-exempt use or vice versa, a (partial) correction of previously deducted VAT may be in order. In the plans that were put up for consultation, a threshold of EUR30,000 for these services was suggested. The proposed legislation includes a grace period up to 1 January 2026, to allow time for stakeholders to implement the necessary compliance procedures.

Key Takeaway

Given the relatively low threshold and potential discussions on what constitutes a single “service” to take into account in this respect – this project means a significant increase in administrative obligations and potential discussions upon the sale/ acquisition of real estate on the exact (latent) VAT liabilities involved.