The acquisition of immovable property located in the Netherlands is a taxable event for Dutch transfer tax purposes (belastbaar feit). Once this acquisition has taken place, real estate transfer tax (RETT) is generally due, and subsequent events occuring after this acquisition generally have no impact on the obligation to pay this tax. However, in the case of conditional acquisitions—such as transfers subject to a condition subsequent — this can be different.

Specifically, when a condition subsequent is fulfilled after the transfer, the purchaser finds themselves in a situation where he has had to pay transfer tax, while ownership of the immovable property has, by operation of law, reverted to the original seller (as a result of the condition subsequent). The Dutch Transfer Tax Act (Wet op belastingen van rechtsverkeer (WBR)) addresses this situation through Article 19, which offers a solution: a request by the Purchaser for refund of the RETT paid. This short read focuses on the possibility of such a refund in specific cases where a resolutive condition has been fulfilled.

Based on Article 19 WBR, the purchaser may request a refund of the RETT paid, provided that both the factual and legal situation prior to the acquisition are restored in the same way as before the transfer (feitelijk en rechtens herstel). For such restoration, the seller must, among other things, refund the full purchase price received. In practice, however, parties may wish to settle an amount reflecting any change in value of the property between the time of acquisition and the moment the resolutive condition is fulfilled. Such a change in value may, for example, result from construction, renovation, or demolition activities carried out during this period. It was previously assumed that if the seller did not refund the exact original purchase price, a refund of transfer tax could not be claimed, since the situation was not restored in the strict sense.

The State Secretary for Finance considered this outcome undesirable in all circumstances. Therefore, in a policy decree dated 3 October 2019 (no. 2019-128190) (“Decree”), it was approved that a refund of RETT may still be granted even if, alongside the refund of the purchase price, an amount is settled to account for a change in the value of the property between the time of acquisition and the reversion of ownership to the seller as a result of the fulfilment of the resolutive condition. Consequently, even after construction, renovation, or demolition works, a refund of RETT may still be possible.

Various conditions apply for a refund in accordance with the Decree, the most significant being: (i) the settled amount must relate exclusively to, and be no greater than, the change in value attributable to construction, renovation, or demolition of the property; (ii) the change in value must be determined based on the state of the property after such works, as valued at the original date of acquisition; and (iii) the settlement must serve to comply with an existing obligation between the parties to compensate for damages. Additionally, all other requirements under Article 19 WBR must be met.

The approval in the Decree applies to situations in which there would be not a situation of factual and legal restoration (feitelijk en rechtens herstel) solely due to the settlement of a change in value. The Decree therefore allows for a refund in the event of a restitution amount that differs from the original purchase price. It is important to note that a request for a refund may (still) be rejected on other grounds. For instance, interim leasing: according to the State Secretary, case law shows that there can be no factual and legal restoration in the event of interim leasing of the immovable property or the establishment of a limited right. In such cases, the interim conclusion of a lease agreement or the establishment of a limited right prevents the transfer tax already paid from being refunded.

Should you have any questions regarding or seeking advice for the refund claims of transfer tax and or the (conditional) transfer of immovable property, please feel free to contact one of the specialists at Q.G.M.