The Dutch Ministry of Finance intends to introduce VAT revision rules on services. This will result in additional VAT compliance for real estate investors. Transactions involving real estate will also be impacted by the new rules. This follows from a consultation paper that was published yesterday. The law proposal is not yet final and may change as a result of the consultation of the public.

VAT due diligence

In the Netherlands many transactions involving real estate are treated as a transfer of a going concern for VAT purposes resulting in a transfer of VAT obligations from seller to the purchaser. If the proposal is implemented there will be more situations in which the repayment of VAT that was initially refunded to a seller can become due by a purchaser. VAT due diligence will become more important. The new rules are expected to be applicable as from 1 January 2018.

For services relating to real estate the VAT revision period will be ten years according to the proposal. This means that if the VAT use of the service will change during this period this may give rise to repayment of VAT that was earlier refunded or to refunds if initially no refund was granted.