Question of law and importance

The Court of Appeal of The Hague had to rule on the application of the 2% rate for transfer tax where an apartment right had been acquired in a former office building that had been transformed into housing. Prior to the acquisition, the demolition on the relevant floor of the building had just been completed and the contractor had started replacing window frames. Further construction work still had to take place.

Assessment by the Court of Appeal

The Court of Appeal ruled that the 2% rate applies, but on different grounds than the District Court that came to the same final assessment earlier. Where the District Court did not find that the work carried out for delivery led to a clear conclusion, so that the public law regulations were invoked, the circumstance that the demolition had been completed, the construction had started and the building had been divided into apartment rights was sufficient for the Court of Appeal to arrive at the judgment that this was a building that by its nature is intended for residential use. In doing so, the Court of Appeal took into account that the qualification as a dwelling is fully in line with the existing design and implementation of the transformation plan and the permits issued prior to acquisition.

Practical implications

This judgment is important in determining the rate for the levy of transfer tax on the acquisition of immovable property during a transformation from a non-residence to a residence. On the basis of this ruling, the moment at which real estate qualifies for the 2% rate seems to be the moment at which the first construction work after demolition is performed.