On 15 September 2015, the 2016 Tax Plan was presented to the Dutch Parliament by the State Secretary of Finance containing, amongst others, an initiative to combat ground lease structures for the application of Dutch Real Estate Transfer Tax ("RETT").
A ground lease structure involves the sale of immovable property with the seller retaining a ground lease, i.e. a right to continue using the immovable property. Generally, RETT is levied on the value of transferred immovable property. Under the current regime, it is possible to offset the capitalized value of ground lease against the value of the immovable property upon the transfer of such immovable property in cases where the transferor reserves a right of ground lease. This way, the RETT tax base can effectively be lowered compared to a normal sale and lease back situation although the situation is economically identical.
In order to combat such structures, the Dutch tax legislator has introduced a legislative proposal in which offsetting the capitalized value of ground lease against the value of the transferred immovable property in cases where the transferor reserves a right of ground lease is disallowed as from 1 January 2016.
The proposed legislation also applies in cases in which an easement or a right of construction is reserved by the transferor of the immovable property.