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24 June 2019 / news

No demerger exemption on real estate transfer tax when issuing shares in a real estate company

When a real estate company is legally demerged, two taxable events for the levy of real estate transfer tax can be identified, namely, the transfer of property under universal title and the issuing of the shares by the acquiring entity.

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The Gelderland District Court has ruled that the real estate transfer tax demerger exemption does not cover the issuing of shares.

Issue of law and interest

Depositary receipts have been issued for the shares in a real estate company with nine subsidiaries - also real estate companies. There are three depositary receipt holders. The real estate company was then legally demerged, whereby the assets were transferred to two newly incorporated private limited companies (B.V.) that also qualify as real estate companies. Two depositary receipt holders each received 50% of the shares in one of those newly incorporated companies. The question at issue is whether the demerger exemption from real estate transfer tax only relates to the acquisition of the subsidiaries by the newly incorporated company, or also relates to the acquisition of the shares in that company by the depository receipt holders.


The Gelderland District Court concurred with the inspector and ruled that the issuing of the shares by an acquiring entity, a real estate company, is subject to the levying of real estate transfer tax. The demerger exemption was introduced with regard to the transfer of assets from the demerging entity to the acquiring entity, and according to the District Court does not apply to the issuing of shares at the moment when that issuing is accompanied by an expansion of the tangible interest in the real estate.


The District Court has followed the policy of the state secretary. This interpretation of the demerger exemption, which is too limited in our view, substantially restricts the scope of application for the demerger exemption. This makes it harder for taxable entities to restructure without being subject to real estate transfer tax.


If you have any further questions on this issue or would like to receive more information, please contact Jérôme Germann, Jérôme Ariës or your trusted adviser at the Loyens & Loeff Real Estate Tax Team.​

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