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06 December 2019 / article

No exemption from real estate transfer tax on the acquisition of retirement homes with a book profit

According to the Supreme Court, the exemption from real estate transfer tax for the transfer of tasks between public benefit organisations ('PBOs') cannot be applied if the selling PBO achieves a book profit.

New Belgian Company Code

For the purpose of its public housing activities, a PBO has acquired the ownership of four complexes of retirement homes from another PBO. A book profit was made on this sale. The price was determined on the basis of a public law regulation.

Question of law

The dispute is whether the acquisition of the four complexes of retirement homes is exempt from real estate transfer tax on the basis of the exemption for acquisitions in the context of a transfer of tasks between PBOs. According to the Arnhem-Leeuwarden Court of Appeal, this exemption was not applicable because a book profit was on the transfer. The Court of Appeal therefore ruled that commercial factors have played a role, as a result of which the transfer of task exemption does not take place. The interested party lodged an appeal in cassation.

Assessment by the Supreme Court

According to the Supreme Court, it cannot be deduced from the legislative history that it is important for the exemption that the purchase price partly relates to the hidden reserves in the immovable property. The purchase price in this case was partly based on this, so that these reserves remain available for the transferring PBO. Since legislative history does not show that this is important for assessing the application of the exemption, the Arnhem-Leeuwarden Court of Appeal has, according to the Supreme Court, rightly ruled that it may not be applied because commercial factors played a role.

Practical implications

Legislative history shows that this exemption has been included in order to prevent real estate transfer tax from playing a role in the transfer of immovable property between PBOs. Commercial factors should not play a role. Apparently this is even the case if a book profit is achieved through a purchase price that is regulated under public law.

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