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06 December 2019 / article

Real estate transfer tax due on acquisition of self-storage company

According to the District Court of The Hague, a company that is primarily engaged in renting out storage space qualifies as a real estate company, as a result of which real estate transfer tax is due on the acquisition of shares.

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The activities of the self-storage companies consisted of providing storage space, climate control and security of these storage spaces, assisting with the storage and removal of goods from the storage space, the sale of storage and packaging materials and locks, taking out insurance for the stored goods, the rental of trailers and the provision of trolleys and the like. The shares in this company were transferred.

Question of law

The dispute is whether this self-storage company qualifies as a real estate company, as a result of which real estate transfer tax would be payable on the acquisition of shares. If this question is answered in the affirmative, there is also a dispute as to whether the additional tax assessment has been set at an excessive amount.

Assessment by the District Court

The District Court of The Hague has found that the company is primarily engaged in letting immovable property for the purpose of storing goods, thus fulfilling the so-called ‘purpose condition’. The other activities are considered by the Court as additional activities performed in the context of the letting. This observation is supported by the annual figures, which show that the turnover was largely achieved by letting storage space.

The levying of real estate transfer tax could still be omitted at the moment that the so-called ‘holding condition’ is not met. That is why there is also a discussion about the value of the immovable properties. A Purchase Price Allocation report was submitted in support of the value advocated by the buyer. Although this report was drawn up by an independent third party, the Court did not go along with the report, because the buyer himself determined the method on the basis of which the value was determined and thereby gave further instructions to the valuer. In addition to the purpose condition, the holding condition is therefore also met, as a result of which the acquisition of shares is subject to real estate transfer tax.

Practical implications

This judgment makes it clear that in the event of a purchase of shares in a real estate company, it is very important to take into account any real estate transfer tax due.

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