Transfer tax on compensation for a deferred delivery
The compensation paid by a purchaser to a vendor for a deferred delivery of an immovable property is, according to the Court of Appeal, also subject to 6% transfer tax.
Point of law and interest
Transfer tax is in principle payable on the value of an immovable property to which the acquisition relates, where the value is at least equal to the consideration. The vendor and the purchaser had reached agreement on the sale and purchase of an immovable property, part of which was still under development. Part of the agreement was that the transfer would take place on 1 December 2015. Since the purchaser had not managed to get the financing arranged in time, the transfer had to be deferred. For the deferral, the vendor stipulated a further payment in addition to the purchase sum. According to the purchaser, this payment was to do with the underprofitability of the immovable property; the vendor was of course not obtaining any return on the part of the building that was still under development, whereas that would have been the case if the property had been transferred in time.
If other compensation or payments are agreed in addition to the purchase price for an immovable property, the question may arise whether transfer tax is payable on these too. The Court of Appeal gave its ruling on this case on 20 March this year.
Assessment by the Court of Appeal
The Court of Appeal holds that it is plausible that the payment concerned in this case was actually to do with the underprofitability. Nevertheless, this does not mean that it is a separate performance. In fact, the Court of Appeal holds that the compensation is a payment that is related to the rise in value of the development site that the vendor wished to have compensated in the consideration. In these circumstances, transfer tax is also payable on this compensation.
An appeal in cassation has meanwhile been lodged against this ruling.
Agreements are often made in property transactions that may lead to a higher or lower payment obligation for the purchaser. The question then arises whether this affects the value and/or the consideration, and therefore whether it will lead to a higher or lower base amount over which the transfer tax due is calculated. We will monitor this case going forward and keep you updated.
If you have any further questions on this issue or would like to receive more information, please contact Jérôme Germann, Luca van Silfhout or your trusted adviser at the Loyens & Loeff Real Estate Tax Team.