The case

A multinational company that leases out storage space (self-storage) acquired all shares of a Dutch competitor in 2015. The activities of the acquired self-storage company consisted of providing storage spaces, climate control and security of these storage spaces, assisting with the storage and removal of goods from the storage space, selling storage and packing materials and locks, taking out insurance for the stored goods, renting out trailers and providing trolleys. In addition, business operations consisted of developing and updating the business concept and occupancy rate by way of active management and marketing. A dispute arose as to whether the acquired company qualified as a ‘real estate company’ for the purposes of real estate transfer tax. In addition to the assets test, which was met in this case, such qualification is subject to the condition that at least 70% of the immovable property must be used for, in short, real estate operations. This is also referred to as the purpose test. In this case, the real estate operations could be interpreted as the leasing of immovable property.

Question of law

At dispute is whether the activities of this self-storage company essentially consist of the leasing out of immovable property, as a result of which the company would qualify as a real estate company and transfer tax would be due on the acquisition of shares.

Assessment by the Supreme court

The Supreme Court ruled that for the assessment of whether a company is primarily engaged in the leasing of immovable property, it is relevant whether the leasing is subordinate to the whole of the activities that is performed to customers. This must be assessed from the perspective of the customers. This means that services that are not aimed at individual customers (overhead) are not relevant in this assessment. According to the Supreme Court, the Court of Appeal of The Hague did not test the perspective of the customers or motivated its judgment insufficiently. The Court of Appeal of Amsterdam will have to determine whether in this case the provision of storage space to customers is subordinate to the services provided by the self-storage company to its customers. 

Practical implications

Whether or not transfer tax is due on the acquisition of shares is an important business consideration. The emphasis on the customer’s perspective for the purpose test is a welcome clarification by the Supreme Court. We tend to regard the services provided by the self-storage company as subordinate to the rental of storage space rather than the other way around.