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24 June 2019 / news

Renovated historic factory qualifies as newly constructed property

The interested party acquires a ‘retail park’. This retail park consists of a historic former wool factory that was seriously dilapidated. The seller carried out repair and renovation work both to the historic elements and the integral structural elements of the property, such as the floors and load-bearing structures for walls and roofs.

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The interested party acquires a ‘retail park’. This retail park consists of a historic former wool factory that was seriously dilapidated. The seller carried out repair and renovation work both to the historic elements and the integral structural elements of the property, such as the floors and load-bearing structures for walls and roofs.

Issue of law and interest

The dispute in this case relates to a part of the property with historic elements that have been (compulsorily) preserved. The question is whether the acquisition of this part constitutes the acquisition of a newly constructed property for VAT purposes, as a result of which the ‘concurrence exemption’ applies for the purposes of real estate transfer tax.

Judgment

The Zeeland-West-Brabant District Court notes that a property qualifies as newly constructed as a result of construction works, if the property after the completion of the works is deemed to be newly constructed. In this regard, it is not relevant whether the ‘new’ property corresponds to the ‘old’ property. In view of the nature and extent of the work carried out, the District Court believes a prima facie case has been made that the structure has been modified such that it constitutes ‘replacement by a new-build property’ in structural terms. The fact that historic elements of the property have been retained does not detract from this conclusion. Hence the delivery is subject to VAT by law and the interested party is entitled to the real estate transfer tax concurrence exemption.

Practical interest

The question of whether a property qualifies as a new property for the levying of VAT depends on the facts and circumstances. The District Court’s judgment shows that even when properties with historic building status are renovated, this can constitute the creation of a newly constructed property.

Contact

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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