Budget Day: proposed changes to tax legislation
The measures in Tax Plans 2026 affecting the real estate market are relatively modest. The tax classification rules grandfathering is however highly relevant as fund and corporate real estate structures often make use of Dutch and non-Dutch limited partnerships.
Background
As from 1 January 2025, all Dutch and foreign partnerships are, as a main rule, classified as transparent for Dutch tax purposes, except when a partnership should be considered a fund for joint account (fonds voor gemene rekening; FGR). At the same time, an amended FGR definition was introduced. Currently, an FGR will only be classified as non-transparent if four cumulative criteria are met.
Additional guidance on the amended FGR definition was set out in a decree published in December 2024. Due to various issues and uncertainties relating to the amended FGR definition, even after the decree, a public consultation was launched in the beginning of 2025 to obtain input from the market, in particular relating to the (often unintended) (re)classification of tax transparent Dutch limited partnerships (commanditaire vennootschap; CV) and foreign limited partnships into non-transparent FGRs. In June 2025, a letter was published in which the Dutch State Secretary for Finance announced further investigation into the possibility of additional amendments to the FGR definition to take away certain issues and uncertainties. Legislative proposals in this regard are expected to be published for consultation before year-end 2025, with entry into force on 1 January 2027 at the earliest.
Before Budget Day and based on currently applicable grandfathering rules, limited partnerships that classified as tax transparent prior to 2025 are, under conditions, allowed to implement a ‘redemption mechanism’ during the calendar year 2025 to retain a tax transparent classification going forward.
The new entity classification rules, FGR definition and existing grandfathering rules are described in detail in our Quoted of June 2025.
What’s new?
In light of the further investigation by the Dutch government on possible further amendments to the FGR definition, new grandfathering rules have now been proposed in the Tax Plans 2026 for Dutch and foreign limited partnerships that classified as tax transparent prior to 2025 and would be reclassified into a non-transparent FGR as of 1 January 2025. These limited partnerships may retain their tax transparent status until 1 January 2028, provided that: (a) the partnership has demonstrated, prior to 1 January 2025, its intention to implement a redemption mechanism (irrespective of whether the redemption mechanism has been implemented or not), or, if this intention was not demonstrated prior to 1 January 2025, (b) the partnership and its participants choose to retain the transparent status ultimately on 28 February 2026, and such choice can be demonstrated.
The period of application of these transitional rules may be shortened if any further amendments to the FGR definition will happen to enter into force prior to 1 January 2028 (e.g., on 1 January 2027).
If you have queries or require assistance on assessing the application of the new entity classification rules, FGR definition and/or grandfathering rules in a particular situation, please contact your trusted adviser at Loyens & Loeff or one of the specialists mentioned below.
For more information on other proposed tax measures, we refer to our website post of 16 September 2025.
Other legislation to come into effect per 1 January 2026
In addition to the proposal outlined above, the following legislative proposals relevant to the real estate market were already adopted previously and will come into effect as per 2026.
As of 1 January 2026, the default real estate transfer tax (RETT) rate of 10.4% will no longer apply to the acquisition of residential real estate as investment property. For the acquisition of such residential real estate, a new RETT rate of 8% will be introduced as per 1 January 2026. The 8% RETT rate will only apply if, at the time of acquisition, the acquired real estate is ‘in its nature fit for residential purposes’. The 8% RETT rate will therefore not apply to the acquisition of existing non-residential real estate that – after acquisition – will be redeveloped / transformed to residential real estate. Typically, the execution of the deed of transfer constitutes the RETT taxable event and the date of execution is decisive for the applicable RETT rate.
As of 1 January 2026, new administrative obligations will apply for all owners and users of real estate which procure real estate related investment services. Such services are of long-term benefit to the real estate and are characterized by their durable nature. This involves services to real estate such as the renovation, extension, repair or replacement and maintenance of such property. Demolition work associated with renovation is also included. A (five-year) VAT revision period will apply to such services with an invoice amount of € 30,000 or higher. The revision period will apply to services that are taken into use as per 1 January 2026. Although this measure aims to address VAT-saving practices related to ‘short stay structures’ with renovated residential property and property that’s redeveloped from non-residential to residential property, the new revision period will affect all entrepreneurs owning or using real estate.
