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Per 1 January 2023, the Dutch RETT (real estate transfer tax) will increase from 8% to 10.4%. Transactions that close after 31 December 2022 will therefore be subject to a 2.4% higher transfer tax.

It may be possible to avoid this by applying a Provisional Closing Scheme (Groninger akte structuur). This essentially means that the formal closing for tax purposes takes place this year, but the purchase price is paid at a later stage, next year, after certain conditions subsequent have been fulfilled, such as financing.

The Provisional Closing Scheme entails that the transfer of ownership takes place provisionally. The ownership passes to the buyer, but the purchase price remains unpaid. Only the RETT is to be paid to the tax authorities.

The parties furthermore agree on a long stop date for payment of the purchase price (generally depending on financing arrangements). If, at the long stop date, the purchase price is not paid, the purchase agreement is dissolved by force of law. Therefore, no retro-transfer via a civil-law notary is required to effectuate this. Non-fulfillment of the condition subsequent (payment of the purchase price) automatically leads to the legal ownership shifting back to the seller.

Moreover, all rights in rem (such as mortgages, liens, pledges, etc.) vested in the interim period become null and void as well. So, the seller does not run the risk of receiving an asset encumbered with rights vested when ownership was with the buyer. When the legal ownership shifts back to seller, no RETT is due.

If the condition subsequent (payment of the purchase price) is not fulfilled, and ownership shifts back to the seller, the buyer is entitled to reclaim the RETT paid from the tax authorities. The Provisional Closing Scheme does not only apply to the current increase of RETT. The scheme is also a useful solution in various other situations where there is a tax deadline that cannot be met because certain conditions subsequent are still pending.

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Photo of Simone Wijngaard Simone Wijngaard

Simone Wijngaard is a shareholder in the Real Estate Practice. She divides her time between London and Amsterdam. She focuses on advising international investors and financers on investment holding structures, real estate investments, as well as hotel investments and operations.

Photo of Sabine Schoute Sabine Schoute

Sabine Schoute heads the Amsterdam Finance & Restructuring Group. She focuses her practice on virtually all types of finance, including general syndicated lending, leveraged finance, corporate finance, property and project finance, and restructurings and workouts. Sabine has acted for a wide range of

Sabine Schoute heads the Amsterdam Finance & Restructuring Group. She focuses her practice on virtually all types of finance, including general syndicated lending, leveraged finance, corporate finance, property and project finance, and restructurings and workouts. Sabine has acted for a wide range of private equity sponsors, real estate investors, borrowers, lenders, and other stakeholders. Before joining Greenberg Traurig in 2020, Sabine worked at a large international law and tax firm for almost 10 years during which she spent two years in their New York office.

Photo of Richelle Baptiste ˘ Richelle Baptiste ˘

Richelle Baptiste is a senior tax lawyer and has great experience in national and international tax planning structures. She has deep knowledge of complex cross-border tax structures, IP structures, litigation in tax related matters, and M&A projects. Richelle has advised on a wide…

Richelle Baptiste is a senior tax lawyer and has great experience in national and international tax planning structures. She has deep knowledge of complex cross-border tax structures, IP structures, litigation in tax related matters, and M&A projects. Richelle has advised on a wide range of corporate transactions and tax treaty analysis in cross border projects.

˘ Admitted to the Dutch Association of Tax Advisors Bar.