No plans to introduce progressive stamp duty land tax rates

Questions have recently been tabled in the Lower House of the Dutch Parliament concerning the fiscal treatment of residential lets, one of which addressed the State Secretary’s readiness to switch to a system of taxing property portfolios comprising in excess of three residential properties at “Box 1” rather than “Box 3” rates, for example by granting such portfolios business venture status. The State Secretary in response referred to the ranking as per the Netherlands Income Tax Act 2001, which entails facts and circumstances being used in assessing whether a particular set of assets should be regarded as company capital, result from sundry business operations or “Box 3” investments. The State Secretary pointed out that undertakings had been given to the Upper and Lower Houses for a survey to be carried out into alternatives for taxing property-generated rental income, the object of the probe in question being the charting of variations that could help enhance the tax system rather than the devising of ways of lessening the attraction of residential property investment.

Under the current Dutch system a two percent stamp duty land tax charge is levied in connection with the transfer of title to existing residential properties, compared with a six percent stamp duty land tax charge for transactions involving other immovable properties. The State Secretary is not at all in favour of introducing a progressive stamp duty land tax rate as a way of making it less attractive for investors to buy properties for letting purposes. Such a graduated system, it has been suggested, could run from zero percent for first-time home owners to an elevated rate of, say, ten percent for third and subsequent residential properties. According to the State Secretary this would create regulatory complications as well as opening the door to fiscal scheme-based tax dodging in avoidance of the higher rate.

Dutch version: Geen tariefdifferentiatie overdrachtsbelasting