Dutch real estate investments: zero rate continues
In the autumn of 2017, the coalition agreement included the intention to no longer allow fiscal investment institutions ("FII's) to invest in real estate directly as from 2020. This proposed amdendment was linked to the intented abolishment of the dividend withholding tax. Meanwhile, the government has announced that it will refrain from the abolishment of dividend withholding tax. In view thereof, the government also refrains from the proposed resitriction of the FII-regime.
Currently, FII's can invest in real estate either directly or indirectly and can benefit from a corporate income tax rate of 0% on their results. A FII is then obliged to annually distribute its taxable result to its shareholders within eight months after the end of the financial year.
Of course, dividend withholding tax is payable on these dividend payments. The maximum rate is 15%, altough in practive often a (partial) reduction, reimbursement or credit right exists. In principle, Dutch dividend withholding tax will be levied on Dutch real estate held by FII's.
We will remain focused on the developments and are of course happy to further inform you in case you have any questions.