Entitlement to a transfer tax refund if a condition subsequent is fulfilled
If property is acquired subject to a condition subsequent, acquisition takes place the moment the legal and/or beneficial title to the property is transferred. This means that the acquirer must immediately remit transfer tax in connection with the acquisition of the property. The remitted transfer tax can subsequently be claimed back if the transfer of the property is annulled due to the fulfilment of a condition subsequent. The legislature has made transfer tax refunds subject to the condition that refund requests can only be granted if the pre-acquisition situation can be restored in terms of both fact and law. This follows from section 19 of the Dutch Taxation of Legal Transactions Act (Wet op belastingen van rechtsverkeer).
The court recently addressed the question of whether a pre-acquisition situation could be restored in terms of fact and law where the buyer paid EUR 40,000 to the seller, which would not be refunded if the transfer were annulled, since the buyer and the seller had agreed that the buyer did not have to pay the purchase price for the acquisition but would instead owe the seller an amount of EUR 2,000 until the purchase price of EUR 1,000,000 was paid. They had furthermore agreed that the monthly payments would not be refunded if the transfer were annulled.
In the case at hand, the court ruled that as a consequence of the annulment, the seller reacquired ownership of the property and had at all times retained use of the property. The purchase price did not have to be repaid, as it had never been paid by the buyer. This meant that, to that extent, the pre-acquisition situation had been restored both in terms of fact and law.
This is because with respect to the payment of EUR 40,000, the court distinguishes two situations: the situation in which the condition subsequent is not fulfilled and the amounts paid by the buyer are deducted from the purchase price, and the situation in which the condition subsequent is fulfilled and those amounts are not deducted from the purchase price. Despite the fact that the origin of the amount was unclear, the court held that where the condition subsequent was fulfilled, the payments could not concern the acquisition since the acquisition had in fact been reversed. The court then inferred from this that the two provisions in the transfer deed could not, within reason, be interpreted other than being a record of the purchase price of EUR 1,000,000 on the one hand and a separate payment of EUR2,000 per month agreed by the interested party in case the condition subsequent was fulfilled.
We infer from the judgment that some room exists to settle amounts between parties without this standing in the way of successfully claiming a transfer tax refund in cases where a condition subsequent materialises.
Source: ECLI:NL:GHARL:2017:7523
