Since 2013, landlords renting out “regulated” or public-sector (“social”) rented accommodation have been subject to the “landlord levy” [verhuurderheffing].. The Dutch Supreme Court recently ruled that municipalities and housing associations that allow people to live in such dwellings pending demolition so as to prevent illegal squatting are also liable to pay the landlord levy on those dwellings.
Features of the landlord levy
Landlords owning more than 50 rented dwellings pay a landlord levy on the value of the dwellings for the purposes of the Valuation of Immovable Property Act (the “WOZ value” [WOZ-waarde]). This concerns rented dwellings for which the monthly rent does not exceed the housing allowance limit (EUR 710.68 in 2018). In 2018, the landlord levy is 0.591% of the WOZ value of the dwelling concerned. It will increase to 0.593% in 2022 and from 2023, it will be 0.567%. The relevant WOZ value is also capped at EUR 250,000 (this limit is indexed annually). In the Landlord Levy Act [Wet verhuurderheffing] , a “rented dwelling” [huurwoning] is defined as a dwelling situated in the Netherlands and intended for letting.
Until 1 July 2018, landlords could apply for a reduction of the landlord levy if they invested in transformation (i.e. the transformation of offices or schools into housing), demolition in areas where the population is shrinking or in Rotterdam-South, conversion in Rotterdam-South, or new construction of rented dwellings with a rent below EUR 597.30 (price level 2018). No landlord levy is due on the letting of registered national monuments and historic buildings. On the other hand, the Supreme Court recently ruled that the levy is payable on the letting of dwellings subject to the Vacant Property Act and anti-squatting dwellings.
Dutch Supreme Court
The City of Tilburg was the owner of 30 dwellings subject to the Vacant Property Act and 62 anti-squatting dwellings. The dwellings were scheduled for demolition. Pending demolition, the city temporarily rented them out so as to prevent squatting. It was of the opinion that it did not need to pay the landlord levy because dwellings awaiting demolition could not be regarded as “intended for letting”.
The Dutch Tax and Customs Administration disagreed, arguing that the dwellings were rented dwellings within the meaning of the Landlord Levy Act. Both the Zeeland-West Brabant District Court and the ’s-Hertogenbosch District Court ruled in favour of the Tax and Customs Administration because on the reference date (1 January of the year in question) the homes were actually let. There was, after all, a direct link between the (rent) payment obligation and the provision of the relevant anti-squatting property as a (temporary) rented dwelling.
“Intended for letting”
The Supreme Court also ruled that dwellings subject to the Vacant Property Act and anti-squatting dwellings are dwellings “intended for letting” within the meaning of the Landlord Levy Act. The Supreme Court pointed out that the systematics and parliamentary history of the Landlord Levy Act show that simplicity and practicability played a major role in the design of the landlord levy. According to the Supreme Court, the fact that the city was only renting out the dwellings to prevent vacancy, squatting, and deterioration was irrelevant. The Supreme Court assumes that not only properties that are actually let on the reference date are subject to the landlord levy but also those that are vacant and are offered for rent (temporarily).