REALWorld Law

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The main types of property right in the Netherlands are:

• Absolute ownership: full ownership of land includes ownership of all its constituent parts (everything above and beneath the surface), by way of accession (natrekking). This includes all building and underground structures, with the exception of underground cables and pipelines
• Rights of superficies: the right to have, hold and maintain buildings, works or plant in, on or above land owned by another party - as such, the right of superficies prevents buildings, works or plant on land owned by another party passing into the ownership of that party
• Apartment rights (condominium): – the ownership of part of a property, including the exclusive right to an apartment plus shared rights and obligations in relation to common areas (for example walls, roof, external spaces); and
• Rights of leasehold: – long leaseholdses (usually around 50 or 100 years, but they can also be perpetual) are a very common way of holding property owned by the municipalities of Amsterdam, Rotterdam and The Hague. Leasehold rights may be transferred or mortgaged.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

No.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Yes, certain agricultural tenants (pachters) may have pre-emption rights and local authorities can impose pre-emption rights on a property under the Environment and Planning Act (Omgevingswet). Also, it is possible to agree to create (obligatory) pre-emption rights.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The legislation that applies to real estate transactions is:

• Article 7:1–50 Civil Code (sale/purchase)
• Article 3:80–106 Civil Code (transfer)
• Article 5:20–36 Civil Code (ownership)

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

No, except for residential real estate.

In a consumer sale of residential real estate, it is not allowed to derogate to the detriment of the buyer from articles 7:1-38 of the Civil Code (except for articles 7:12, 7:13 sentences 1 and 2, 7:26 and 7:35 of the Civil Code, as long as these derogations are not stipulated as general conditions), and in such sale there may be no limitations on, or exclusion of, the legal rights and remedies of the buyer for any failure in the performance of the obligations of the seller (article 7:6 Civil Code).

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The purchase agreement forms the basis of the transfer deed. This deed is signed by all parties and executed in a notarial transfer deed by the Dutch civil law notary, who then submits a certified copy to the Land Registry. With the registration of this certified copy the transfer is complete.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Is real estate registered/does a reliable register of land ownership exist?

Yes.

Are transfers of title recorded in this country?

In the Netherlands the Land Registry records all important information concerning real estate. All property has its own specific section and number in the Land Registry, which is available online to everyone. It is impossible to transfer property without registration.

Does title insurance exist in this country?

No, the registration process offers the buyer an appropriate level of security.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The normal steps in a real estate transaction are as follows:

1. Negotiate and sign a letter of intent
2. Due diligence process, and
3. negotiate and sign the sale and purchase agreement; executing the notarial transfer deed and registration of the deed in the Land Registry.

Both prior to and after executing the notarial transfer deed the Dutch civil law notary will check:

• Whether the seller is still registered with the Land Registry as the owner of the property
• Whether any new mortgages or enforcement have been established/levied on the property
• Whether the extracts from the Chamber of Commerce Records are still correct (both for the buyer and the seller)
• The marital status of the seller and the buyer (if applicable)
• Whether the buyer and the seller have been declared bankrupt (or become insolvent)
• Whether the buyer or the seller have been placed under guardianship
• Whether all permissions and cooperation have been obtained from third parties and whether they are valid
• Whether any claim of a preferential right by the municipality has been made under the Environmental and Planning Act (Omgevingswet); and
• The validity of the passports of both the buyer and the seller.

After executing the transfer deed, the Dutch civil law notary submits a true copy of the deed to the Land Registry, which registration is the actual moment of delivery and transfer of the real estate.

Monetary transactions

A Dutch civil law notary generally arranges the financial completion of a property transaction.

Because the Dutch civil law notary is at the heart of the financial arrangements, he will not execute any deed before he is certain that the entire purchase price (plus other costs and taxes payable) has been transferred to the notarial trust account. The purchase price (and other amounts to be paid to the seller or the seller’s bank) is not paid to the seller until the Dutch civil law notary has confirmed that the property is not encumbered with any mortgages or enforcement, other than those that were disclosed when the transfer deed was signed.

It is common in larger transactions to agree in a separate 'notary letter' amongst seller, purchaser, lender and notary on the flow of funds.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The buyer and seller will agree on the scope of the investigations in a letter of intent. The buyer will, in particular, investigate the title of the real estate, lease contracts, zoning and environmental issues, such as asbestos and soil pollution.

Due diligence normally takes several weeks.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

A spouse must give consent in writing for the sale of the marital home.

In addition, depending on the articles of association of a company, the management board of a B.V. (the Dutch equivalent of a private limited company) or an N.V. (the Dutch equivalent of a public limited company) may need the permission of the supervisory board for certain transactions.

Also, permission may be required with respect to some specific categories of real estate, such as hospitals and school buildings.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The sale and purchase contract relating to real estate must include:

• The names of the buyer and seller
• The purchase price
• Details of the real estate
• The date of completion

For business real estate transactions, Dutch law gives no further requirements. However, of the buyer is a private individual and the property is a residence, it is required that the SPA be entered in written form.

What is a typical contract or SPA in this country like?

A typical contract or SPA will include clauses regarding the following:

• Definitions
• Special conditions (costs/taxes)
• Representations by the seller as to ownership, lease agreements, pollution
• Representations by the buyer
• Delivery and deposit, or bank guarantee (for 10 percent of the purchase price)
• Pre-conditions to be satisfied and any other special conditions
• Jurisdiction and choice of law
• A cooling-off period of three days (only in case of residential property), and
• Standard conditions

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Under Dutch law, the seller guarantees that it has valid title to the property, and that the property is free from any mortgages and enforcement. The seller also has an obligation to transfer the property in accordance with the agreement by both parties, as set out in the transfer deed: this usually includes the size and the use of the building.

Other warranties can be negotiated by the parties.

It is generally agreed that complaints about the state of the property must be made within two months and any court proceedings must be instigated within two years of purchase.

In addition, the seller must provide the buyer with an energy certificate or a similar document in accordance with the Dutch Structures Living Environment Decree (Besluit bouwwerken leefomgeving). The energy certificate states the energy consumption of the property being transferred and offers advice on how to reduce this consumption.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Buyer's remedies against misrepresentation include:

• Annulment or dissolution of the agreement
• Restoration of missing items
• Replacement
• Repair, or
• Compensation

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

• Zoning – Municipal environmental plans and decisions designate particular use to specific plots and areas. Lower level environmental plans (eg municipal environmental plans) must comply with upper level zoning plans (eg provincial, regional and/or national environmental regulation).
• Public-private relations – Municipalities charge fees for public law cooperation eg permits and exemptions. The amounts are adopted in ordinances. In addition, municipalities may adopt exploitation ordinances which govern the municipal authorities' policy in contracting with private law parties in relation to land exploitation, in which the municipal authorities may set fees payable in relation to such exploitation as well as rules on compensation of planning-related damages suffered by third parties.
• Environment – Environmental law under Dutch law governs both strict (physical) environmental law as well as zoning-related environmental law. Environmental permits are required for carrying out specific activities (eg demolition and construction) or making specific use of real estate, eg uses which deviate from the applicable municipal environmental plan.
• Building permits – Statutory law sets conditions for building operations and permit exemptions; additional requirements may be set by environmental law and building permits.
• Monuments – Specific regulations exist with regard to buildings of historical or architectural interest which may restrict work on/ alterations to such buildings.
• Office building energy certificate – Buildings may only be (mainly) let as office space if the energy certificate is at least C. The energy certificate states the energy consumption of the property being transferred and offers advice on how to reduce this consumption.
• Municipal housing regulations – Municipalities may have housing regulations (Huisvestingsverordeningen) that require permits for the letting of social and mid-marked residential property, or for the conversion of self-contained accommodation into shared housing. For example, the municipalities of Amsterdam and The Hague have such housing regulations.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Under Dutch law, in principle the owner of the title to a real estate asset is responsible for preventing soil pollution and/or contamination and also must implement decontamination measures. Alternatively, should the owner demonstrate that another party is responsible for the pollution, this party may be held liable for remediation costs.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

The buyer should investigate the applicable environmental law decisions, primarily the applicable municipal environmental plan, via a publicly available database. Use can be changed through an exemption (vrijstelling) procedure.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Yes. Exploitation agreements with municipalities deal with the extent to which municipalities financially and practically enable projects. Such enabling may regard creating access to public services and to roads. Municipalities as private law entities are often restricted by their public law decision making and public tendering procedures. Case law proves exploitation agreement require diligent drafting to put actual obligations on municipalities.

Last modified 22 Mar 2024

Which taxes are relevant/which transaction costs will be incurred when buying real estate via the shares in the owning company (share deal) and how are the transaction costs shared between the buyer and seller?

Yes, Dutch law provides specific public law authorities with the authority to seek to expropriate property if this is in the public interest. Strict criteria must be met before this can be done.

Once the environmental plan has been finalized (and no further appeals are possible) expropriation begins with an administrative law procedure under which objections and appeals in relation to the private interests of the landowners are possible. This is followed by a civil law procedure where experts are appointed to determine the damages suffered by the owners, tenants and others whose property has been subject to expropriation (based on the 'full compensation' principle).

Also, many leasehold conditions contain a clause stating that the right of leasehold may be terminated on grounds of public interest. Such clauses will often seek to provide for a similar process to public law expropriation proceedings including compensation for damages for the expropriated leaseholder. A recent Supreme Court ruling has stated that these clauses are legally valid.

Last modified 22 Mar 2024