The sale-leaseback transaction has profound implications for VAT – Taxation


Sale and leaseback transactions have taken off in the Dutch logistics real estate sector (particularly in distribution centers). The huge increase in online sales has led to an increased need for distribution centers. There also appears to be growing interest from the UK. Adjusting to the post-Brexit reality, UK companies are looking to lease distribution centers and other logistics properties in the Netherlands.

A sale-leaseback transaction tends to occur if a company has developed a logistics location for itself entirely in accordance with its own needs and wishes. The newly constructed distribution center is then sold and leased to itself. A long-term triple net lease is the form often chosen, which gives the lessee a great deal of independence. The sale-leaseback operation frees up capital locked in brick and mortar.

There are a lot of things involved in completing a sale and lease transaction. The consequences of the VAT of such a transaction are a problem that arises. A recent judgment of the Supreme Court of the Netherlands shows that this is not a simple matter, so it is advisable to carefully design the transaction with this in mind. This sale-leaseback case was not about logistics real estate, but about a housing company that sold a newly built complex to a third party because it wanted to gain financial leeway. The housing company then faced a substantial additional appreciation of the turnover tax (VAT). The Supreme Court upheld the tax service’s assessment in a recent case (HR January 29, 2021, ECLI: NL: HR: 2021: 154).

VAT resulting from the sale-leaseback

The following factors play a role in determining the VAT consequences of a sale and lease transaction in the Netherlands.

  • The sale of new premises (less than two years old) is subject to VAT.
  • This VAT does not necessarily increase the cost price for the buyer.
  • However, VAT will increase the price if the buyer is unable to deduct this VAT. This would be the case if the property was rented, for example.
  • In some circumstances it may be possible to do something about this using a certain tax facility, i.e. the exemption applicable if all of the assets of the business are transferred (i.e. say “all assets” or algemeenheid van goederen in Dutch). However, one should be careful here as the tax authorities are taking action against abuse of this facility.
  • The company must ensure that the transaction has been optimally designed and that all bottlenecks have been identified.
  • The transfer of leased premises can also be part of the transfer of all assets, but this recent Supreme Court ruling has shown that the facility normally applicable to the transfer of all assets does not apply if the transferor of those assets exercises different economic activity. as the assignee of these assets.
  • If necessary, a business should consult with the tax authorities in advance.


In the Netherlands, a housing association is an organization that builds, manages and rents affordable social housing. In this case, a housing association owned a large apartment complex with residences, parking and commercial space. She had rented a large portion of the apartment complex since its completion in 2011. Later in 2011, the housing association entered into a sale-leaseback agreement with a buyer. Under this agreement, the housing association was to sell the apartment complex to this buyer, then rent it to the buyer for a period of 25 years and continue to manage it. In September 2011, ownership transferred to the buyer.

The housing association considered that no VAT was payable on the transfer because the sale involved “all the assets”, as stated in Article 37 quinquies of the 1968 figure tax law. ‘business. . The housing association appealed unsuccessfully. According to the Hague Court of Appeal, there was no “delivery” (the sink) within the meaning of VAT, because none of the measures taken by the housing association with regard to the set of apartments led the buyer to acquire the power to sell the set as owner .

Supreme Court decision

The Supreme Court ruled that there had indeed been a “delivery” (the sink) within the meaning of the Turnover Tax Act, but dismissed the appeal on the grounds that “all of the assets” had not actually been sold. For a detailed explanation (in Dutch) of the VAT system, I refer to my previous blog. According to the Supreme Court, the concept of “delivery” of goods in Dutch turnover tax law does not refer to the civil law concept of the transfer of property, but to a transfer of tangible property by a party so that the other party is entitled to in factdispose of this property as owner. The power to dispose of a property as owner implies, among other things, that it is possible for the party to which this power is transferred to take decisions that may affect the legal status of the property in question, including the decision to sell the property. . Whether such a transfer occurs has to be determined on a case-by-case basis on the basis of the actual circumstances.

In this case, the housing association and the buyer have agreed that the set of apartments will be transferred to the buyer by notarial deed with no right or option to buy back. Upon delivery, the income from the apartment complex went to the buyer. The buyer had to bear the risks associated with the ownership of the apartment complex. They also agreed that the buyer would rent the apartment complex to the housing association and that the housing association would now sublet the apartment complex to those to whom it had previously rented it. . The buyer could only sell the apartment complex during the 25-year lease period with the written consent of the housing association. The accommodation would not grant such consent for the first 15 years after the transfer. In view of these facts, the Supreme Court ruled that there had been a “delivery” (the sink) of the apartment complex within the meaning of Dutch turnover tax law. According to the Supreme Court, this was the case despite the temporary restriction of the buyer’s power to sell the apartments to a third party.

“Total assets”?

As this was in principle a taxable delivery for VAT, the question then arose whether the housing association and the buyer could avail themselves of a VAT mechanism intended to be used during the purchase. transfer of an entire business (ie the transfer of “all of the property”). If this were the case, the transfer would not be subject to VAT. The concept of “all assets” can include leased goods. If this facility is applicable, the purchaser assumes the VAT position of the seller or, failing that, of the assignor. According to the Supreme Court, there is a transfer of all or part of “all the assets” during the transfer of a company (or an autonomous business unit) with tangible, and possibly intangible, assets which together form a company. (or part of a company) with which an autonomous economic activity can be carried out.

The finding that the transfer of the apartment building was a transfer of “all the assets” is only justified if the housing association has transferred all or part of its business to the buyer and all or part of this business was sued by the buyer. . According to the Supreme Court, the mere fact that the apartment complex has remained (or remains) subject to commercial exploitation in the sense of being rented out to users of apartments forming part of the business alone is not sufficient in itself. to justify the conclusion.

After acquiring ownership of the apartment complex, the buyer rented all apartments to the housing association for a period of 25 years and thus granted the housing association permission to rent (and continue for rent) these apartments as residential units, parking spaces and commercial premises in its own name and for its own account. Thus, according to the Supreme Court, after the transfer of civil law from the apartment complex to the buyer, the housing association no longer operated these apartments as owner / lessor but rather as tenant / sub- tenant of the apartment complex. After the delivery, the housing association continued to manage the apartment complex, but did so for the buyer in exchange for payment. According to the Supreme Court, by transferring the apartment complex to the buyer, the housing association had not transferred its economic activity / business of collecting rent. In this case, therefore, the transfer of all or part of all the assets had not occurred, according to the Supreme Court. The Supreme Court was apparently of the opinion that the party that transfers all the assets and the party that acquires those assets must be engaged in exactly the same economic activity. According to the Supreme Court, the turnover tax was rightly collected by the tax authorities.


It is important to correctly identify the tax issues associated with the sale of a new building that is to be let. In certain circumstances, VAT can be avoided by relying on a tax facility. The Supreme Court case discussed in this blog shows that the installation will have to be interpreted more restrictively than previously assumed. It is advisable to carefully study the (sometimes complex) tax consequences of a sale-leaseback transaction beforehand and to call on a team of specialists for the various aspects of the transaction. This could include due diligence investigation, drafting of the purchase and lease agreement (triple net) and oversight of negotiations.

Our Construction and Real Estate team is ready to assist you in your sale-leaseback transactions and to ensure optimal management of tax aspects.

Please do not hesitate to contact us if you have any questions.

(This is a translation of the previously published blog in Dutch Sale-and-rental-backtransactie heeft verstrekkende btw-gevolgen)

Originally published April 12, 2021.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought on your particular situation.

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