Global RE tax publications

On 21 March 2018, the Swedish government put forward proposals for new corporate tax regulations. The key proposal is to limit the deduction for corporate interest expenses. The right of deduction will be based on a so-called EBITDA-rule and will be accompanied by a decrease in the corporate tax rate.

The German Federal Constitutional Court ruled in its decision on 10 April 2018 that the method for the determination of the assessment basis of German land tax is in breach of the German Constitution. The current method of determining the fiscal values remains applicable however until at least 31 December 2019.

On 23 March 2018, President Trump signed the Consolidated Appropriations Act of 2018 (the Omnibus Act), an omnibus government spending bill which includes several technical corrections of previously enacted tax provisions related to FIRPTA, REIT spin-off transactions, REIT income tests and the partnership audit rules. The Omnibus Act also includes new low-income housing tax credit provisions.

Where foreign companies receive dividend payments from German subsidiaries, the hurdles for claiming an exemption from withholding tax have been lowered following the issue of a circular by the German Ministry of Finance.

The new DTT seeks to modernise the rules applying. The current treaty between Luxembourg and France was signed as long ago as 1 April 1958. The new DTT is fully “post-BEPS”. It implements the new approaches developed at international level during the OECD/G20 BEPS Project, now reflected in the 2017 version of the OECD Model Tax Convention, and in the Multilateral Convention to Implement Tax Treaty Related Measures (“the MLI”), signed by both Luxembourg and France in June 2017.

The European real estate industry is experiencing a seismic shift in its centre of gravity – from real estate as a financial asset, to real estate as a product and more significantly, to real estate as a service.

Tax and legal aspects of real estate investments around the globe

Effective from 25 July 2018, the Hungarian Parliament has adopted further favourable changes to foster the establishment of Real Estate Investment Trusts (REITs).

The REIT structure varies country-by-country, and it is constantly evolving. PwC have contributed the UK chapter of this European Public Real Estate Association analysis of global REITs.

The Finnish Government have published their proposals to implement the EU Anti-Tax Avoidance Directive I (restricting interest relief), which is expected to come into force 1 January 2019. This represents a major development for the real estate industry as most real estate investors have until now been outside the scope of the Finnish interest capping rules.

On 18 September 2018, the Dutch Ministry of Finance announced a number of important changes and amendments to the Dutch tax legislation for 2019 and onwards, including the abolition of the current Dutch Dividend Withholding Tax Act and the introduction of a new conditional withholding tax on dividends. On Budget day, the Dutch government also issued a legislative proposal regarding the Dutch implementation of the ATAD. On 15 October 2018, the Dutch Government announced that the proposed changes have been reconsidered which has resulted in the withdrawal of the proposal to abolish the dividend withholding tax. In order to stimulate the Dutch investment climate, alternative measures have been proposed.

Dutch Courts find that FBI tax exemption regime applies to a German real estate fund and is not restricted to Dutch funds.

Changes are proposed to Hong Kong’s profits tax exemption for privately offered funds which will:

- unify the profits tax exemptions for privately offered funds (onshore or offshore, regardless of their structure, location of central management and control, their size, or the purpose they serve) into one comprehensive regime; and

- significantly widen the application scope of the profits tax exemption. 

See here for more information. 

More commercial property transactions are likely to be subject to VAT (rather than Civil Law Activities Tax) as a result of new guidelines issued by the Polish authorities. 

In December 2009, Germany introduced an exemption from Real Estate Transfer Tax (RETT) for group restructurings.The exemption was challenged in the case of an upstream merger as infringing the State aid rules. 

The CJEU found that although there was technically state aid, it could be justified "by the nature or general scheme of the German tax system and the intention of the German provision to prevent double taxation" (it being assumed that RETT had already been paid by the group). 

With effect from 1 February 2019, Portugal has introduced Real Estate Investment Trusts (REITs) in order to provide a specialist investment vehicle for the real estate market. 

 

The discussions on the expansion of German Real Estate Transfer Tax (RETT) continue and the current proposal is that RETT will apply where 90% of the shares in a property rich company are transferred over a 10 year period (down from 95% and 5 years respectively).  In addition, the tax will be borne by the company itself. This change in particular is predicted to have a substantial impact on the real estate industry.

The German Federal Ministry of Finance has circulated a draft bill to real estate industry associations addressing several tax changes including the upcoming changes to the German Real Estate Transfer Tax (RETT) Act. The draft legislation primarily incorporates the changes announced in December 2018, and will apply to transactions closing after 31 December 2019.

On 31 July 2019, the Cabinet of the German Federal Government approved draft legislation which extends the scope of the German Real Estate Transfer Tax (RETT).

Spanish Draft 2021 Budget Bill: Preparing for the proposed tax measures in the real estate industry

Germany - Draft law on the modernisation of the relief from and the certification of withholding taxes

Proposed abolition of Italian taxation on dividends and capital gains earned by EU/EEA investment funds

Dutch Budget Day 2020: The most important changes for the real estate industry

Polish government announces plans to amend its corporate and personal income tax laws

German government announces comprehensive €130 billion stimulus package to reverse economic damage from COVID-19 pandemic

Reform of the German Real Estate Transfer Tax Act postponed to the first half of 2020

Real Estate newsalert - Mandatory Disclosure Rules (MDR): Dutch legislative proposal

European Court of Justice to decide on discrimination of foreign real estate funds under the German Investment Tax Act 2004

German Ministry of Finance proposes legal changes to increase the appeal of Germany as a fund holding jurisdiction

France - E-filing and 3% tax return: foreign entities must be registered before 15 January 2021

German draft bill on the modernisation of the withholding tax relief procedure