Last Prinsjesdag the Dutch Tax Plan 2021 was presented. The Dutch Tax Plan consist of eight legislative proposals, one of which is the Dutch Transfer Tax Differentiation Act (Wet differentiatie overdrachtsbelasting).

The aim of this bill is to improve the position of starters on the housing market compared to investors. In short, from January 1st 2021 starters on the housing market will be entitled to an exemption from transfer tax related to real estate, while investors with a third home will be faced with a higher tax rate.

In order to be able to make use of the exemption from transfer tax as a starter on the housing market, a number of conditions must be met with the time of acquisition.

Firstly, the acquirer must be 18 years of older, but younger than 35 years. In addition, the acquirer is required to use the house as his or her main residence.

Furthermore, the exemption may only be applied once. Young people who acquire a home after it comes into effect, but have already been a home owner before 2021, and are therefore not a starter, can still invoke the exemption once if they meet the conditions. After all, they have not made use of the tax exemption before.

Existing participants on the housing market
For other natural persons who buy a home and will use it as their main residence, but do not meet the conditions of the starter exemption, the rate of 2% will continue to apply.

In all other cases, the rate will be increased from 6% to 8%. This rate will apply to the acquisition of non-residential properties, properties that will not or only temporarily be used as main residence, properties that are used by others than the acquirer and properties that are acquired by a legal entity.

Joint purchase
What if a house is acquired by two people, one of whom meets the conditions of the starters exemption, but the other does not? If both will acquire half of the house with the intention of living there together, the starters tax exemption applies to one half of the house and a rate of 2% to the other half.

Entry into force
The date of entry into force of the bill is January 1st 2021. At the moment that the starter invokes the starter exemption, he must declare in writing that he has not made use of it before. The civil-law notary may assume that this statement is correct and does not need to carry out any further investigation, unless he knows that the information is incorrect.