Real estate investment in The Netherlands – Dutch VAT

If so many foreigners invest in real estate in The Netherlands, mainly Amsterdam, there must be good reasons for it. And so there are: Amsterdam is a wonderful place to visit, real estate value keeps rising and the market for short term rentals, including Airbnb, is positively booming.

Our clients often ask whether they can reclaim VAT paid on new real estate, renovations, maintenance, etc. Yes, this is possible and rather beneficial under certain circumstances.

Only qualifying entrepreneurs can reclaim VAT. As demonstrated in my previous blog, sometimes it is not a great idea to be considered an entrepreneur for income tax reasons. If you invest through a company, however, you are an entrepreneur anyway. If you supply services with VAT, you can reclaim VAT others charged you. Long term rent is VAT exempt. However, short term rent of furnished apartments is taxed at a 6% rate. This is advantageous, since VAT on most real estate-related investments is 21% (painting and plastering work excepted). So, you pay 6%, but reclaim 21%. You do not want strangers in your place? Then let to family and friends.

Of course, there are some administrative sides to this: you will have to file quarterly VAT returns and issue invoices. In many cases, this is well worth your trouble, and anyway: we can do it for you.

If you are considering to invest in Dutch Real Estate, or already have done so, do not take VAT for granted. VAT is meant to be paid by consumers, not entrepreneurs. You might be an entrepreneur without even knowing it. Want to hear more? Get in touch with one of our investment taxation specialists.

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