Unfavorable transfer tax on earlier key transfer of the new home / application of the hardship clause (Law on Taxation of Legal Transactions)

It sometimes happens that the buyer of a house receives the keys to the new house earlier, for example in order to start the renovation of the house earlier. This entails risks and (tax) consequences. Be well informed about the consequences by your broker or notary.

It has an adverse effect on the transfer tax.

Getting the keys earlier is an acquisition of beneficial ownership. The result will be a levy of transfer tax at the regular rate of 10.4% transfer tax. The reduced rate of 2% transfer tax and the starter exemption will not apply then (after all, there is no immediate occupation by yourself).

The State Secretary of Finance has now decided to approve the application of the reduced rate of 2% transfer tax or the start-up exemption with the application of a hardship clause in these situations. This approval will be made public in a policy decision. This will also state exactly what the conditions will look like. This policy decision will be published in the Government Gazette in early 2023.

Hardship clause explanation:
The hardship clause is the possibility to deviate from (mandatory) legislation if the consequence would lead to an unreasonable disadvantage for the citizen or company concerned.

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Until the publication of the aforementioned policy decision, the buyer(s) in situations as described above can apply for the application of the hardship clause referred to in Article 63 AWR to apply the reduced rate of 2% transfer tax or the starter exemption. This also applies to cases that have already taken place. A request is assessed on the basis of the facts and circumstances of the case. Of course, the other requirements of the reduced rate or the starter exemption must be met.

The request may be addressed to: Ministry of Finance, Belastingdienst/Corporate Dienst Vaktechniek/team Brieven en Beleidsbesluiten, Postbus 20201, 2500 EE Den Haag.

When are you entitled to apply the start-up exemption?
You are entitled to the start-up exemption if you meet the following 4 conditions:

• You obtain a home in which you yourself will live for a long time;
• You are of age and under 35 at the time you acquire the property;
• The moment of acquisition is the moment of signing the notarized deed of transfer;
• If you acquire the property, the property value must not exceed €440,000. This is the fair market value. This means the maximum value of the home on the open market (if the appraisal value is higher than the purchase price, this is the market value). It refers to the house including any appurtenances, such as a garden, shed or garage. This is usually equal to the purchase price as stated in your purchase agreement. If the house is on leasehold land, the value of the capitalized canon is also added to the value of the house;
• You have not used the start-up exemption before.

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When can the reduced transfer tax rate apply?
You are entitled to apply the reduced transfer tax rate if the following conditions are met:

• You obtain a home in which you yourself will live for a long time;
• You are of age and over 35 at the time you acquire the property;
• The moment of acquisition is the moment of signing the notarized deed of transfer;
• If you acquire the property, the property value exceeds €440,000. This is the fair market value. This means the maximum value of the home on the open market (if the appraisal value is higher than the purchase price, this is the market value). It refers to the house including any appurtenances, such as a garden, shed or garage. This is usually equal to the purchase price as stated in your purchase agreement. If the house is on leasehold land, the value of the capitalized canon is also added to the value of the house;

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Ministry of Finance Jan. 12, 2023