The ruling commission held a meeting a few days ago with the central tax administration to discuss the unwinding of existing split sale structures and to agree on a position regarding the potential reconstitution of full property without triggering 10% / 12,5% registration duties on the value of the full property.
The ruling commission now confirms the possibility to obtain a positive ruling in case of reconstitution of full property with 2% registration duties being due on the sale of the long-lease and 10%/12,5% on the sale of bare ownership in case of re-constitution. This possibility is however limited to certain specific cases:
– the initial split sale structure should have been covered by a ruling or the notary deed relating to the transfer(s) of the right(s) in rem should contain wording indicating that it was not the intention of the parties to reconstitute the full property.
– there is no call option (or drag-along right or similar instrument) linking the sale of the long-lease and the sale of the bare ownership. Based on the discussions we had with the ruling commission, a preference right in favour of the long-lease holder would be acceptable. The ruling commission argues basically that in case of a call option (or similar instrument), there is a unity of intent to sell both rights in rem together.
– The re-constitution can only occur in the hands of a third party acquirer and not in the hands of the long-lease holder / bare owner.
Unfortunately, the current position does not allow to unwind the split-sale structures without a third party being involved. As such, this evolution is positive, but you will need to foresee some time in the sales process to obtain this ruling.
In addition, we also want to inform you that discussions are ongoing with respect to share deals of real estate companies. From our experience in various files, it has become clear that the ruling commission requests that the real estate company concerned is in going concern and actively performs the real estate activity. This is assessed based on factual circumstances. We know that the ruling commission is also considering whether there will be a formal requirement to have an active mandate (e.g. an active managing director) or a personnel member who is actively managing the company. For this specific element, the final position is not yet clear and we will keep you posted on this.