CMS guide to
stamp duty saving
for real estate
Austria
Belgium
UK and European
comparison
France
Germany
Ireland
Italy
Netherlands
Poland
April 2002
Portugal
Spain
United Kingdom
CMS is a major transnational legal and
tax services organisation with over
1,700 lawyers and a total staff in
excess of 3,500. CMS has been
created by several major European law
firms to offer clients seamless services
across Europe.
This guide is intended only to
provide a general overview of the
matters covered; the information
contained in it is not comprehensive
and does not purport to be professional advice.
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
2
APRIL
2002
Contents
Foreword
4
SECTION 1 - UK stamp duty
Split legal and beneficial ownership
5
Purchase land before building
7
Rest on contract
8
Limited partnership or limited
liability partnership
9
Property holding companies
11
Unit trust
12
Section 76 FA 1986
13
Grant lease to nominees
14
Short lease followed by sale
of freehold or grant of long lease
15
Offshore execution of
agreement for lease
16
The contingency principle
17
Grant offshore option
18
Property swaps
19
SECTION 2 - Stamp duty and registration
taxes in Europe
EU stamp duty comparisons
20
CMS
22
Contact point
23
3
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Foreword
Stamp duty saving schemes have already
assumed key importance in real estate
transactions in the UK and are also now
taking on greater importance in relation to
European real estate investments.
Many organisations are not aware of
the benefits they can take from real
estate savings schemes. The purpose of
this guide is to set out key features of the
current stamp duty saving schemes and to
provide some comment on their suitability
in different situations. Whether you are
looking to invest or have already invested
in property, this guide is essential reading
as you may be able to make significant
savings through informed awareness of
the various schemes available and their
relevance to your situation. The guide is
also relevant to those companies which,
although not property investors or
traders, have significant property interests
that they may be looking to realise in the
short or medium term by sale, securitisation or otherwise.
In the second part of this guide, we
compare UK stamp duty with real estate
duties or transfer taxes across Europe and
outline possibilities for the saving of
transfer taxes outside the UK.
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
4
“Whether you are
looking to invest or
have already invested
in property, this guide
is essential reading as
you may be able to
make significant savings
through informed
awareness of the various
schemes available and
their relevance to
your situation.”
SECTION 1 - UK stamp duty
Split legal and
beneficial ownership
This is currently the most popular property
scheme and in the absence of a stamp duty
reserve tax for property transactions will
remain so for the foreseeable future. A
significant proportion of our clients now
hold their property portfolios or indeed
their operating properties through a split
legal and beneficial ownership structure as
for over-reaching purposes in relation to
third party beneficial interests and to avoid
needing in the future (i.e. upon sale) to
execute and register in the UK transfers of
shares in UK nominee companies. There is
a risk that if the Inland Revenue wished to
attack this scheme, they would choose
those involving UK nominee companies by
set out in the diagram above.
Assuming the transfer to the two
nominees has been achieved at a stage
before heads of terms are signed or
settled with any prospective purchaser and
indeed preferably before any decision to
sell is made, then the transfer will attract
duty of only £5 as will the declaration of
trust. The two Jersey nominees are used
arguing that the transfer of the shares is
the means by which the sale of the property was completed and is therefore
subject to stamp duty on the whole of the
value of the land!
When a sale is to be achieved then it
may be done effectively by selling the
beneficial ownership in the land by
means of an offshore executed and
5
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
retained sale contract (and a direction to
the nominees to hold for the purchaser) in
combination with an agreement for sale
and transfer of the shares in the two Jersey
nominee companies.
There is an alternative method involving
resting on contract (refer to the section on
“Rest on contract”). The landowner agrees
(again offshore for safety’s sake) to sell and
procure the sale of the whole interest (both
legal and beneficial) in the land to the
purchaser but that contract is not
completed. There is therefore no new
declaration of trust by the nominees in
favour of the purchaser nor any direction
“Whilst this is the most widely used stamp duty saving device there are
a number of issues in relation to it.
Which of the two routes do we use for the sale?
Is it different for vendor or purchaser?
When is the latest point the scheme can be adopted?
What is the going rate for sharing the duty saved?
Do we need a stamp duty indemnity?”
“Like all products there is a strong pressure on the client to buy. It is
however advisable to take a step back and ensure that you are being
told about all the risks, benefits and alternatives before being
committed to a particular route.
The structure does not affect the VAT or capital allowances position of
the vendor or purchaser.”
by the landowner to the nominees to hold
for the new purchaser. There are concerns
about the efficacy of this route for
commercial property purposes. It certainly
creates the need eventually for a stampable
transfer in order to complete the contract
(both to alleviate concerns about the
perpetuity rules and to ensure that the
contract is not regarded as a contract for
the sale of the beneficial interest). A long
stop date for completion should therefore
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
6
be included (say, 21 years) which would
mean that the last transferee in those 21
years must pay stamp duty. Additionally,
any intervening bankruptcy could prejudice
the position of a vendor who remains in
the firing line if there are any, for example
environmental, issues arising in relation to
the property.
On the other hand, critics of the first
route will rightly say that the contract for
sale of the beneficial interest is stampable
and there is a definite liability to duty
(plus interest) if it ever has to be returned
to the UK.
Purchase land
before building
The sale of a newly completed building
carries stamp duty both on the land value
and on the value of the building work just
carried out. Therefore in relation to any
new property development, the transaction
is much better structured as an early sale of
land accompanied by a contract for the
construction of a building by the vendor.
Following recent case law and Inland
Revenue practice it should be possible to
structure any arrangements in relation to
the building work without the Inland
Revenue successfully being able to argue
that stamp duty should also be charged on
the building contract price.
Projected saving 4% of £8m: £320,000
“Careful wording is necessary in relation to the land and the building
contract to ensure stamp duty only on the land sale. The scheme is
clearly only available in relation to new development proposals and is
aimed at third party forward purchases. Rights of re-conveyance can
be used to minimise conditionality that might be needed to give effect
to an underlying agreement only to buy once the building is erected.”
7
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Rest on contract
This route relies on an old stamp duty case
which held that an agreement to sell the
whole interest in land cannot be stamped
as a conveyance of that land or indeed any
interest in the land. Thus a contract for the
sale of the target property will be entered
into and a deposit equal to 100% of the
purchase price will be paid.
“Given that the vendor remains on the title this route is really only
commercially sensible where the parties involved know each other
very well or indeed are entering into a joint-venture or partnership.”
“Additionally, if the contract is to avoid being stampable upfront as a
contract for the sale of a beneficial interest, then there must be an
assumption that the contract will be completed at some point and
therefore, a long stop date by which the contract is completed (say, 21
years) should be included. It therefore leaves, albeit postponed for 21
years, a liability to stamp duty on the execution of transfer. The rate
of stamp duty should however be that applicable at the time of
entering into contract. Proper drafting is again very important.”
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
8
Limited partnership
or limited liability
partnership
Limited partnerships and, more recently,
limited liability partnerships (LLPs) provide a
tax transparent method for an investor to
gain exposure to UK property. It may also
allow more readily off balance sheet leveraging of property investment. In recent
years they have been viewed as the jointventure vehicle of choice, particularly with
the possibility of stamp duty saving. Inserting
a property into a joint venture can be
readily achieved through a limited partner-
nees owned by the general partner, holding
for the benefit of the general partner
acting for the limited partners. Indeed, if
the vendor has already adopted the split
legal and beneficial structure mentioned
within the section “Split legal and beneficial ownership”, it can readily be brought
into the limited partnership on that basis.
This permits the sell-down of a part
interest in the property or indeed the whole of
the property to be achieved in a stamp duty
Hold title
for GP acting
for the LP
ship or limited liability partnership without
upfront stamp duty by using the rest on
contract route mentioned within the
section “Rest on contract”. This could be
combined with the placing of the legal title
in nominee companies owned by the originator. Alternatively, if a new partnership is
to be set up with properties purchased
from outside then the title to the properties
could be taken into the name of the nomi-
efficient manner by using the scheme above or
the retirement of one partner and introduction
of a new one or the direct sale of a partnership
interest by an existing partner to a new one.
Such sale may be accompanied by the transfer
of shares in one or other of the nominee
companies in order to give the incoming partner
increased commercial protection. There is no
requirement to register the transfer of a UK
limited or limited liability partnership interest.
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CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
However it is generally thought that an actual
transfer of a limited partnership interest will be
stampable in the UK. Accordingly, it is sensible
to execute and retain any documentation in
relation to the sale of the partnership interest
outside the UK.
It is often considered advantageous,
although it is not essential that limited
“Tricky issues in a limited partnership and limited liability partnership
situation include liquidity, VAT irrecoverability on the costs of achieving
a sell-down and the inflexibility in relation to the introduction of new
partners. In particular where partners bring property into the joint
venture because of a change in profit share and this is combined with a
re-evaluation of the property in the partnership this can lead to a
capital gains charge for the original UK investors in the partnership.”
“The limited partnership will of course remain a very tax efficient
method for foreign investors or gross fund participation in UK
property. The LLP is not transparent for pension funds.”
“A limited partnership could in fact be created in-house by a group of
companies as a stamp duty saving vehicle in its own right although the
expense of doing this would point us more in the direction of using the
split legal and beneficial ownership route as mentioned above. “
“It should be borne in mind that ordinarily an incoming partner simply
steps into the shoes of the other partners in relation to outstanding
capital allowances of the partnership.”
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
10
partnerships are set up in Jersey or
Bermuda for example to reduce further the
connection with the UK and the risk of
stamp duty being required to be paid on
any transfer by requiring the documents to
be returned to the UK.
Property holding
companies
The use of local or foreign holding companies is by far the most widespread method
of avoiding stamp duty across Europe – see
further in Section 2 of this guide. In the
UK, using property holding companies
“The use of property holding companies is more appropriate when
dealing with sales to and by foreign investors including international
property funds. In that situation, a Jersey property holding company
would be a standard method of investing tax efficiently in the UK and
achieving a stamp duty saving opportunity. Care needs to be taken
with UK anti-avoidance provisions in relation to property.”
means that the amount of stamp duty can
be reduced to 0.5% or indeed almost to
zero if the company is leveraged to the full.
If a foreign property holding company is
utilised then the stamp duty can be eliminated altogether. Two particular difficulties
arise in relation to the use of property
holding companies. The first is that the sale
of those companies will bring with it the
extra baggage of a corporate transaction
and the massive documentation and due
diligence exercise that usually ensues.
Secondly, and perhaps more importantly, there is a risk of inherent double
taxation particularly if a UK property
company is utilised. Basically the price paid
for the shares does not give any rights to a
stepped up base cost for the underlying
property. Further, the purchase of shares
means that there is an inheritance of the
tax written-down capital allowance position
of the target company.
11
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Unit trust
The UK has no equivalent to the US real
estate investment trust concept. We do
have authorised property unit trusts and
indeed unauthorised unit trusts but neither
of those is likely to be attractive for property holdings. A unit trust structure, which
is increasingly being seen, is the offshore
unit trust and in particular the Jersey property unit trust. The Jersey property unit trust
is viewed as tax transparent for the
purposes of income taxation but not in
relation to capital gains. This means that it
is a most useful vehicle for the creation of a
new investment structure, but if property is
“This represents an advantage over the limited partnership where the
tax effect of dealings in the property is automatically visited upon the
investors, which make it very difficult for the fund to be open ended
or roll-up.”
“The unit trust can permit greater liquidity and allows new property
to be later contributed by new investors without negative tax impact
on the existing investors – something that will often be a problem for
a limited partnership. The utilisation of a Jersey or offshore unit trust
can however lead to extra cost, including the need to comply with
financial services requirements and to establish Jersey management
infrastructure.”
to be inserted into the Jersey property unit
trust in return for units then there will be a
capital gains tax disposal on the way in.
Thereafter provided a proper Jersey infrastructure can be maintained then disposals
of the property will be without liability to
capital gains tax on the investors until they
cash in their interest.
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
12
Section 76 FA 1986
Using this section reduces the rate of stamp
duty on the transfer of a business to a UK
company in return for shares from 4% to
0.5%. This relief has therefore been successfully used in a number of more substantial
property transactions in order to reduce the
rate of stamp duty on the sale of a sizeable
property portfolio or completing investments
such as a shopping centre from 4% to the
0.5% mentioned above in relation to the
hive-down and the 0.5% which arises on the
sale of shares in the company in question.
Whilst the limitations on the availability
of Section 76 relief are not as numerous as
3
2
elsewhere within the stamp duty legislation,
there are a number of pitfalls that need to
be avoided by careful drafting of the documentation if the application for a relief
under Section 76 is to be successful.
sells preferred shares
in NewCo
1
50 preferred shares
issued in return for
the property
350 ordinary shares
“The client must be prepared for the technical risk that the total amount of
stamp duty on such transactions, in the event of a successful Inland Revenue
challenge to the scheme, could be 4.5% rather than the 4% normally expected.
This is an artificial structure which is potentially subject to attack by the Inland
Revenue on the grounds of the anti-avoidance case law or through legislation.
Care must be taken to avoid creating a capital gains group between the vendor
and NewCo - otherwise the purchaser will inherit the capital gains base cost of
the vendor and an exit charge could arise! This is the reason why the purchaser
starts off owning NewCo (the 350 ordinary shares in the diagram). This structure should not be used other than for the larger property transactions.”
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CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Grant lease
to nominees
This is a version of the split legal and beneficial scheme which should be considered if
it has not been possible to plan in advance
so as to achieve the split legal and beneficial ownership before the process of selling
the property has become too far advanced.
In one version of the scheme, pursuant to
an umbrella agreement a lease is granted
to nominees for the landowner who agrees
under an offshore sale agreement to sell
the beneficial interest in the resultant lease
to the purchaser who will also agree to sell
the shares in the nominee companies. Care
needs to be taken as the nominees must
not be connected with the landowner.
In another version under an umbrella
agreement a lease is granted to nominees
acting for a subsidiary or sister group
member and a put and call option arrangement is put in place in relation to that
lease or the beneficial interest in it or
indeed an offshore sale agreement can be
entered into.
“The schemes put in place once a deal has been struck, whether in principle or as heads of terms, are most at
risk of being attacked by the Inland Revenue whether by refusal to give the £5 fixed duty or nil stamp duty
on the transfer to the nominees or by the Land Registry when registration of the newly created leasehold
interest is sought. Recently the Land Registry has become more aware of stamp duty schemes and is increasingly
asking that applicants for registration have documents adjudicated before they will register them.”
“Although both schemes have been seen to work, past success cannot be viewed as a guarantee of future
success. It must therefore be preferable to set up the split legal and beneficial ownership structure in
advance – see the previous section on ‘Split legal and beneficial ownership’. After all taking that route gives
the possibility of a higher annual property valuation in your accounts.”
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
14
Short lease followed
by sale of freehold or
grant of long lease
This scheme can be utilised to reduce the
stamp duty on the conveyance of a freehold or the grant of a long lease. First, a
short lease is granted, i.e. for a term of 35
years or less, at an appropriate premium.
The freeholder then sells the reversion or a
long lease is granted subject to the agree-
ment for lease and therefore at a lesser
premium. This latter document is
stamped. The agreement for lease
remains stampable and accordingly must
be executed and retained offshore. Later
the purchaser or his group may merge the
interests they have agreed to acquire.
Sale of freehold for
say 30% of value (2)
Offshore agreement
for 35 year lease for say
70% of value (1)
“The capital gains position of the purchaser will need to be taken into
account in order to ensure that the full amount paid by it can be taken
in as base cost. This structure can also cause corporation tax problems
for the seller. There must be no arrangement for the lease to be
merged after completion. The agreement for lease remains a
stampable document which will be at risk of Inland Revenue attack.
The structure is artificial and is therefore susceptible to Inland Revenue
or Land Registry objection.”
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CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Offshore execution of
agreement for lease
In relation to land-based structured finance
transactions, it has over recent years regularly been the case that the parties will rely
on agreements for lease executed and
retained in Jersey on the basis that most of
such structured finance deals are premised
upon the value of the corporate covenant
“You should be aware that the Inland Revenue have indicated, at least
in relation to structured finance transactions, that they will insist upon
the production of the original agreement for lease in the UK in relation
to any dispute as to the true tax status of the transactions. It is yet to
be seen whether such insistence will be successful or if the production
of the agreement for lease in the UK is actually central to the success
of the tax schemes in question.”
“However, their insistence certainly has an effect – we must now
rethink how we approach savings in relation to the stamp duty costs
of structured finance transactions. A stamp duty cost of 4% may more
than consume the margins involved.”
of the counter-party rather than on the
security value of the land alone. The stamp
duty savings are a deferral until such time,
if any, that the agreement for lease has to
come back onshore. It is possible of course
that the stamping of the lease will not be
required at all.
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
16
The contingency
principle
If land is transferred or a lease granted in
return for an unascertainable sum or an
unascertainable rent then the transfer or
lease is stamped on the basis of the
market valuation of the interest in land in
question. On the other hand, if the
transfer or lease contains a maximum,
minimum or prima facie figure for premium
or rent then stamp duty case law requires
that such figure be taken as stampable
consideration for the interest in question.
“The Inland Revenue is aware of this possibility and has indicated that
they will not view the contingency principle as applicable if a wholly
unrealistic estimate or minimum figure is placed on the consideration.
It is questionable whether this view can be supported in law but it
may have the effect desired by the Inland Revenue by scaring
taxpayers off. Certainly however if a sensible figure can be identified
from the documentation and surrounding facts then the Inland
Revenue should not be able to challenge the payment of a lesser
amount of duty than might otherwise be the case.”
“Careful drafting is always required to ensure the contingency
principle applies and to prevent the Inland Revenue discovering a
higher contingent sum than is intended.”
Accordingly, in appropriate circumstances
and in the absence or any other possible
stamp duty saving scheme consideration
should be given to attempting to agree a
technically unascertainable price subject to
a contingent minimum, maximum or prima
facie figure which is significantly less than
the market value of the property interest in
question, thereby reducing the stamp duty.
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CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Grant offshore option
This scheme is a version of the offshore
nominee scheme which was so popular
throughout the 80s and 90s until the
Parinv v IRC decision went in favour of the
Inland Revenue. Basically, the vendor will
grant an option (executed and retained
offshore) to the purchaser for the purchase
of the land in question. The exercise price
will be £1 and the option price will be the
full consideration minus £1. The expectation is that the only stampable document in
the UK will be the transfer for £1.
“Although there are contrary views, it is our view that this scheme is
to all intents and purposes identical to the scheme which was successfully attacked by the Inland Revenue in the Parinv v IRC case – a court
would hold that the means by which the parties have completed their
chosen transaction is the transfer of land at full price notwithstanding
that the transfer of the property purports to be for £1. Accordingly,
the transfer must be stamped on the full consideration moving
between the parties.”
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
18
Property swaps
If real estate is exchanged or part
exchanged both transfers are stamped on
full value. However, if one is sold for the
other and some equality money then the
duty is reduced to 4% of the consideration
for the most valuable property.
“Precise drafting is vital to this route which is only likely to be of
relevance for relatively few transactions save that the principle could
conceivably be extrapolated into a saving scheme by setting up a sale
of non-stampable assets such as platinum sponge or gold for a cash
sum to be satisfied in part in cash and in part by the transfer of the
target property.”
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CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
SECTION 2 - Stamp duty and registration taxes in Europe
EU stamp duty
comparisons
A comparison of EU’s maximum rates of stamp duty on share and real estate transfers
The following does not deal with VAT, which will often apply in the case of transfer of real estate properties instead of or as well as stamp
duty/transfer taxes.
Countries
Austria
Belgium
France
Property
3.5%
12.5%1
4.89%
Germany
Ireland
Italy
Netherlands
Poland
Portugal
Spain
United Kingdom
3.5%
6%2
8%
6%
2%
10%
7%
4%
Whilst the stamp duty avoidance industry
appears to be at its most developed in the
UK – no doubt because of the recent hikes
in the rate of duty applicable to property
transactions – stamp duty saving has come
more under the spotlight in recent years in
Europe. Accordingly, a major issue in the
structuring of real estate property investment
and indeed the creation of real estate property funds in Europe includes the possibility
of saving stamp duty. We comment below
on the possibilities in each jurisdiction.
Austria
Austria has similar rules in relation to
transfer tax as in Germany – see overleaf.
There is no stamp duty on shares in
Austria. However, if 100% of the shares of
a real estate company are transferred, the
1
2
tax of 3.5% will apply, calculated on the
basis of triple standard value (standard value
is a standardised value which is usually far
lower than market value) of the real estate.
However, the treatment of the sale of shares
in a real estate corporation as if it was an
indirect sale of the property only applies if
100% of the shares in the real estate
company are sold to the same purchaser.
Thus if one share is held back, the 3.5%
rate will not apply. Indeed it may be possible
to use a trustee to act for the purchaser
who acquires all stock but has some shares
transferred into the name of the trustee as
the legal form rules in this situation.
Alternatively, certain forms of lease
contract, written or preferably oral, can be
utilised in Austria in order to reduce or
eliminate the transfer tax applicable.
This tax of 12.5% is reimbursed at 3/5 if the property is sold in the two years since its acquisition
Rates are up to 6% for non-residential properties and up to 9% for residential properties
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
Shares
0%/3.5%
0%
1%/Euro 3,000
Or 4.8%
0%/3.5%
1%
0.14%
6%
1%
0%
0%
0.5%
20
In a development structure another
possibility for minimising tax is to have the
building constructed by a construction
company to whom the bare land may be
transferred. Subsequent acquisition of
100% less one share of the construction
company does not trigger tax or stamp
duty. In that case, tax would be triggered
only upon acquisition of the land, and the
building would not be subject to real
estate transfer tax.
Belgium
No tax applies on the transfer of shares
even if the assets of the company
comprise mainly or totally real estate
(the tax of 12.5% will have applied
when the property was transferred first
to the company).
France
Italy
Portugal and Spain
Whilst it is not generally possible to avoid
French registration tax on a dealing in property
in the same way as in the UK, it is possible
practically to eliminate the French registration
tax liability by means of transactions in the
shares. In particular, the transfer of shares in
an offshore holding company is not subject to
French stamp duty. A transfer of shares in a
French company is subject to registration tax
of 1% up to a maximum of FRF20,000
(approximately EU 3,000) unless more than
50% of the gross assets of a company, or
indeed its subsidiaries as a whole, comprise
French real estate. In the latter case a tax of
4.8% applies without limitation.
The standard method of avoiding the
significant Italian transfer tax is for shares in
an Italian real estate company to be
acquired by a new Italian holding company
at a cost of 0.14%. It is interesting to note
that if the purchaser and the target are
subsequently combined in a merger there is
a step-up in basis for the new Italian
holding company in the property up to the
price it paid for the shares in the target.
Portuguese and Spanish transfer taxes
cannot be avoided by a sale of shares in a
local property company. They can however
be avoided by transfers of shares in nonresident property holding companies. The
most popular amongst these has proved to
be the Gibraltar company.
Germany
Germany is the most difficult country for
the avoidance of registration tax. Germany
does not levy transfer taxes on shares.
However, the transfer of 95% or more of
the shares in a German real estate holding
company or indeed any foreign company
which also owns German real estate or a
German real estate company will trigger an
indirect stamp duty liability in relation to
the property itself. It is possible to avoid
the registration tax if the German or
foreign company does not exist for the
purposes of German real estate investment
alone. It is noteworthy in Germany that
there is no real estate transfer tax relief for
transfers of land within the same group
of companies.
Ireland
The avoidance of Irish stamp duty can best
be achieved through transfers of shares in
an Irish company or indeed an overseas
holding company.
The Netherlands
The Dutch tax authorities have an armoury
of anti-avoidance rules. Indeed transfer tax is
levied on the acquisition of shares in real
estate companies if the acquirer obtains
directly or indirectly, at least one third of the
nominal paid up capital (including shares
already in its possession). A real estate
company is a resident or a non resident
company whose purpose is to invest in
immovable property and whose assets
consist of at least 70% of immovable property located in the Netherlands. It is
noticeable that the 6% rate is applied to the
true value of the property and not the much
lower reported value seen in other jurisdictions such as Germany and Portugal. The
transfer of shares in an overseas holding
company may also trigger that same liability.
Accordingly, the English trend towards avoidance of transfer tax has reached the
Netherlands and two schemes for avoiding
transfer tax when purchasing a property
company or taking an economic interest in
real estate are currently worth considering.
It is noteworthy that stamp duties do
not apply if the company has as its goal the
exploitation of the real estate (for example,
a hotel).
21
Poland
In Poland, stamp duties are charged on the
market value of the property or shares sold,
but the tax authorities usually accept the
transactional price, especially if the sale is
carried out between independent parties.
There are schemes available to avoid stamp
duty. For instance:
a sale of shares could be carried out
through a brokerage agency – in such a
case the sale will be exempt from
stamp duty;
if vendor V and purchaser P are companies and P wishes to acquire real estate
from V for $X, instead of a direct sale P
can contribute $X to V in exchange for
shares in V (subject to 0.1% stamp
duty). Then P’s shares in V are
redeemed and, as a remuneration for
that, V transfers real estate to P (which
is stamp duty free). Alternatively V
could be divided into two companies,
with P taking the shares in the new
company which holds the real estate.
However, these methods should be
analysed case by case, because they are not
applicable to all transfers of real estate.
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
CMS
Created by several major European firms,
CMS is a transnational legal and tax services organisation, which has 40 offices in
24 jurisdictions. We currently employ in
excess of 1750 lawyers, with a total staff
of 3500. CMS Bureau Francis Lefebvre
leads the CMS tax group, a Paris based
firm with an unparalleled reputation for
the technical excellence of its tax advice.
This reputation for quality is fully complimented by the substantial tax practices of
other CMS member firms, with over 250
tax advisers across Europe and the
Americas. CMS has recently welcomed the
arrival of the tax specialist firm of
Adonnino Ascoli & Cavasola Scamoni in
Italy as well as new tax teams in Belgium
and Stuttgart.
Our worldwide presence allows us to
provide clients with local knowledge
combined with international expertise.
We can draw upon a significant crosssection of technical and commercial
expertise and provide clients with the
benefit of our network of offices and
extensive international connections. Our
offices and associated offices include the
UK, Central and Western Europe, South
East Asia and North and South America.
CMS law firms provide clients with
access to integrated pan-European legal
services, managed by a single point of
contact and with common high calibre
service standards.
Our international CMS member firms’
head offices include:
CMS Adonnino Ascoli & Cavasola
Scamoni: Italy
CMS Bureau Francis Lefebvre: France
CMS Derks Star Busmann: the
Netherlands
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
CMS Hasche Sigle: Germany
CMS Lexcelis: Belgium
CMS Strommer Reich-Rohrwig Karasek
Hainz: Austria and Central Europe
CMS von Erlach Klainguti Stettler Wille:
Switzerland
Further information on CMS is available via
our website www.cmslegal.com
Argentina
Buenos Aires
CMS Bureau Francis Lefebvre
T +54 11 48 13 64 61
F +54 11 48 16 06 08
Patrick Patelin
[email protected]
Austria
Contact point
If you are interested in following up in relation to stamp duty saving opportunities and
real estate transfer taxes in the UK and
throughout Europe or indeed other tax
issues, please contact the following people
in our London office. You can also contact
our European colleagues throughout CMS.
Mark Nichols
T +44 (0)20 7367 2051
E [email protected]
Richard Croker
T +44 (0)20 7367 2149
E [email protected]
Simon Meredith
T +44 (0)20 7367 2959
E [email protected]
Vienna
CMS Strommer Reich-Rohrwig
Karasek Hainz
T +43 1 40 4430
F +43 1 40 443 9000
Gerhard Rettenbacher
[email protected]
Belgium
Brussels
CMS Lexcelis
T +32 2 626 22 00
F +32 2 626 22 51
Andre Bailleux
[email protected]
Brazil
Rio de Janeiro
CMS Bureau Francis Lefebvre
T +55 21 233 7447
F +55 21 233 7450
Flavio Assan
[email protected]
France
Paris
CMS Bureau Francis Lefebvre
T +33 1 47 38 55 00
F +33 1 47 38 55 55
Jean-Claude Bouchard
[email protected]
22
Germany
Italy
Russia
Berlin
CMS Hasche Sigle
T +49 30 203 60 0
F +49 30 203 60 290
Wolf-Georg von Rechenberg
[email protected]
Milan
CMS Adonnino Ascoli & Cavasola Scamoni
T +39 02 48011171
F +39 02 48012914
Giuseppe Ascoli
[email protected]
Moscow
CMS Bureau Francis Lefebvre
T +7 502 221 4903
F +7 095 299 3024
Jean-Luc Pipon
[email protected]
Düsseldorf
CMS Bureau Francis Lefebvre
T +49 211 175 910
F +49 211 164 0411
Wolfhard Tillmanns
[email protected]
Rome
CMS Adonnino Ascoli & Cavasola Scamoni
T +39 06 3220585
F +39 06 3219128
Giuseppe Ascoli
[email protected]
Spain
Frankfurt-am-Main
CMS Hasche Sigle
T +49 69 71 701 0
F +49 69 71 701 110
Thomas Link
[email protected]
Morocco
Hamburg
CMS Hasche Sigle
T +49 40 37 63 00
F +49 40 37 63 03 00
Heino Büsching
[email protected]
Munich
CMS Hasche Sigle
T +49 89 23 80 70
F +49 89 23 80 71 10
Gerd Seeliger
[email protected]
Stuttgart
CMS Hasche Sigle
T +49 711 97 64-0
F +49 711 97 64-900
Kurt Gragz
[email protected]
Hungary
Budapest
Ormai és Társai CMS Cameron McKenna
T +36 1 483 4800
F +36 1 483 4801
Judit Pethö
[email protected]
Madrid
CMS Bureau Francis Lefebvre
T +34 91 436 4531
F +34 91 436 4302
Alexis Baelen
[email protected]
Switzerland
Casablanca
CMS Bureau Francis Lefebvre
T +212 22 26 19 92
F +212 22 26 37 61
Jacques Buonanno
[email protected]
Zürich
CMS von Erlach Klainguti Stettler Wille
T +41 1 285 1111
F +41 1 285 1122
Hans Wille
[email protected]
The Netherlands
United States of America
Utrecht
CMS Derks Star Busmann
T +31 30 2121 111
F +31 30 2121 333
Tom Feringa
[email protected]
New York
CMS Bureau Francis Lefebvre
T +1 212 246 8045
F +1 212 246 2951
Paul Bayle
[email protected]
Poland
Warsaw
CMS Cameron McKenna
T +48 22 520 5555
F +48 22 520 5556
Arkadiusz Michaliszyn
[email protected]
Uruguay
Romania
United Kingdom
Bucharest
CMS Bureau Francis Lefebvre
T +40 1 231 91 19
F +40 1 231 91 20
Catalina Marcu
[email protected]
London
CMS Cameron McKenna
T +44 (0)207 367 3000
F +44 (0)207 367 2000
Mark Nichols
[email protected]
Montevideo
CMS Bureau Francis Lefebvre
T/F +59 82 902 5048
Javier Bordaberry
[email protected]
23
CMS guide to stamp duty saving for real estate UK and European comparison
April 2002
CMS is a major transnational legal and
tax services organisation with over 1700
lawyers and a total staff in excess of
3500. CMS has been created to offer
clients seamless services across Europe
and is the vehicle to full integration of
member firms. The members of CMS are:
CMS Adonnino Ascoli & Cavasola Scamoni
CMS Bureau Francis Lefebvre
CMS Cameron McKenna
CMS Derks Star Busmann
CMS von Erlach Klainguti Stettler Wille
CMS Hasche Sigle
CMS Lexcelis
CMS Strommer Reich-Rohrwig Karasek Hainz
Further information on CMS may be
found at www.cmslegal.com
CMS offices and associated offices
worldwide: Berlin, Brussels, London,
Paris, Rome, Utrecht, Vienna, Zürich,
Aberdeen, Amsterdam, Arnhem,
Beijing, Belgrade, Bratislava, Bristol,
Bucharest, Budapest, Buenos Aires,
Casablanca, Chemnitz, Dresden,
Düsseldorf, Frankfurt, Hamburg,
Hilversum, Hong Kong, Leipzig, Lyon,
Madrid, Milan, Montevideo, Moscow,
Munich, New York, Prague, Rio de Janeiro,
Stuttgart, Toronto, Warsaw and
Washington DC.