18/December/2025

The Dutch Ministry of Finance has recently adopted an amending decree introducing several targeted amendments to the Decree on Immovable Property for VAT purposes (the Real Estate Decree). These amendments mainly result from recent case law — in particular the judgment of the Court of Justice of the European Union (CJEU) in Lomoco Development — and from policy changes following the abolition of the reduced VAT rate for accommodation as of 1 January 2026.

Below, these amendments are discussed in comparison with the current Real Estate Decree.

1. Concepts of “building” and “undeveloped land” – amendment following Lomoco Development

The current Real Estate Decree contains further guidance on the concepts of “building” and “undeveloped land” for VAT purposes.

Building

 Under the former wording of the decree, a building was defined as a structure permanently attached to the land, even if not yet completed. Examples included a partially completed building and a structure forming part of a building yet to be constructed, such as a building foundation (Real Estate Decree 2023, section 3.2.1):

“A structure permanently attached to the land but not yet completed already qualifies as a building for VAT purposes. This includes a partially completed building or a structure forming part of a building yet to be constructed, such as a building foundation.”

Following the judgment of the CJEU of 7 November 2024 (Lomoco Development et al., C-594/23, ECLI:EU:C:2024:942), the amending decree deletes the wording referring to:

“… a structure forming part of a building yet to be constructed, such as a building foundation”.

As a result, the policy position that a foundation or similar structure already qualifies as a building for VAT purposes is explicitly abandoned.

Undeveloped land

In line with this change, the guidance on “undeveloped land” has also been amended (section 4.4.2). Under the former wording, land on which or in which a partially demolished building was present generally continued to qualify as developed land:

“The complete demolition of a building results in undeveloped land. Land on which or in which a partially demolished building is present in principle continues to qualify as developed land for VAT purposes. Undeveloped land exists where a plot of land contains only old piles remaining in the ground which no longer perform any function for a new building to be constructed.”

Under the amending decree, land on which a partially demolished building is present qualifies as undeveloped land if that building no longer performs the function of a building. In addition, land containing only old piles qualifies as undeveloped land, irrespective of whether those piles may serve a function for a new building to be constructed. The new wording reads as follows:

“The complete demolition of a building results in undeveloped land. Land on which or in which a partially demolished building is present qualifies as undeveloped land for VAT purposes if the partially demolished building can no longer perform the function of a building. Undeveloped land also exists where a plot of land contains only old piles, irrespective of whether those piles perform a function for a new building to be constructed.”

As a result of these amendments, read in conjunction with CJEU case law, land will in practice earlier qualify as undeveloped land for VAT purposes.

2. First occupation for VAT purposes

First occupation refers to the first actual and durable use of a building in accordance with its objective intended purpose. Incidental or temporary use for other purposes does not constitute first occupation. The objective purpose of an immovable property may change, for example where the property is durably used for different purposes by the owner or with the owner’s (explicit or implicit) consent.

The current Real Estate Decree stated that factual acts aimed at durable use — such as tenant fit-out works — could already result in first occupation. As expected, this guidance (including an illustrative footnote) has been deleted in the amending decree. Consequently, the performance of fit-out works no longer automatically leads to first occupation.

As the qualification of a building as “new” and the application of the real estate transfer tax concurrence exemption depend in part on the moment of first occupation, this real estate transfer tax concurrence exemption may remain applicable for a longer period. In addition, the amended wording may result in a later commencement of the VAT revision period than previously assumed.

The Ministry of Finance has indicated that the concept of first occupation will be further reviewed in light of case law of the Dutch Supreme Court and the CJEU. Based on the legislative history of the Sixth VAT Directive (Council Directive 77/388/EEC) and CJEU case law, first occupation only occurs when the product leaves the production process and enters the consumption phase. We therefore expect further case law developments at both national and EU level and amendments to the definitions of ‘building’ and ‘first use’ in the Real Estate Decree by the Ministry of Finance.

3. Creation of a newly developed good through renovation

The Real Estate Decree confirms the Supreme Court’s position that only substantial changes to the structural elements of a building may result in a renovation being regarded as the creation of a newly developed immovable property (in wezen nieuwbouw) and has been supplemented by a footnote confirming that the Promo 54 judgment of the Court of Justice of the European Union (C-239/22) does not bring about any change to the criterion developed by the Supreme Court.

Nevertheless, we expect future CJEU case law may still provide grounds for revisiting this approach.

4. Sale-and-construction agreements

Section 4.3 of the Real Estate Decree has been rewritten. The amending decree clarifies the VAT qualification of transactions arising from a sale-and-construction agreement (koop-/aannemingsovereenkomst) that must be treated as a single supply for VAT purposes. New guidance has been added in relation to major renovations and the supply of rights of leasehold.

5. Letting of conference, meeting and exhibition space

Section 5.8.4 clarifies that the existing pragmatic approval regarding the VAT-taxable letting of conference, meeting and exhibition space to many and frequently changing tenants in relation to the VAT option requirements also applies where such space is located within a hotel, café or restaurant business. The decisive factor is that the tenant uses the space exclusively for conference, meeting or exhibition purposes. Other use of the space by the landlord does not preclude the application of the approval.

6. Short-stay accommodation and holiday accommodation – amendment due to abolition of the reduced rate

Section 5.10.2 has been amended following the abolition of the reduced VAT rate for accommodation as of 1 January 2026. The interpretation of the concept of “short-term stay” has been updated accordingly. It is now explicitly stated that where both contractually and in fact the maximum duration of stay does not exceed six months, the stay qualifies as short-term. Where the duration exceeds six months, the burden of proof rests with the landlord to demonstrate that the stay is nevertheless short-term by nature. Recent case law of the Arnhem-Leeuwarden Court of Appeal has also been incorporated.