Dutch Supreme Court: legal title to shares alone insufficient for RETT group and internal reorganisation exemption

The Supreme Court ruling is as expected and, therefore, should not have a major impact on practice. The judgment is relevant for acquisitions within structures where a manager, custodian or general partner holds legal title to shares for investors’ account and risk. These may include contractual funds, and limited partnerships under Dutch law and foreign contractual funds and partnerships without legal personality.  

If a manager or custodian holds legal title to shares in a company for the account of (investors in) a fund, such manager or custodian does not form a RETT Group with that company. For the same reason, two companies of which the shares are held by the same manager or custodian for the account of (investors in) a fund do not form part of the same RETT Group (unless there is an investor with a common interest of 90% or more). RETT aspects of restructurings between companies held by a fund should therefore be carefully reviewed.

In line with previous case law of the Supreme Court, this ruling confirms that solely the economic interest in (shares of) a company is relevant for establishing a RETT Group.  

The Supreme Court’s reference to Nova Iberomoldes provides important guidance as to the impact of the Capital Duty Directive on Dutch RETT law. In the present case, the Court did not identify any transactions on which Article 5 of the Capital Duty Directive prohibits the levying of indirect tax. Nevertheless, its remark implies that Dutch RETT is an indirect tax within the meaning of the Capital Duty Directive and that if the conditions set by the Directive are met, RETT may not be levied. This is important as until now the Dutch government has not provided any guidance as to the compliance of Dutch RETT rules with the Capital Duty Directive.  

If you would like to discuss the implications of the judgment for your specific circumstances, please contact your regular PwC contact.

Dutch RETT is levied on acquisitions of real estate in the Netherlands and, under conditions, shares in real estate-rich companies (“Real Estate Rich Company”). Subject to conditions, an acquisition resulting from a transfer within the same group for RETT purposes is exempt from RETT under the exemption for internal reorganisations. 

For companies to form part of the same group for RETT purposes, they must be affiliated through an interest of 90% or more (“RETT Group”). That interest must be represented by a direct or indirect shareholding.

The case concerned the interpretation of the term ‘interest’ in the situation where a manager of a contractual fund holds legal title to shares while the economic return on those shares accrues to the funds’ investors.

A Swiss financial services group offers units in real estate investment funds to investors. Two of these funds, Fund B and Fund C (jointly: the “Funds”), are managed by the same Swiss fund management company (the “Fund Manager”). The Funds are contractual funds without legal personality. By acquiring units, investors obtain a claim against the Fund Manager to the Fund’s equity and income in proportion to the interest in the Fund. The units are tradable, and none of the investors holds 90% or more of the units in either of the Funds. The investors in Fund B are different from those in Fund C.

The Fund Manager holds the legal title to all shares in two Swiss companies, G AG and H AG, each of which has only one class of shares. The return for the investors in Fund B derives from real estate held (indirectly) by G AG, while the return for the investors in Fund C derives from real estate held (indirectly) by H AG. 

A private limited liability company (the “Acquirer”) of which the shares were held by H AG acquired all shares in a Dutch Real Estate Rich Company from G AG. Upon acquisition, the Acquirer paid RETT but subsequently filed an objection on the basis that G AG and the Acquirer belonged to the same RETT Group headed by the Fund Manager resulting in no RETT being due under the exemption for internal reorganisations. The tax inspector is of the view that the Fund Manager is not holding a qualifying interest in both G AG and the Acquirer as the interest for RETT purposes in these companies was with the investors in Fund B and Fund C respectively. Therefore, no RETT Group existed between the transferor and transferee of the shares.

The Court of Appeal of The Hague (25 February 2025) ruled in favour of the Acquirer by interpreting ‘interest’ as ‘shareholding interest’ and concluded that in the case of a company with a single class of shares, these shares represent the entire legal and economic interest in the company. The Court of Appeal thus assessed the economic interest by reference to the characteristics of the shares themselves, rather than by reference to who actually bears the risks and has the benefits of these shares under the contractual arrangements. As the Acquirer, G AG and H AG each only had one class of shares, in view of the Court of Appeal, they formed a RETT Group with the Fund Manager, as holder of those shares, notwithstanding the investors’ contractual entitlement to changes in the value of the underlying real estate.

The State Secretary of Finance appealed in cassation, arguing that legal title to shares in a company, without the corresponding economic interest, cannot establish a qualifying interest for purposes of forming a RETT Group. 

On 6 November 2026, the Dutch Supreme Court ruled that a RETT Group exists only to the extent that the parent of the group holds the entire or almost entire (i.e., 90% or more) economic interest in the shares of the other companies of that group. Who holds legal title to those shares is not relevant. To hold the economic interest, the parent company must bear all or almost all of the risk of changes in value and loss of the shares and be entitled to all or almost all of the income from those shares. 

Based on the established facts, the investors in the Funds bore the risk of changes in value of the shares in G AG, H AG and their subsidiaries to a significant extent and also benefitted from the income from those shares to a significant extent. The economic interest in the shares was therefore not (almost) entirely with the Fund Manager. There was also no RETT Group with any of the investors, as none of them held 90% or more of the units in the Funds.

The Acquirer’s acquisition of the shares in the Dutch Real Estate Rich Company therefore did not qualify for the exemption for internal reorganisations.

As an important closing remark, the Supreme Court stated that the CJEU’s judgment in Nova Iberomoldes did not apply, as it could not be derived from the case documents that transactions had taken place on which no indirect tax may be levied under Article 5 of the Capital Duty Directive. This is the first time that the Supreme Court has referred to Nova Iberomoldes.