Changes to tax position of Dutch housing corporations

The proposed exemption from the earnings stripping rule may increase the amount of interest that housing corporations can deduct, thereby providing them with greater financial capacity for investment. The exemption applies only to qualifying DAEB activities. The earnings stripping rule will continue to apply to non-DAEB activities. The existing deduction rules will continue to apply to carried-forward interest. The exemption will not automatically make accumulated interest balances deductible.

According to the Dutch government, housing corporations may already take the proposed exemption into account in their multi-year budgets, potentially creating more scope for guarantees from the Social Housing Guarantee Fund (WSW) and for obtaining guaranteed finance. However, neither the measure’s introduction nor its effective date is certain. When making investment and financing decisions, housing corporations should therefore take account of the uncertainty surrounding the introduction, effective date and final form of the exemption.

The proposed exemption does not diminish the importance of the ongoing proceedings concerning the existing interest deduction limitation. Discuss with your adviser whether a timely, reasoned objection should be lodged against each final tax assessment in which the interest deduction limitation has been applied, in order to preserve your legal position for that year.

The new real estate transfer tax exemption may also facilitate certain property transfers between housing corporations. This may be relevant, for example, where a financially stronger housing corporation acquires property from one that cannot independently fund the necessary investment. Please note that not all DAEB property qualifies for this exemption.

The earnings stripping rule is a general limitation on interest deductions for corporate income tax purposes. Under this rule, the net interest expense — broadly, the difference between interest expenses and interest income, including certain related costs — is deductible only up to the higher of 24.5% of tax EBITDA or €1 million. Any excess is, in principle, not immediately deductible but may, subject to certain conditions, be carried forward to subsequent years.

Housing corporations finance the construction of housing, sustainability improvements and other property-related projects partly through external borrowing. The earnings stripping rule may restrict the deduction of interest on these loans. This may result in a higher corporate income tax burden and consequently reduce the financial capacity available for investment.

Through the second memorandum of amendment to the 2027 Tax Plan, the Dutch government gives effect to the previously announced exemption for housing corporations. The measure forms part of a package intended to strengthen the financial capacity of the housing corporation sector and support the implementation of the National Performance Agreements. These agreements cover, among other matters, the construction of social housing, sustainability improvements and keeping housing affordable.

The exemption applies to authorised institutions within the meaning of the Housing Act and only to activities that qualify as services of general economic interest (DAEB) and have been entrusted to those institutions under that Act. For the purposes of the earnings stripping rule, the portion of the net interest expense attributable to those activities and the corresponding portion of adjusted profit (tax EBITDA) are disregarded.

As a result, the net interest expense attributable to those DAEB activities is not restricted under the earnings stripping rule. The rule continues to apply to non-DAEB activities. The proposal therefore does not provide a full exemption for housing corporations and does not affect any other interest deduction limitations that may apply.

Further rules may be laid down by or pursuant to an order in council on allocating the net interest expense and adjusted profit to the DAEB activities.

The proposed exemption follows the Housing Act in defining the scope of DAEB. Any future expansion of DAEB will therefore also affect the application of the exemption once that expansion has been incorporated into the Housing Act and has entered into force. The current State aid assessment concerns the DAEB currently enshrined in the Housing Act. The proposed expansion to include a limited category of affordable housing is being discussed informally with the European Commission as part of a separate legislative process concerning the Housing Act. That process also considers the tax and State aid implications and whether the tax legislation and regulations need to be amended.

The existing rules continue to apply to net interest expenses carried forward to subsequent years. Such interest may be deducted in later years to the extent that deduction capacity would have been available without applying the proposed DAEB exemption.

This applies both to interest carried forward before the new rules take effect and to interest arising thereafter. The exemption therefore does not result in the automatic deduction of accumulated interest balances. The Dutch government expects the actual utilisation of carried-forward interest to be limited. Utilisation will continue to depend on developments in adjusted profit and net interest expense.

The EU Anti-Tax Avoidance Directive (ATAD) allows long-term public infrastructure projects to be exempted from the interest deduction limitation it contains (the earnings stripping rule). When the Dutch rules were introduced, the activities of housing corporations were not brought within this exemption.

The Dutch government now considers that there is scope for a broader interpretation in light of changes to the European framework for social and affordable housing, including the revision of the DAEB Exemption Decision. It refers, among other things, to the Omnibus proposal for a directive on direct taxation presented by the European Commission on 24 June 2026. That proposal would replace the exemption for long-term public infrastructure projects with an exemption for long-term projects in the general interest, expressly including social and affordable housing.

The Omnibus proposal has not yet been adopted and therefore does not yet amend ATAD. Nevertheless, the Dutch government takes this development into account in interpreting the existing scope for an exemption.

In addition to falling within the scope permitted by ATAD, the exemption must comply with the EU State aid rules. The Council of State raised questions about this and advised, among other things, that the measure should be limited to DAEB activities. The proposed rules include this limitation. However, this does not yet establish that the measure complies with the State aid rules.

In its answers to parliamentary questions on 16 October 2026, the Dutch government clarified that, in its view, the proposed exemption falls within the DAEB Exemption Decision. It therefore considers that the measure may be implemented without prior notification to, and formal approval by, the European Commission. The government does not expect any issues with the intended commencement date of 1 January 2028.

Before the measure enters into force, however, the Dutch government intends to discuss its assessment informally with the European Commission’s services. This consultation is intended to resolve any remaining State aid uncertainties and reduce the risk of subsequent recovery. When the second memorandum of amendment was submitted, the consultation had not yet taken place and the State aid assessment had not been finalised.

The commencement date will be determined by royal decree. The exemption will apply for the first time to financial years beginning on or after that date. The intended commencement date of 1 January 2028 is therefore not yet unconditional.

Although the tax measure is expected to apply from 2028, the Dutch government considers that it may increase investment capacity as early as 2027. By taking the proposed exemption into account in their multi-year budgets, housing corporations may obtain greater scope for guarantees from the Social Housing Guarantee Fund (WSW) and for attracting guaranteed finance for new projects. This does not mean that the increased interest deduction will apply from 2027.

It also remains important to take account of the uncertainty surrounding the measure’s actual introduction and final form.

In addition to the proposed legislative amendment, proceedings are ongoing in which the compatibility of the earnings stripping rule with primary EU law is being challenged. The proposed exemption does not resolve that legal question and does not provide an automatic remedy for interest deductions in earlier years. These proceedings therefore remain relevant, even though the Dutch government is proposing a partial exemption for future years.

The scope for an exemption under ATAD, the State aid assessment of that exemption and the compatibility of the existing interest deduction limitation with primary EU law are separate questions. The proposed legislative amendment does not constitute an acknowledgement that the existing rules are contrary to EU law.

Housing corporations are advised to assess with their adviser how these proceedings may affect their position and whether timely objections should be lodged against assessments in which the interest deduction limitation has been applied.

Subject to certain conditions, a real estate transfer tax exemption applies when responsibilities are transferred between two public benefit organisations (ANBIs). Housing corporations may qualify as ANBIs subject to certain conditions. To apply the exemption, an assignment or an independent part of an assignment must be transferred.

An evaluation by SEO found that the concept of a “assignment” under this exemption no longer aligns adequately with housing corporations’ public responsibilities in the social housing sector. As a result, transfers that support those responsibilities sometimes fall outside the exemption. The existing exemption also does not apply to the transfer of individual properties alone. In addition, all assets and liabilities associated with the transferred assignment must be transferred. This makes the exemption complex and, in some cases, impossible for housing corporations to apply.

A new standalone exemption is therefore proposed for certain transfers between housing corporations of immovable property or rights to which such property is subject. The exemption applies only to property used by the transferring authorised institution immediately before the acquisition to provide DAEB within the meaning of Article 47(1)(b) and (d) of the Housing Act. At the time of acquisition, the acquirer must also be an authorised institution within the meaning of the Housing Act.

The explanatory notes name social housing, student accommodation and institutional property, such as residential care homes and nursing homes, as examples. The use condition described above also applies to these examples. Not all DAEB property qualifies. Property not used to provide the DAEB referred to above falls outside the exemption. This includes, for example, buildings designated for community use that fall within Article 47(1)(f) of the Housing Act. The new exemption does not require all assets and liabilities associated with a responsibility to be transferred.

The measure is intended to make it easier to transfer qualifying property to a housing corporation that is financially better placed to fund the necessary investment. It may thereby promote greater mutual solidarity and a better allocation of the investment burden within the housing corporation sector. The proposed commencement date for the exemption is 1 January 2027.

For the exemption to apply, the extent to which the property constitutes qualifying DAEB property must be established at the time of acquisition. According to the implementation assessment, the housing corporation must provide the civil-law notary with a valuation report when claiming the exemption. The report must state the property’s value and classification.

The memorandum in response to the report clarifies that the audited financial statements are not used for this purpose. Real estate transfer tax is assessed at a specific point in time, so the property’s value and classification must be established at the time of acquisition.

In addition to the new exemption for housing corporations, the Dutch government intends to restore the existing ANBI assignment-transfer exemption to its pre-2021 form. The specific addition that allows the exemption to apply where a purchase price equal to or exceeding market value is prescribed by a public authority will therefore be removed.

The existing exemption will therefore not be abolished. According to the memorandum in response to the report, ANBIs, including housing corporations, will retain the ability to acquire immovable property free of real estate transfer tax when an assignment is transferred, provided that the consideration does not exceed the book value of the transferred assets and the other conditions for the exemption are met. For these purposes, book value means historical cost less depreciation.

The amendment is intended to prevent overlap with the new exemption for housing corporations and avoid unnecessary administrative burdens. According to the memorandum in response to the report, the 2026 Year-End Decree will include a provision restoring the assignment-transfer exemption to its pre-2021 form.

The proposed measures may still change during the remainder of the legislative process.