ERES REIT outlines minimal business impact as a result

TORONTO, Sept. 22, 2022 (GLOBE NEWSWIRE) — European Residential Real Estate Investment Trust (TSX:ERE.UN, “ERES“or the”REITs”) announced today that on September 20, 2022, the Dutch government published its 2023 budget, along with a number of announced changes to tax legislation. The principal proposed changes that are relevant to the REIT include the following, all effective January 1, 2023:

  • The landlord levy tax, which affects certain REIT regulated apartments, will be eliminated. The removal, which was previously announced as part of the government’s coalition agreement, will positively result in an improvement in ERES’ long-term net operating margin.
  • The tax on real estate transfers (“RETT”) rate will increase from 8% to 10.4%. While this will result in an additional cost on future acquisitions, it will otherwise have no direct impact on the business or operations of the REIT.
  • The reduced rate applicable to the first tranche of profits subject to corporation tax (“ICT”) will increase from 15% to 19%. In addition, this reduced corporate tax rate will apply to the first €200,000 of annual profits per taxpayer in 2023, which have been reduced from the €395,000 threshold applicable in 2022. ‘ERES, its estimated effect will be immaterial to the REIT. financial operations and results.

Notably, the Dutch government has also announced that as of January 1, 2024, real estate investment trusts in the Netherlands (tax beleggingsinstellingen) will no longer be allowed to invest directly in real estate and will remain exempt from corporation tax (subject only to dividend withholding tax on mandatory annual distributions, in accordance with the rules of the current tax regime). As a result, profits made by real estate investment trusts on real estate investments in the Netherlands will be subject to Dutch corporation tax. Importantly, this will not impact ERES as the structure of the REIT is such that it does not hold any direct interest in real estate, but instead holds all of its investments indirectly through taxable vehicles. Indeed, it does not apply to ERES as a REIT incorporated in Canada and only affects those incorporated in the Netherlands.

Notwithstanding the above, the Dutch government has not released any further announcements on rent control or other potential regulatory developments and legislative proposals affecting the housing market. The Housing Minister reiterated that she will brief Parliament in the fall of 2022.

About ERES

ERES is a real estate investment company with variable capital without legal personality. ERES units are listed on the TSX under the symbol ERE.UN. ERES is the only European multi-residential REIT in Canada, with an initial current focus on investing in high-quality multi-residential real estate properties in the Netherlands. ERES owns a portfolio of 158 multi-residential buildings, made up of 6,900 suites and ancillary shops located in the Netherlands, and owns an office building in Germany and an office building in Belgium.

The registered office and registered office of ERES is located at 11 Church Street, Suite 401, Toronto, Ontario M5E 1W1.

For more information, please visit our website at www.eresreit.com.

Cautions Regarding Forward-Looking Statements

All statements in this press release that do not relate to historical facts are forward-looking statements. These statements represent the intentions, plans, expectations and beliefs of ERES and are subject to certain risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. These risks and uncertainties are more fully described in the regulatory documents which may be obtained on SEDAR at www.sedar.com.

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