The Dutch government is updating the conditions for exempting foreign pension funds from corporation tax requirements, marking a long-awaited shift in policy as part of efforts to boost international investment in residential property.

New residential property under construction in Amsterdam's Zuidas business district

Housing minister Elanor Boekholt-O'Sullivan announced the move on Monday as part of a package of 50 measures to head off the shortfall in residential property in the Netherlands. The minister has set a target of building 100,000 new homes a year, and her plans include a €7 billion programme to boost affordable housing construction up to 2035.

Dutch investors and developers had earlier called on the government to change the way foreign pension funds are treated tax-wise in the Netherlands because, unlike Dutch funds, they often do not meet the exact conditions to qualify for the exemption.

The minister has now asked the tax office to "clarify and modify" the rules, which, the cabinet says, will make it easier and more attractive for pension funds (traditionally large, stable institutional investors) to invest in Dutch housing. The changes are due by the end of 2026.

Transfer tax cut

Earlier, the cabinet said it would cut the property transfer tax for investors from 8% to 7% and is introducing a €500 million subsidy package specifically targeted at investors in mid-market rental housing, which will amount to €10,000 per unit. 

The cabinet is also planning to amend rental housing regulations to increase profitability and provide greater clarity and predictability for landlords, the ministry said. The total number of large scale development sites is being expanded from 21 to 31.

The minister has made attracting more international investment a key part of her strategy to cut the housing shortfall, which is currently around 400,000 units. “We need considerable investment to realise enough affordable housing,” the minister told MPs in a statement. The measures outlined this month, she said “give housing corporations and investors more opportunities to invest.”