TSX:ERE.UN - Post by User
Post by
retiredcfon Sep 26, 2022 9:05am
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Post# 34985941
RBC
RBC21 September, 2022
European Residential REIT
Dutch government decides to tax Dutch REITs; should be a non-event for ERES
TSX: ERE.UN | CAD 3.22 | Outperform | Price Target CAD 5.25
Sentiment: Neutral
Event: Yesterday, the Dutch government published its 2023 budget and included a few changes to tax legislation. The most noteworthy change was the announcement that effective January 2024, Dutch REITs will no longer be allowed to invest directly in real estate and will be subject to Dutch corporate income taxes.
Implications: We understand that this should be a non-event for ERES. ERES is not a Dutch REIT, is a Canadian REIT and their holdings of assets are already in taxable entities, and ERES is already paying taxes. There were other tax changes, including the abolition of the landlord levy (positive for ERES), higher RETT trade (land transfer tax to 10.4% from 8%) which means acquisition cost will be a little higher, and changes to the corporate income tax rate. All in all, it does not appear that these changes are overly material to ERES.
Importantly, there is no news on the Housing Minister’s statement of expanding rent control to the mid-market but that there will be an update on this topic in the fall of 2022.