In principle, when a property or a right is transferred, ownership passes in full. This means both legal and beneficial ownership.
Legal ownership is the "shell", the ascription. Economic ownership is all other rights and obligations relating to the thing or right.
In a beneficial ownership transfer, the buyer will usually stipulate that at first request, the legal delivery will also be transferred by the seller. An irrevocable power of attorney is then given to the buyer to effect this.
Is economic ownership transfer tax due?
The acquisition of beneficial ownership of real estate is taxed as if the real estate itself were acquired. From 1 January 2021, this will not be the same for the acquisition of the economic ownership of a house which is intended as a main residence. That is because when economic ownership is acquired, the rate of 8% will always apply and not the special rate of 2% or the exemption for starters.
Why only economic transfer?
Before 1995, no transfer tax was due on an economic property transfer. Therefore, economic ownership transfer was widely used then to save transfer tax.
Nowadays, an economic transfer of ownership is however used to prevent the land register or commercial register from showing who the (economic) owner is. We call this "anti Quote structures". But an economic ownership transfer can also be used when co-shareholders do not want to cooperate in the transfer of shares.
For more information on beneficial ownership or anti Quote structures, please contact us. We will be happy to advise you.
