Changes to the tax regime for Dutch real estate investment trusts (REITS) will see them grow competitively within Europe, according to the European Public Real Estate Association (EPRA).

The organisation said the changes, which came into force in 2014, would now allow the Dutch funds, known locally as FBIs, to compete against other REITS.

It said the changes would allow FBIs’ ancillary services – such as providing meeting space, in-house catering or energy to tenants – to qualify for the same special tax regime as their core activities.

This falls in line with the structure elsewhere in Europe and now sets Dutch funds on a level playing field, EPRA said.

Ronald Wijs, a member of EPRA’s tax committee, said the changes to legislation came about after EPRA and the industry consulted the government on the system’s negative impacts.

“This legislation is a major improvement,” he said. “It should allow Dutch REITs to manage their property portfolios in a more dynamic way and to meet the changing demands from investors and tenants.”

However, the changes to the tax regime came with several stipulations, EPRA said.

The government will only provide tax allowances if the ancillary activities take place in a legitimate subsidiary, and if the activities directly relate to the core investment.

It also said the total value of shares in the subsidiary may not exceed 15% of the value of the FBI as a whole, while turnover may not exceed 25%.

In line with this, the subsidiary providing the ancillary activities may only be financed by equity.

The government said this was to prevent companies from keeping their value artificially low.