Residency
For the purpose of Dutch gift and inheritance tax, the residence of the donor or deceased is relevant; not where the assets are located nor where the recipient is resident. In principle, if someone residing in the Netherlands gifts an asset to someone resident elsewhere or if someone dies while residing in the Netherlands and leaves assets to a relative resident elsewhere, the recipient in both cases would be liable to Dutch gift or inheritance tax, respectively.
For sake of clarity and completeness’, the Netherlands does not levy any gift or inheritance tax on Dutch real estate or other Dutch sourced assets received from non-residents of the Netherlands.
Emigration and deemed residency
The Netherlands applies a deemed residency concept for gift and inheritance tax purposes. A distinction is made between individuals who emigrate from the Netherlands whilst being Dutch national / passport holder and those who are non-nationals.
A Dutch citizen continues to be seen as a resident up to 10 years after emigrating from the Netherlands. Hence, for expats or other individuals without the Dutch nationality that have lived in the Netherlands for a long time and meet the requirements for naturalisation may need to think twice whether they want to really become a Dutch national if they anticipate to leave the Netherlands at some point in time again.
Now, a resident of the Netherlands (who is not a Dutch citizen) continues to be a resident, liable only for gift tax (not inheritance tax), up to 1 year after emigrating from the Netherlands.
Scope of taxation
All assets (including both, movable and immovable property, and also rights of use, such as usufruct) – located in the Netherlands as well as outside the Netherlands – gifted by or inherited from a (deemed) resident of the Netherlands are in principle subject to gift tax or inheritance tax, respectively.
Certain deductions, such as debts and funeral expenses, may be allowed in calculating the value of the asset for tax purposes.
Special rules apply if you inherit or receive a company if the business is continued.
A capital amount received from a life insurance following the death of a (deemed) resident may not be subject to inheritance tax if the beneficiary is the policyholder and pays that personal premium accordingly. Hence, in circumstances where partners are not married in community of property, it is often highly recommendable that one partner is the policy holder of a death insurance for the life of the other.
180 days rule
If someone dies within 180 days after having done a gift to a particular individual that gift to that individual is – besides a few exceptions – seen as an inheritance.
Tax Rates
Gift tax and inheritance tax rates (based on the value of assets and relation between the recipient and the donor/deceased) for the year 2021 are mentioned in the table below:
| Value of assets | Tax rates applicable to beneficiaries | |||
| – Partner / Children | – Grandchildren
– Other 1st line descendants |
– Brothers, sisters
– Others |
||
| € 0 – € 128,750 | 10% | 18% | 30% | |
| > € 128,751 | 20% | 36% | 40% | |
Exemptions
Though the tax rates for assets transferred by way of gifts and inheritance are the same, the exemptions allowed in case of gifts differ from the exemptions allowed for inheritance.
The following table provides an overview of the exemptions (“tax free amounts”) that are allowed as a deduction from the value of assets transferred for the purpose of calculating inheritance tax in 2021:
| Relation | Tax free amount |
| Partner:
– Spouse / Registered Partner – Notary joint living agreement – Adult non blood relatives registered at same address for at least 5 years |
€ 671,910 |
| Child (including foster and stepchild) /
Grandchild |
€ 21,282 |
| Great-grandchild | € 2,244 |
| Child with disability | € 63,836 |
| Parents (jointly) | € 50,397 |
| Others (brothers, sisters, 3rd persons) | € 2,244 |
Note that the partner exemptions may be imputed by the value of a pension entitlement the partner receives following the death of his/her beloved.
With respect to gift tax in the year 2021, a transfer of assets from a parent to a child (including a foster or stepchild) is exempt up to € 6,604. Additionally, a gift received from the parents in 2021 (once in the lifetime of a child between the ages of 18 and 40 years) is exempt up to € 26,881. This amount is increased to € 55,996 if the gift is made for study purposes and to € 105,302 for the purchase, maintenance or improvement of a home, including repayment of a (mortgage) loan.
For all other gifts (other than from parent to child) the annual exemption for gift tax purposes in 2021 is € 3,244.
Specific exemptions may apply for gifts or inheritance to qualifying charitable organisations or the fulfilment of a moral obligation.
Finally, to the extent a gift is subject to an income tax that gift is not subject to gift tax.
International / double tax relief
To the extent the assets include foreign real estate in a country that levies gift and/or inheritance tax, the Netherlands may allow for an ordinary foreign tax credit for the avoidance of double taxation, either based on one of the few countries with whom the Netherlands has a succession treaty with or based on the Dutch domestic legislation.
The Netherlands has only concluded succession treaties with the following countries. These only relate to inheritance tax unless this is specified behind the specific country below:
- Austria (relates to both gift and inheritance tax)
- Finland
- Israel
- Sweden
- Switzerland
- United Kingdom (relates to both gift and inheritance tax)
- United States of America
Note that the treaty with the US contains a specific clause on succession tax treaty residency (7-out-of-10 years rule). Therefore, the position of US nationals residing in the Netherlands is not only special for income tax purposes but requires specific attention for succession as well.
Planning opportunities
Cross-border gifts and inheritance may provide tax planning opportunities or, in certain cases, lead to double taxation. For instance, if the deceased is a resident of the Netherlands, the recipient of his estate is resident in another country and the immovable property that makes up his estate is located in a different country, there is a possibility that the recipient is liable to tax in all three countries. In such a case, tax may be mitigated by seeking assistance in filing tax returns in all three countries, seeking exemptions (for example) under tax treaties or domestic law.
In principle, the recipient who is subject to Dutch gift or inheritance tax is required to file a tax return in the Netherlands. Additionally, the Dutch resident making a gift may also be considered liable for the gift tax payable.
Immigration or emigration may provide some situations of respite from gift and inheritance taxes if executed in a planned manner. For example, it is advisable for an individual immigrating to the Netherlands to make gifts of considerable values, ideally at least 180 days (see above), prior to moving to the Netherlands in order to avoid potential Dutch tax implications.
Further, it may or may not be advisable for a resident of the Netherlands (who is not a Dutch citizen) to acquire Dutch citizenship from the perspective of inheritance tax, as a Dutch citizen would be liable to Dutch inheritance tax up to 10 years after emigrating from the Netherlands.
Note that trust are generally considered as transparent. Hence, a gift or an inheritance to a trust is seen as a gift or inheritance from the donor or deceased to the beneficiary of the trust.
Disclaimer:
The main features of Dutch gift and inheritance tax have been addressed in this website. The website cannot be considered exhaustive, although a detailed and accurate impression of the Dutch gift and inheritance tax regime is given. Since the situation of individual tax payers may vary greatly, we advise you to contact your TTT-Group advisor in specific cases.
