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Taxes in the Netherlands - Part 7

This article continues our series on taxation in The Netherlands. In previous articles we discussed filing income tax returns, tax issues for self-employed professionals, and buying a house in the Netherlands.

In this article we will elaborate on the following subjects:
- Inheritance and gift tax
- Upcoming change in VAT rate
- Update to the 30% ruling

Inheritance tax
If you receive an inheritance, the tax authorities do not withhold the tax payable, so you may need to pay the inheritance tax (erfbelasting) yourself.

Inheritance tax or estate tax is levied on the beneficiary’s share of the estate and the tax is generally paid by the beneficiary.

In general the inheritance will be taxed in the country of the deceased. For expats this means that if they receive an inheritance from abroad they will usually pay tax outside the Netherlands.

This also implies that if someone is a Dutch resident at the time of death, the tax authorities will tax the heirs (living in the Netherlands or abroad) through the Dutch tax system.

Different tax rates apply, depending on the relationship between the heir and the deceased.

There are three categories:
- Spouses, registered partners & children
- Siblings, parents & other direct ascendants
- Other beneficiaries

There are several instances in which a portion of the inheritance is given tax-free in the Netherlands. For example: the first 603.600 euros that a spouse inherits is tax-free. For children there is a tax exemption for the first 19.144 euros.

› Filing the inheritance tax return
If the inheritance you receive is taxable, you are required to file an inheritance tax return. An heir can only declare their own inheritance tax return, but the heir(s) can also appoint someone to file the inheritance tax return for all heirs. 

› Cross-border inheritance tax problems
The European Commission has proposed measures to tackle cross-border inheritance tax problems, since multiple Member States may claim taxing rights on the same inheritance or tax foreign inheritances more heavily than local inheritances.

At the moment there are no measures to address this double taxation problem. This is one of the main reasons why you should contact a tax expert: there may be international tax treaties which apply to your particular tax situation.

› Inherited goods from abroad
Did you inherit goods from somebody living in a non-EU country and do you wish to import these goods tax-free into the Netherlands? Then you need an exemption permit for inheritance goods.

You can apply for the permit at the regional customs office where you live, or at the regional customs office where you received the inheritance goods.

If you are moving to the Netherlands from another EU country then you generally do not have to make a customs declaration for moved goods or personal goods.

› Gift tax
Gift taxation (Schenkingsrecht) works basically the same as inheritance tax. Gift tax is levied on all gifts donated by Dutch residents. On gift tax there are several exemptions and different rates as well.

Upcoming change in VAT rate
As of October 1, 2012 the general VAT rate of 19% will increase to 21%. With respect to this Minister Weekers has given guidelines on how to proceed if services will be provided after September 30, 2012. Read more about the VAT rate increase.

Update 30% ruling
On April 27 the Supreme Court of the Netherlands published a court case in which the 30% ruling was in question. The question was whether the 30% ruling is allowed for income from options which are received after the end of the actual employment period.

This court case possibly opens a much broader scope of the 30% ruling than initially suggested. Read more about the new 30% ruling and what happens when it expires.


Nico Koppel is an Expat Service Provider, who specialises in tax advice & accountancy. For more information, please comment below or visit Koppel Tax Consultants.

Nico

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Nico Koppel

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