Find out whether inheritance tax in the Netherlands applies to your worldwide assets as an expat or a non-resident.
For expats who have relocated to the Netherlands, it is important to be aware of any Dutch inheritance and tax implications on your assets, inheritance, or estate planning. Foreign residents can be subject to Dutch inheritance law and inheritance taxes on worldwide assets; although recent reforms and bilateral agreements allow certain foreigners to avoid this by revising their will.
This helpful guide, provided by SCG Lawyers, explains the essentials of inheritance law in the Netherlands. It includes the following information:
- Dutch inheritance law and succession rules
- Dutch inheritance tax
- Paying inheritance tax in the Netherlands
- Reducing your inheritance tax in the Netherlands
- Useful resources
SCG Lawyers have a team of specialists who will advise and guide you in all matters relating to inheritance law. They are one of the largest family law firms in the Netherlands and work with clients in the Netherlands and abroad in all possible family and inheritance disputes with a personal approach.
Dutch inheritance law and succession rules
In the Netherlands, you pay inheritance tax on any inheritance you receive. Inheritance consists of the estate (assets and liabilities) left by a deceased person, but there are some exceptions. Therefore, it is good to know the basics of Dutch inheritance law and respective taxes to avoid any surprises.
The first step is to determine which country’s law applies to an inheritance; this will affect how to divide the estate as well as the rights and duties of the heirs. Basically, the Dutch inheritance law will be applied to Dutch nationals currently living in the Netherlands; as well as foreign residents who lived there for five years before their death.
However, there have been recent changes to EU rules. This means that EU citizens living abroad (in most countries) can now choose whether the law of their home country or their country of residence applies. If a foreign resident dies without leaving a will or making an official declaration on which law they wish to apply, the law of the country in which they resided for the last five years will apply.
The rules don’t apply in Denmark, Ireland, and the United Kingdom, as these countries opted out. It will, however, apply to nationals of these countries if they become resident elsewhere in the EU. The EU provides details on country-agreements for cross-border succession.
Inheritance without a will
If a person dies in the Netherlands without leaving a will, Dutch intestacy rules laid out under Dutch inheritance law state that the estate is equally distributed between the spouse/registered partner and children. However, if there are no spouse/partner or children, parents and siblings will share the estate. Grandparents and great-grandparents are next, and the last, in the succession line. Note that a partner who is not married to the deceased, or has no registered partnership with them, is not considered an heir and is barely protected by law.
In cases where an heir has passed away (or rejects an inheritance), their share will be distributed equally between any children they have. If there is a surviving spouse/partner and children, Dutch inheritance law under statutory provision states that the estate passes to the spouse/partner.
However, the children retain a monetary claim on the estate equivalent to their share; which they can cash in in the event of the death, remarriage, or bankruptcy of the spouse/partner. Rules of the community of property apply in the Netherlands. This means that, unless the married couple made a matrimonial agreement to the contrary, they jointly own all assets. In the event of death, the surviving spouse/partner automatically retains their half, and the other half becomes the deceased’s estate.
Dutch inheritance law includes provisions for forced heirship, which places some restrictions on how an estate is distributed. Under forced heirship, the children of the deceased are entitled to claim 50% of what they would have received under intestacy rules if they are disinherited. Spouses and registered partners who are disinherited can also claim lifetime use (usufruct) of the family home or other estate assets.
Inheritance law on pensions in the Netherlands
If your partner (or ex-partner) died and you were financially dependent on her/him, you may be entitled to the Anw benefit; Algemene Nabestaandenwet – “survivor’s benefit”. However, if you are the surviving partner and you have not yet reached the AOW pension age, look after a child under 18, or you are more than 45% incapacitated for work, you can qualify for an Anw survivor’s benefit.
In the case that you are the surviving partner and you also get an AOW pension, you will now get an AOW pension for a person living alone; which is paid at a higher rate than for a person living with another adult. The higher pension will start from the month your partner died. Furthermore, if both parents pass away, minor children (both biological and adopted) may receive a benefit.
To be eligible for the pensions mentioned above, the partner (or ex-partner) must have lived in the Netherlands or have worked and paid tax in the country.
In addition, a death grant will be paid immediately to the deceased’s partner, or (if there is no surviving partner) to the children (under 18). The amount of the death grant is equal to one month’s AOW pension and is only paid once.
Inheritance tax is not due on the “survivor’s pension”. However, the value of this pension will be deducted from any exemption the partner may be given. Half of the cash value of any pension right received by the surviving partner from the deceased is deducted from this amount; with the condition that a minimum allowance of €162,071 always remains.
Read more about the Dutch pension system.
Dutch inheritance tax
Inheritance tax in the Netherlands is levied on the estate of the deceased. It is payable on all worldwide assets belonging to anyone who is classified as a Dutch resident, for tax purposes, at the time of their death. However, Dutch law considers émigrés as residents for inheritance and gift tax purposes for 10 years after emigration.
Inheritance tax in the Netherlands is payable on the net value of the estate. This is the value of all moveable and fixed assets minus outstanding debts and funeral costs. The assets include all gifts donated within 180 days before death, and proceeds of life insurance, if the law obliges the deceased to contribute to such insurance.
Dutch inheritance tax rates and gift tax rates are the same. The 2020 rates for inheritance tax in the Netherlands are as follows:
- Spouse/partner and children: 10% on inheritance below €126,723, and 20% on any inheritance above the threshold;
- Grandchildren: 18% below €126,723, and 36% above;
- All others: 30% below €126,723, and 40% above
Part of your inheritance can be eligible for an exemption from the Dutch inheritance tax. You will, however, still be taxed on the remaining amount of the inheritance that exceeds the exemption. The current rates of tax-free allowance are as follows:
- Spouse/partner: up to €661,328 (depending on pension values);
- Children and grandchildren: €20,946;
- Sick and disabled children: €62,830;
- Parents: €49,603;
- All others: €2,208
Remember that these exemptions are subject to deductions, such as pensions. Charities and social welfare community organizations are exempt from inheritance tax in the Netherlands.
The estate tax in the Netherlands
The inheritance tax on a real estate is equal to the WOZ value (real estate law valuation) minus the mortgage debt. In the tax return, you can choose which WOZ value you state: the WOZ value in the year of death, or the WOZ value in the year after death.
An inherited Dutch real estate is not considered taxable for the purposes of Dutch real estate transfer tax. If a real estate located in the Netherlands is gifted, however, transfer tax will apply.
No inheritance tax is applied to a non-resident’s real estate situated in the Netherlands. However, a resident’s worldwide property is subject to inheritance tax. Note that for the Dutch authorities, the residence of the donor or deceased is more relevant than the places where the assets are located. Hence, no gift or inheritance tax is levied on Dutch real estate or assets received from non-residents of the Netherlands.
All the mentioned possibilities above must be considered when you are preparing a will. Estate planning, for example, is a good way to make the taxes work for you and your family. A simple step like considering in advance if it is better to transfer the assets of a relative before or after his/her death can bring consequences on the type (and the amount!) of taxes you will have to pay (inherited and/or gift tax).
Paying inheritance tax in the Netherlands
Dutch taxation law requires that the inheritance tax is paid within eight months of the date of death. An executor of the will may be appointed to conduct the inheritance tax return. The tax authorities will send the assessment to the executor after three months of receiving the tax return.
As an expat, it is important to know that you may be subject to double taxation. In the Netherlands, inheritance taxes are levied if the deceased’s domicile was in the country. As previously mentioned, the Dutch authorities consider the residence of the deceased more relevant than the places where his/her assets are located. However, in other countries, the law may be different, and you may have to pay two sets of inheritance tax. As a result, the Netherlands has been making double tax treaties with several nations to allow foreign residents to avoid double taxation.
Reducing your inheritance tax in the Netherlands
Inheritance tax in the Netherlands is payable on the net value of the estate. This is the value of all moveable and fixed assets minus outstanding debts and funeral costs. The assets include:
- all gifts donated within 180 days before death;
- proceeds of life insurance, if the law obliges the deceased to contribute to such insurance
Dutch inheritance tax rates and gift tax rates are the same, but the exemptions allowed in case of gifts and inheritance differ from each other. One fact is for sure: you and/or your heirs will have to pay taxes on them anyway. However, you can reduce the amount that is owed.
The first step may be to consult a civil law notary who can offer you personal advice, based on your personal circumstances. The notary can also help you with your will, which can ensure that you have total control of who will inherit your estate and ease the burden on your heirs. In your will, you can state, for example, that the law of your country of nationality should be applied to your estate, instead of your last country of residence.
Gifting to your heirs
There are other ways to reduce the amount of tax due, such as gifting to your heirs or using the matrimonial property law. However, before implementing the steps below, you should consult a civil law notary.
Gifting can be a good tax planning strategy, as some exemptions apply. However, these will depend on the relationship between the gift-giver and receiver, and the purposes for giving that gift. For example:
- children of all ages can receive €5,320 tax-free for any purpose;
- children between 18 and 40 years of age can receive:
- €25,526 tax-free for any purpose;
- €53,176 tax-free for an expensive education;
- €100,000 tax-free to purchase a house. However, you can only use this one-off exemption once in your lifetime.
For gifts received from somebody other than their parents (grandparents, uncles, aunts, etc), the exemption is €2,129 tax-free for any purpose or €100,000 tax-free to purchase a house.
- Belastingdienst: the official website of the Dutch Tax and Customs Administration
- Your Europe: the official European Union website for planning cross-border succession
- Law of succession in the Dutch Civil Code
- Social Verzekeringsbank (SVB): the organization responsible for the implementation of the Dutch national insurance schemes
- European Commission about the survivor’s benefit
- ABN AMRO Bank brochure: “Giving”
- TTT Group: Total Employer and Employee Solutions
- AAME Adviseurs
- Koppel Services