Residency in The Netherlands is determined via several factors such as whether you live in the Netherlands, economic and personal ties, etc. Non-residents must pay taxes only on their income derived from Dutch sources, where as residents must pay taxes on their worldwide income.
Dutch Rental Income & Taxes:
Individuals who receive income from Netherlands pay income tax. Individuals’ income from different sources is distinguished in three categories. These categories are known as ‘boxes'. The income in each of the three boxes is taxed at a different rate. The total of the tax owed in the three boxes is the income tax payable.
The rental income derived from second or vacation homes held for investment purposes falls in
Box 3. Under the Box 3 rules the notional investment yield (4 % per year) is taxed not the actual rental income. The tax is applied at source at 30 per cent tax rate.
Dutch Tax Identification Number:
The Belastingdienst (Dutch Tax Administration) require a tax number to comply with tax obligations in the country. If you live or have lived for more than 4 months in Netherlands and you are registered at the municipality, you will be automatically issued a Burgerservicenummer (BSN). If you are not registered at the municipality and you have tax obligations you need to apply for Social fiscaal nummer, so called “Sofi-number”. You need to arrange a meeting at your local tax office in order to apply for Sofi-number.
Purchase of Dutch property:
There are no restrictions on ownership of private and investment property by non-residents. The average transaction cost vary from 10.52% - 13.74%, and most of them are paid by the buyer.
Real Estate Tax (Onroerendzaakbelasting)
Real estate taxes are based on the value of the property and are paid by both the landlord and the tenant, if different. Each municipality determines its own real estate tax tariff which are revised every four years. The real estate tax tariffs are usually between 0.1 and 0.3 percent of the property value.
Besides real estate taxes, municipal authorities levy other taxes and charges such as building charges that are related to building permits, wastewater pollution tax and sewage system tax, sufferance tax, groundwater tax, ecological taxes, energy tax, etc. These taxes and their rates vary from municipality to municipality, so it is preferable to consult with an attorney or real estate professional for more information.
Letting Property in the Netherlands:
Dutch base-rents are calculated using a ‘points’ system, (woningwaarderingsstelsel), which scores everything from the floor space to furniture and appliances.
Base-rents up to EUR 640.62 a month (2010) are governmentally regulated. The amount is adjusted for inflation and other economical and social factors. Anything over the base-rates amount is market regulated.
Dutch Capital Gains Tax:
There is no Capital Gains tax in Netherlands. However, capital gains derived by corporations in the conduct of business are taxed under the corporate tax law, and the 30 per cent on the 4% notional yield has similar effect to capital gains taxation.
Dutch Inheritance (estate) tax and gift tax
As of 1 January 2010 a new inheritance and gift tax came into force. In general, these taxes are payable by the transferee not the transferor.
There are several exemptions for both gift and inheritance tax depending on the circumstances. The rates are the same with a minimum rate of 10% and a maximum rate of 40% of the property’s adjusted basis.
Dutch Tax Return & Dutch Tax Filing Deadline
Tax year is from 1 January to 31 December (calendar year). Filing deadline falls on April 1st of the next calendar year. The filing deadline can be extended up to 1 year if you are registered with a tax agent who is also preparing the return.
Residents of The Netherlands should declare their entire worldwide income on their income tax return. This worldwide income also includes the revenue which The Netherlands is not allowed to tax under national and international regulations. Examples are income from employment, profits from business activities or capital in other countries.
Non-resident taxpayers, emigrants and immigrants can choose whether or not they want to be treated as taxpayers resident in the Netherlands. This choice is known as the right of option (keuzerecht). If you opt for resident taxpayer status, you should declare your entire worldwide income received during the year.
There is a double taxation agreement between the Netherlands, USA, Ireland and the UK so double taxation relief applies in some cases. Please contact us for further details regarding double taxation relief and/or filing your Resident Tax Return.
Property Tax International can organize the completion and filing of all necessary Dutch tax returns in addition to advising on your property tax obligations in your home country.
The information provided here is intended as a guide only. While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.
Property Tax International is a trading name of Taxback Returns which is part of the Taxback Group incorporating taxback.com providing financial services since 1996