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Netherlands: Inheritance

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Inheritance tax and law

Wealth acquired by inheritance from an individual who has properties in the Netherlands is subject to inheritance tax (recht van sucessie). Several other forms of wealth transfer such as gifts made by the testator within 180 days prior to death and the proceeds of a life insurance contract for which the testator paid the premiums are treated as an inheritance for tax purposes. Property acquired through inheritance is valued at fair market value less liabilities (debts such as tax debts, funeral costs, and other expenses) at the time of the testator’s demise.

Different rates apply, depending on the relationship between the heir and the testator where there are three categories: (I) for spouse or partner (living together for at least five years), and children; (II) siblings, parents and other direct ascendants and (III) other recipients.

The inheritance and gift tax rates for 2007:

Inheritance tax is levied on the beneficiary’s share of the estate and the tax is generally paid by the beneficiary. For both gifts and inheritances, a large number of deductions apply. The deduction for surviving spouses is €523,667. The same amount (€523,667) is available to the surviving partner of an unmarried couple who have been living together for at least five years and the exemption amount is reduced proportionally if the couple has been living together for less than five years.

For children under 23, a deduction of €4,479 for each year below the age of 23 is allowed, with a minimum of €10,000. For children older than 23 years, a deduction of €10,150 is allowed if the inheritance does not exceed €26,852. Special deductions are given to disabled children.

Gifts up to €2,688 per calendar year received from the same donor are exempt. Gifts from parents to children, including adopted and stepchildren, are exempt up to €4,479 per calendar year. Once in a child's lifetime the annual exemption may be increased to €22,379 if the child's age is between 18 and 35.

The heirs are also required to pay transfer tax and it is calculated on the value or sales price of the acquired Dutch property at the current tax rate of 6%.

Netherlands - more data and information

• How high is income tax on residents in the Netherlands?

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posted by JayKay | 2008-04-30

Manager, UK

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