Chapters in this guide
20
The Netherlands is not widely known for its favourable tax system for high-net-worth (HNW) individuals. Although on the face of it the Dutch tax rates are not competitive, through special regimes and decent tax planning the Netherlands can be a favourable location for HNW individuals to live and work.
The Dutch income tax system is divided into so-called boxes, in which different income categories are taxed at different rates. Through application of the so-called 30% ruling, temporary residents may receive part of their income from employment tax free.
Upon moving to the Netherlands and becoming a Dutch tax resident, taxpayers obtain a step-up in basis for the Box 2 shares. No Box 2 exit tax applies to shares in non-Dutch corporations if a taxpayer leaves the Netherlands within eight years of becoming a Dutch tax resident.
The Dutch inheritance and gift tax rates are reasonable with a 20% top rate for direct descendants.
Within the Dutch tax authority, a special HNW team is able to act in a service-minded and knowledgeable way to questions that are typical for HNW individuals. Advance tax rulings are possible to obtain.
Personal income tax is imposed annually on a calendar-year basis. The taxable income of a Dutch individual taxpayer is divided into three different categories, called “boxes”. The income of each box is calculated separately, and a different tax rate applies to each box.
Only individuals who need to pay tax or who have received a letter from the Dutch tax authorities need to file a tax return. The deadline to file a tax return is stated in the letter. Generally, this is 1 May of the year following the tax year. The tax due does not have to be paid until the tax authorities issue a tax assessment. Generally, the tax needs to be paid within six weeks of the date of the tax assessment.
In Box 1, income from work and home ownership are taxed. This includes the following types of income:
- Employment income and pensions.
- Business income and professional income.
- Income from other activities.
- Deemed income from ownership of a principal residence.
- Certain periodic payments, such as alimony.
Employment income generally includes all benefits from dependent personal services. Pension income is treated the same as income from employment. Due to the so-called reversal rule, no tax is levied on pension contributions (by employers and employees, up to a certain amount per year) and the increase in value of the pension savings is untaxed. Pension income becomes taxable once the pension fund starts making pension payments.
Business income constitutes taxable income only if the following three requirements are all met: (i) the business is considered a durable organisation of capital and labour; (ii) the business has a profit motive and profit is to be reasonably expected; and (iii) the business participates in the economic environment. Business income is taxable in Box 1 if it is income from self-employment, or income from a tax-transparent partnership.
Income from other activities comprises income from activities that cannot be considered income from employment or business income. This includes, for example, income from professional activities that do not qualify as a business or income from lending money to a company of which the lender is a substantial shareholder (see Box 2 below).
Income from a principal residence is determined on the basis of an imputed income calculation, depending on the value of the residence. Mortgage interest payments are tax deductible if certain criteria are met.
Box 1 income is taxed at progressive rates, after application of certain (income-dependent) personal deductions and allowances. For 2025, the progressive rates are as follows:
| Income | Rate |
| ≤ EUR 38,441 | 35.82% |
| EUR 38,442 – EUR 76,816 | >37.48% |
| EUR 76,816 | 49.5% |
A reduced rate applies to individuals who have reached the age at which they become eligible for a statutory old age pension.
Box 2 comprises income, such as dividends and capital gains, from a substantial shareholding. A substantial shareholding is an interest of 5% or more in a Dutch resident or non-resident company that qualifies as non-transparent for Dutch tax purposes. To determine the 5% threshold, certain aggregation rules apply for family members. If a company in which the shareholder holds a substantial shareholding provides a loan to the shareholder or certain close family members, the loan is taxed as a dividend distribution insofar as the total amount of loans provided by “Box 2 companies” exceeds EUR 500,000 on 31 December. An exception is made for certain home ownership loans.
Box 2 income is subject to 24.5% tax on the first EUR 67,000 of Box 2 income (EUR 134,000 for fiscal partners), and 31% for additional Box 2 income.
When a taxpayer emigrates from the Netherlands, this is typically treated as a disposal of his Box 2 shareholdings at fair market value. It is possible to receive an extension of payment of this exit tax until the taxpayer receives income from the Box 2 shareholdings, if certain conditions are met. If a taxpayer has lived in the Netherlands for a maximum of eight years and holds a substantial interest in a non-Dutch corporation, the taxpayer may be exempt from exit tax with respect to this Box 2 interest.
Box 3 contains income from savings and investments, such as cash savings, real property (except for a primary residence), and shareholdings that do not qualify as a substantial shareholding. The Netherlands does not have a separate wealth tax. In the future, a new Box 3 system will be introduced but this will likely not happen before 2029.
Under the current Box 3 regime, assets are divided into three different categories, each with their own deemed return on investment. The deemed return is calculated based on the value of the assets and debts on 1 January, and subject to a flat tax rate of 36%.
Taxpayers get an exemption for the first EUR 57,684 of assets (EUR 115,368 for fiscal partners) and debts are only considered insofar as they exceed a threshold of EUR 3,700 (EUR 7,400 for fiscal partners).
Real Estate Transfer Tax
Purchasers of Dutch real property are subject to Real Estate Transfer Tax (RETT) of 2% for primary residences, and 10.4% for other real property. If the purchaser is between 18 and 35 years old, and the value of the property does not exceed EUR 525,000 (2025), the purchaser is entitled to a one-time only exemption of RETT. It has been announced that the RETT for houses (not being a primary residence of the purchaser) will be lowered to 8% as from 2026.
30% ruling
It had previously been announced that the benefit of the 30% ruling would be reduced in steps, to a “10% ruling”. This change has now been cancelled. For the years 2025 and 2026, the 30% ruling will continue to offer a benefit of a maximum of 30% of the maximised wage. As from 2027, the benefit of the 30% ruling will be reduced to 27%.
The Netherlands does not have local wealth taxes.
The Dutch Supreme Court ruled on 6 June 2024 that the current legal regime is not in accordance with EU law. Therefore, if the actual return on investment is lower than the deemed return on investment, taxpayers can elect to be taxed on the actual return on investment. The election can be made annually and applies to all of the Box 3 assets. It is not possible to elect the application of the legal recourse regime to certain specific assets and apply the legal regime to other assets in the same tax year. The Supreme Court has ruled that, when the actual return is determined, unrealised changes in value of the Box 3 assets should also be taken into consideration.
The Netherlands does not have local wealth taxes.
The EU Tax Observatory has recently published a blueprint for an international minimum tax for ultra-high-net-worth individuals. The blueprint proposes a minimum tax of 2%, based on the assets of taxpayers with a net worth of more than USD 1 billion. Additionally, the blueprint proposes an extension of the minimum tax to include taxpayers with assets above USD 100 million. The Netherlands has not yet proposed additional taxes for taxpayers with an (ultra-) high net worth. In the near future, the focus is likely to be on designing a new and effective Box 3 regime for all taxpayers.
There are currently no pandemic-related developments in the Netherlands.
Trusts
The Netherlands does not have trust law but has ratified the Hague Convention on the Law Applicable to Trusts and on their Recognition of 1 July 1985 (“Hague Trust Convention”). The tax treatment of trusts depends on the characteristics of the trust. The assets in and income of an irrevocable discretionary trust are attributed to the settlor for Dutch personal income tax and inheritance and gift tax. After the settlor dies, the assets and income of the trust are attributed to their heirs. If the settlor is a (fictitious) Dutch tax resident, the heirs are deemed to inherit the trust assets and, as such, are subject to Dutch inheritance tax. For such attribution rules, it is generally not relevant who the beneficiaries of the trust are. Distributions of the trust are treated as a taxable gift from the settlor to the beneficiaries. If the settlor is a (fictitious) Dutch tax resident, the distributions are subject to Dutch gift tax. The same applies for the heirs after the death of the settlor. If beneficiaries have a fixed interest in a trust, this interest needs to be qualified for Dutch tax purposes. In most cases, a fixed interest right is part of the Box 3 assets of the beneficiary.
As an alternative to trusts, the Netherlands often utilises foundations to separate legal and economic ownership of assets. When used as such, assets (e.g., shares in a company, an art collection or investments) are transferred to the foundation to be held in administration, against the issuance of depositary receipts by the foundation. The relationship between the foundation and the depositary receipt holders is governed by the trust conditions which are often established by the board of the foundation and imposed on anyone acquiring depositary receipts. If structured properly, the foundation itself should not be subject to tax and the depositary receipt holders are considered the owners of the foundation’s assets for tax purposes.
Estates
The Netherlands has an inheritance tax that generally applies to the worldwide estate of a Dutch tax resident. No Dutch inheritance tax is due when a non-resident dies.
When a Dutch tax resident dies, their worldwide estate is subject to Dutch inheritance tax. Applicable exemptions include an exemption of EUR 804,698 for the surviving partner (spouse, registered partner or cohabitant under the cohabitation agreement), and EUR 25,490 for children and grandchildren.
The deadline for filing an inheritance tax return is eight months after the date of death. As a main rule, the heirs are responsible for filing the inheritance tax returns, but if the deceased made a will, the executor of the estate is often tasked with filing the inheritance tax return.
In 2025, the gift and inheritance tax rates are:
| Relationship of the beneficiary with the donor/deceased | Value of gifted or inherited assets | Tax rate |
| Partner or child | EUR 0 – EUR 154,197 > EUR 154,197 | 10% 20% |
| Grandchild | EUR 0 – EUR 154,197 > EUR 154,197 | 18% 36% |
| Other | EUR 0 – EUR 154,197 > EUR 154,197 | 30% 40% |
As from January 2025, a 100% exemption applies up to an amount of EUR 1,500,000 and for the remainder a 70% exemption applies. The exemption only applies to business assets. The exemption is only applicable if certain conditions are met, for example the beneficiaries need to keep the business for at least three years following the transfer and be at least 21 years old when they receive the business.
If the business is held via a substantial shareholding in a corporation, it is possible to roll the personal income tax claim on the shares forward to the beneficiaries of the gift or inheritance.
The Netherlands does not have local laws with respect to trusts and inheritances.
Historically there has been a lot of discussion between taxpayers and the tax authorities on the application of business succession facilities to real property portfolios. The Dutch tax authorities have generally taken the position that these activities qualify as passive investment activities as opposed to business activities. Jurisprudence about real property businesses has been conflicted. As from 1 January 2024 the law has been changed to exclude all rented-out real property from the business succession facilities thus effectively putting an end to these discussions.
The Netherlands does not have local laws with respect to trusts and inheritances.
The Netherlands has generous facilities for the transfer of family business interests to the next generation. At a high level, these facilities include a roll-forward of the Box 2 tax claim on shares in the family business, and a partial exemption for gift and inheritance tax purposes. It has been announced that the application of these business succession facilities will become stricter in 2026. For example, on the one hand, generally only ordinary substantial interests will qualify for the business succession facilities and structures where the facilities will be applied multiple times may become subject to anti-abuse law. On the other hand, the facilities become less strict. The beneficiaries who receive a business under the business succession facilities will benefit from a shorter business continuation period of three years as from 2026, instead of the current period of five years.
There are currently no pandemic-related developments in the Netherlands.
Within the EU, the application of succession laws is regulated by the EU Succession Directive. If a non-EU country is involved, the applicable succession law would be determined based on international civil law. Based on this, if a Dutch resident dies, generally Dutch inheritance law applies but it is possible for a person to elect the laws of a different country, for example when the testator is a citizen of a different country, in a last will.
If a person dies without a last will and testament, leaving behind a spouse and children, the so-called statutory division applies. Under the statutory division, the spouse acquires all assets and liabilities of the estate. The children will inherit their share as a monetary claim on the surviving spouse. The claim becomes payable when the surviving spouse dies or goes bankrupt. If a person dies without a surviving spouse or children, their parents and siblings would inherit the estate.
Matrimonial law is of importance to determine which assets are part of the estate of a deceased person. In the Netherlands, the default matrimonial property regime changed on 1 January 2018. Before this date, a marriage resulted in a community of property that included all property acquired before and during the marriage. This also included property acquired by gift and inheritance, unless the testator or donor specifically excluded the property from a community of property. For marriages on or after 1 January 2018, the default community of property only includes property acquired during the marriage. Property acquired before the marriage, and property acquired during the marriage by gift or inheritance, is automatically excluded from the community of property. It is possible to create an alternative marital property regime by making a pre- or postnuptial agreement.
The Netherlands does not have local laws with respect to estates and trusts.
The Netherlands has forced heirship rules with respect to children only. Children can be disinherited in a will, but in that case the children can make a claim of 50% of the value of the share that they would have received if the statutory division would have applied. The claim is a monetary claim against the estate and must be made within five years of the deceased’s death. In order to make the forced heirship claim, the child will need to go to court. Often, court cases also include the question of the amount of the forced heirship claim if the deceased made gifts prior to their death, regardless of whether these gifts were made with or without the intention of frustrating the child’s forced heirship claim.
Forced heirship rules do not apply to spouses. A disinherited spouse can, however, claim the usufruct of the family home and household effects and the usufruct of other estate assets if needed for their maintenance.
The Netherlands does not have local laws with respect to estates and trusts.
An issue that regularly comes up is that wills contain clauses that are unclear. In such a circumstance, the intention of the testator is important, but often when disputes regarding wills arise the testator is no longer able to provide guidance. From a practical perspective it is recommended to include an explanatory memorandum with the will to further elaborate on the intention and practical effect of clauses that are included in the will. Not only is this helpful for heirs and other parties involved after the testator’s death, but this is also a helpful tool for the testator themselves to check if the will contains the provisions that they want and has the intended practical consequences.
There are currently no pandemic-related developments in the Netherlands.
4.1 Does the Netherlands tax non-residents who hold Dutch real property?
When a non-resident owns Dutch real property as an investment, the real property is taxable with personal income tax in Box 3 in the same way that applies to Dutch tax residents. There is no inheritance tax or gift tax due when a beneficiary receives Dutch real property from a non-resident, but there is RETT due if the property is received via gift. Inheritances of Dutch real property are exempt from RETT.
4.2 Are the distributions of a trust taxable in the Netherlands?
The answer to this question depends on the tax treatment of the trust. If the trust qualifies as a so-called separate private property for personal income tax and gift and inheritance tax purposes, the trust is transparent to the person who transferred assets to the trust and, after the transferor dies, to their heirs. A discretionary trust is often treated as a separate private property. If the trust makes a distribution to the person who is considered the owner of the assets for tax purposes, the distribution is not taxable in the Netherlands. If a distribution is made to another person, the distribution is subject to Dutch gift tax if the person who owns the trust assets for tax purposes is a Dutch tax resident for gift tax purposes. If this person is not a Dutch tax resident, the distribution is not taxable in the Netherlands.
If a trust does not qualify as a separate private property — for example, a fixed trust — the beneficiary of the trust is subject to personal income tax.
4.3 Are there specific tax facilities in the Netherlands for taxpayers that make charitable contributions?
In the Netherlands, the most common charitable structure is that of a foundation with registered charity status (in Dutch, Algemeen Nut Beogende Instelling; ANBI). An ANBI needs to have a statutory charitable purpose which is in the general interest, and must have activities in accordance with its charitable purposes. The foundation needs to request a ruling from the Dutch tax authorities to obtain ANBI status.
The ANBI is incorporated by a notarial deed, and must have multiple board members and a policy plan, and must publish information on their website. The ANBI must spend at least 90% of its income on charitable activities and cannot be used to accumulate wealth.
Gifts to charities that have the status of a registered charity in the Netherlands are exempt from Dutch gift tax. In addition, the taxpayer who makes the gift may deduct the value of the gift in their personal income tax return. If the gift is a one-time-only gift, the deduction is maximised to 10% of the aggregate income of the taxpayer. If the gift qualifies as a periodic gift, the deduction is maximised to EUR 1,500,000 a year.
Gifts to certain social interest organisations (e.g., a local music association) are also exempt from Dutch gift tax.