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Property Taxes in the Netherlands

Property Taxes in the Netherlands

Foreign citizens and companies are allowed to buy properties in the Netherlands under the same regulations as Dutch nationals. Once a property is purchased, it will attract its registration with the Land Register and the payment of specific taxes.

The property tax in the Netherlands is made of two important components, the first one, which must be paid by the owner of the property, and the second one, which must be paid by the user (the person or company who leases or rents the respective property).

Below, our company formation agents in the Netherlands offer detailed information on the property tax and its payment. We can also help you set up a business in this country.

The main taxes related to buying real estate in the Netherlands

The purchase of real estate in the Netherlands attracts the payment of various taxes since the beginning of the transaction. Among these, the following must be considered:

  • – the property tax which is paid by both natural persons and companies;
  • – companies must also pay the transfer tax in the case of immovable real estate for commercial purposes.

There are several aspects that need to be considered when it comes to the property tax in the Netherlands and among these are the following:

  1. the transfer tax must be paid by company shareholders when their contribution to the share capital is made of real estate;
  2. the transfer tax must be paid by shareholders in all types of legal entities, including partnerships;
  3. the payment of the real estate transfer can be made through a transfer deed authenticated by a public notary;
  4. various tax exemptions are available for property tax payments in the Netherlands.

Our local consultants can offer more information on property taxes that need to be paid in the Netherlands.

Who must pay the property tax in the Netherlands?

Both natural persons and companies must pay the property tax in the Netherlands if they are registered with the Land Register as owners. This also applies to foreigners owning real estate in this country. The tax is levied for any type of property, be it residential or commercial building.

Another important aspect to consider about the property tax is that tenant or users of Dutch real estate are also subject to a tax based on the destination of the said property. For example, an individual must pay a property use tax for using a space as a garage or a storage place.

The payment of the property tax in the Netherlands must be done once a year and is combined with a municipal tax.

There are also specific conditions that apply to those who sell properties or who use real estate for limited periods during a calendar year. These can make arrangements for the taxes remained for the rest of the year to stay at the same level.

The taxation of real estate in the Netherlands requires a lot of attention which is why you can request the services of our local specialists who can guide you.

How is the property tax in the Netherlands calculated?

When it comes to the payment of the property tax imposed on residential real estate, the value of the property depends on the WOZ (Wet Waardering Onroerende Zaken) value, which is a fraction of the value of the property as computed by the local tax authorities. This is why, the amount of money paid as a real estate tax in the Netherlands is different from city to city.

The WOZ value is calculated on a yearly basis and it is based on the Valuation of Immovable Property Law.

It should be noted that the WOZ value is also imposed on property rentals and leases in the Netherlands.

Property taxes are complex matters which can be explained by our agents in the Netherlands. You can also ask any other questions related to the Dutch taxation system.

Non-residents and the property tax in the Netherlands

As mentioned earlier, non-resident citizens and companies are allowed to own real estate in the Netherlands, and alongside their property rights, they are also required to pay the property tax.

The property tax in the Netherlands is paid only on the real estate owned in this country and will be calculated under the same Valuation of Immovable Property Law.

We offer various accounting services to resident and no-resident clients, therefore if you need assistance, do not hesitate to enquire about our services.

Dutch property taxes and the Box System

As many residents are already accustomed with the Dutch taxation system, it is a known fact that in order to establish the payment of certain taxes, the Box System is employed. In the case of the property tax in the Netherlands, the following boxes must be checked:

  • – Box 1 if the property is used as a place of residence by the taxpayer ;
  • – Box 3 if the property or properties owned are not under as places of residence.

All tax returns must be filed with the Tax and Customs Administration in the Netherlands in order for the property tax to be calculated.

Rates of the property taxes in the Netherlands

The rates of the property tax applicable in the Netherlands vary from one city to another, however, they are calculated following the same formula.

Even so, the following aspects need to be considered when paying the Dutch property tax, especially since new regulations have been put in place starting with 2020, hence you should mind the next information:

  • – the WOZ value for rented properties is set at 0.60% for real estate valued at less than 1,090,000 euros;
  • – for properties evaluated above this amount, the WOZ value is 2.35%;
  • – for properties brought on mortgage where the interest is deductible, the deduction rate is 49.50%;
  • – a tax correction rate of 3.50% is applied to deductible interests.

Changes in the taxation of properties in the Netherlands

In 2020, a new tax bill was issued by the Dutch authorities. Apart from the changes related to the corporate tax, it also provided for several amendments to the property tax in the Netherlands. Some of the changes were implemented starting with January 2021, while others will enter into effect beginning with January 2022.

Returning to the property tax to be paid in the Netherlands, there are two important changes targeting real estate held as residential homes, as well as those held as investments. At the level of 2020, the rental value for such properties reached 0.60% of the WOZ value for real estate worth below 1,090,000 euros. For real estate valued above this amount, the WOZ value was set at 2.35%.

Good news refers to mortgage interests that are deductible, with the highest deduction set at 49.50% with a correction rate of 3.50%.

For 2021, the real estate transfer tax has suffered modifications, as the default rate was increased from 2% to 8% for residential and commercial properties. For homes occupied by the owners, the rate will remain 2%, while for young persons aged 18 to 35 and buying their first properties in 2021, the real estate transfer tax will be lowered to 0%.

If you need more information on the changes occurring in the tax system, our Dutch consultants can advise you.

We are at your service if you want to open a company in the Netherlands and need guidance in buying commercial properties.

Property tax deductions in the Netherlands

The payment of the property tax in the Netherlands comes with deductions for interest and mortgage payments which is what makes this country great to purchase real estate in. These payments can be deducted directly from the property tax if the said real estate is used as a main residence place by the owner. Also, the owner must be a Dutch resident. This enables foreign citizens to buy properties in this country and obtain important tax deductions if they obtain Dutch residence permits.

Those who buy real estate with the help of a mortgage loan can deduct the entire amount paid as mortgage interest if it solely used for the purchase of the property (those who use a part of the money for buying furniture or appliances cannot deduct the money spent on these items).

Dutch citizens can deduct mortgage interests only on their main residence places, however, they will be subject to the wealth tax on other real estate they own in the Netherlands. In the case of non-residents, mortgage interests can be deducted while no wealth tax is imposed on properties owned in the country.

It should also be noted that real estate ownership falls under the scope of the Netherlands’ double tax treaties with certain countries.

What are the best cities to buy properties in the Netherlands

The Netherlands is a great country to live in and owning real estate here comes with great benefits, among which a great lifestyle and multiple work and business opportunities. Moreover, the authorities here make it easy for foreign citizens to purchase real estate. These can buy properties in large cities like Amsterdam or Rotterdam, but also in rural areas if they want to pay lower taxes.

Considering the property tax in the Netherlands is levied at municipal level it is easy for foreigners interested in acquiring real estate to compute the amount of money they will pay once they become owners. Also, if they are interested in lending money for the purchase, they can benefit from the deduction of the mortgage interest.

For more information on the property tax in the Netherlands, please contact us. You can also rely on if you want to open a Dutch company.