Inheritance tax and civil law internationally
What system of inheritance law applies if you die as an ‘expat’? Where do you pay inheritance tax? And what international civil-law aspects does your form of marriage or cohabitation entail? Is it the Dutch or the foreign system of marital properly that applies? Should you revise your marital property arrangements and your will?
Paying taxes on your assets when you die is generally seen as unfair. This can rightly be called the most hated tax in the Netherlands. But you can limit what you have to pay by:
- drafting an iron-clad will and testament
- drafting a marital property agreement, or modifying or cancelling an existing one
- transferring assets while you are still alive
What happens if you emigrate? Some countries do not have a gift tax or inheritance tax, or have these taxes at very low rates compared to the Netherlands. Inheritance is taxed in the form of the gift tax and inheritance tax. In the Netherlands, it is the place of residence of the person giving the gift or inheritance that is decisive. Weller knows how this works!
What does the Netherlands tax with gift and inheritance tax? For the gift and inheritance tax, the Netherlands focuses on the place of residence of the person transferring the assets. Our country only taxes assets under gift and inheritance tax if the assets are acquired by gift or demise of a resident of the Netherlands or someone who has lived outside of the Netherlands for less than ten years. Whether the assets themselves are actually in the Netherlands is irrelevant. Assets abroad are also covered under Dutch gift and inheritance tax. Even if the acquirers (generally children or family members) do not live in the Netherlands, they may still be subject to Dutch gift and inheritance tax. On the other hand, you as a resident of the Netherlands do not pay gift and inheritance tax if you acquire from a person living abroad, even if the assets themselves are located in the Netherlands.
If you have Dutch nationality and have moved abroad, and within ten years after emigrating from the Netherlands you transfer assets by gift or inheritance, the legal assumption for this gift or inheritance will be that you are still a resident of the Netherlands, and so the transfer of assets will still be subject to gift and inheritance tax.
What is decisive for this determination is the place of residence of the person who is giving the gift or who is transferring the assets upon death. The place of residence of the person who is receiving the assets by gift or inheritance is not relevant.
If you emigrate to a country that also has gift and/or inheritance tax, it is possible that your gift or inheritance may be subject to double taxation. The Netherlands has signed treaties with a number of other countries on inheritance tax:
- Switzerland (1951)
- Sweden (1952)
- Finland (1954)
- United States of America (1969)
- Israel (1974)
- Great Britain and Northern Ireland (1979)
- Austria (2001)
These treaties do not by any means cover every possible situation of double taxation. We would be happy to inform you about the need for supplemental international estate planning. Don’t wait contact us today for an appointment.