Money from abroad for house purchase in the Netherlands is a frequently asked question. Is this a taxable event? Exciting times!
Money from abroad for house purchase in the Netherlands
We are frequently asked about from abroad for the purchase of a house in the Netherlands. Is this money taxed in the Netherlands? Believe it or not, but in this case tax is less important than the origin of the money. Incoming and outgoing money is not a taxable event.
The origin of the money: your foreign bank account?
The moment you transfer money from your bank account abroad to your bank account in the Netherlands is not a taxable event. However, if you are a Dutch tax resident, you need to report your worldwide assets. Hence also the assets you hold abroad. If you had to file a tax return with Box 3 and you did not report this bank account abroad, you have issues with the Dutch tax office.
The origin of the money: a gift from your family
Your family can give you money. The main rule with gift tax is that where the person giving is living you pay the gift tax. We have two exceptions to this rules.
The first exception is that of a Dutch national living abroad giving you money. This Dutch national is assumed to be a Dutch resident for the purpose of gift tax, unless this Dutch nation has left the Netherlands for a period exceeding ten years.
The second exception is the foreign national living abroad, who was a Dutch tax resident for less than 12 months ago. Then it is assumed the person giving was at the time of giving a Dutch resident, hence Dutch gift tax applies.
The origin of the money: how was the money received obtained?
Often the gift from abroad is used to purchase a house in the Netherlands. The notary who is in charge of the transfer of the house, needs to learn how this money was obtained by the person giving. This is in line with the anti-terrorism act and money laundering act.
You only have maximum six weeks to close the purchase of a home. The moment providing the proof of the origin of the money to the notary takes longer, you have issues. To prevent that, you can do the following. The person that purchases the property, is the person determining which notary is going to be used. If you are the buyer, determine the notary. Already inquire with that notary what documents are required to justify the gift money. This saves time and stress.
The origin of the money: the zero interest money with no repayment obligation
A zero interest money loan does not exist. And a loan implies it needs to be repaid. Therefore a zero interest loan or a loan with no repayment obligation is not a loan, both a gift.
However, we understand where this is coming from. You want to help your child, but as you have more children, you cannot give the money away. We recommend to connect with the notary. Make a loan agreement with true interest, repayment and collateral. The notary can create a mortgage on the house, which implies the loaning parent is in charge.
The minister of finance has acknowledged that if interest is paid to a parent and the parent pays this amount back, that these are two separate legal transactions. One is an interest payment, the other a gift. The tax office cannot claim no interest was paid. The condition is that the money flow actually took place.
Tax is exciting
We think tax is exciting, receiving money from abroad is exciting too!
