Property Tax in the Netherlands - Detailed Guide (2024)

Businessmen from foreign countries, as well as foreign natural persons, are allowed topurchase properties in the Netherlands, which can be used for personal or business purposes. When engaging in such an investment, it is important to know what the applicableproperty taxesare inthe Netherlandsregarding this matter.Our Dutch accountantsspecialize in advising our clients on a wide range oftaxes, including the ones applicable to thetransfer of property ownership.

If you have any question or need assistance in understandinghowreal estate property is taxed in the Netherlands, you can rely onour accountants.

What are the main property taxes in the Netherlands?

Inthe Netherlands,immovable real estate property is taxedwith theproperty tax, a type oftaxthat has to be paid on a yearly basis; theproperty taxis administered by the localDutch municipalities.Thistaxrepresents afraction of the property value–per mille type of tax– as estimated yearly by the local city hall. Thisproperty estimationis called aWOZ value.

Theproperty tax in the Netherlandsis divided into two main types – thetaxthat must be paid by theowner of a real estate propertyand ataxthat has to be paid by theuser of a propertywhich belongs to another person. Regardless of what is the quality of the personliable for taxation, thetaxmust be paid no later than 1st of January for the year that has just ended;our accounting firm in the Netherlandscan offer more information on the formalities that have to be completed in this case.

Anon-resident tax payer(an individual who does not reside inthe Netherlandsandinvests in Dutch real estate) used topay a taxtypically imposed at a rate of1.2%over theWOZ value minus a loan(if applicable),for thepurchase of the Dutch property.

However, since thistype of taxis imposed by eachDutch municipality, its value can range based on the location where thepropertyis registered, but it can also be modified from a financial year to another, depending on the various market indexes.Our team of Dutch accountantscan provide further information on thetax lawregulating this issue.

In case a loan was not made, thepropertytaxation in the Netherlandsfor a non-resident is of1.2% of theWOZ value(the price of the home at the official listed value).Our accountants in the Netherlandscan provide more details on this issue, but it is important to know that the value of theWOZcan varydepending on thevalue of the propertyand on the latesttax modificationsimposed by the local authorities.

Thevalue of the WOZ(which refers to thevaluation of a immovable property in the Netherlands), is done in accordance with the regulations of theValuation of Immovable Property Act; under its regulations, the municipalities are allowed to determine thevalue of the WOZon a yearly basis; more information concerning the stipulations of this law can be obtained fromour team of accountants in the Netherlands.

Besides the above mentionedproperty taxes, thepurchase of real estate propertiesis also imposed with thetransfer tax. Whenbuying a propertyin the country, the buyer has to pay such ataxwhich represents2% of themarket value of a homebought as aprivate residenceand of6% of the property market valuefor other types ofimmovable real estate.Our team of Dutch accountantscanprovide more information on thistype of tax, but it is important to find out that the following are applicable:

• • thetransfer taxis imposed at a rate of 6% in the case ofcommercial immovable properties;
• • theproperty transfer taxmust also be paid by those owning shares in companies that have assets that are consideredreal estate properties;
• • this regulation is applicable in the case of shareholders investing in partnerships, public limited companies or private limited companies;
• • thepayment of the transfer taxis done through a deed of transfer, a procedure which can be completed through a local public notary;
• • thetaxhas to be paid with theDutch Tax and Customs Administration;
• • there are exemptions on thepayment of the property transfer taxin the case in which a businessman transfers the ownership rights on the respectivepropertyto a relative;
• • the same regulation applies when acompany owning propertytransfers itsreal estate assetsto another company, registered as private limited company.

The infographic below shows how theDutch property taxin levied:

Is WOZ used for Dutch rental system?

Yes, theWOZis also used whenrenting a property in the Netherlands. In this country, whenrenting a property, there are two basic systems –social housing, which refers toproperties that are rentedby the local authorities, andpropertiesthat are available at the level of the private sector.

TheWOZ valueis calculated depending on thetype of propertythat is available for rental andour team of Dutch accountantscan provide more details referring to this system. In the case of arental propertythat is considered asocial housing, theWOZ valueis calculated based on a points system, that is used to determine a maximum amount of rent that can be charged to a person.

In the case of properties belonging to the private sector, theWOZ valueis not used for establishing the maximum value of a rental price. It is also necessary to know that the local authorities will inform those who need topay the yearly property taxeson thecurrent valuation of the property. However, eachreal estate owneris allowed to request information on the manner in which theproperty was valuatedand an objection can be made in this sense, by filling the objection form attached to thetax assessment.

Other types of taxeswhen purchasing a Dutch property

It is important to know that, besides thetaxespresented above, the procedure ofpurchasing a real estate propertycan be imposed withadditional taxes.Our Dutch accountantscan advise local and foreign persons wishing topurchase a propertyhere on the manner in which suchtaxesare applied, and can present in-depth details othertaxesthat can apply when one acquires aproperty in the Netherlands. Some of the most importanttaxesare the following:

• • transfer tax, imposed at a rate of 2% of thevalue of the property(anon-negotiable tax);
• • pre-sale agreement deposit, representing 10% of the value at which theproperty is soldand it is important to know that most of the agreements will generally apply this rate;
• • transfer contract tax, imposed at a rate of0.3% of the purchase price;
• • mortgage costis typically imposed at a rate of1% of the purchase price;
• • mortgage contractwill have a value of0.15% of the purchase priceand it is atax deductibleprocedure;
• • if thepropertywas purchased through areal estate agent, thefee is generally imposed at a rate of2% of the property’s market price;
• • valuation of the propertyis imposed with atax of 0.2% of the purchase price, but thetax rate can be negotiated.

Are there any other taxes applicable to Dutch properties?

Yes,owners of properties in the Netherlands, regardless if they are registered asresidential or commercial properties, are required topay other taxesassociated with themaintenance of the property.The Netherlandsapplies awaste collection levy used for thecollection and disposal of garbage and it is computed depending on the number of persons living in a household. At the same time, thevalue of the taxcan vary depending on the municipality in which the residence is set up.

Owners of Dutch propertiesare also liable tosewage levy and to thewater board tax, as well as to the water purification levy. In the situation ofpropertiesthat are not connected to the local sewage system, the local authoritiesapply a pollution levy. It is also necessary to mention that certain municipalities inthe Netherlandsimpose adog taxfor theproperty ownerswho have a dog; however, thistax is not applicable inAmsterdamstarting with 2016.

Tax returns for real estate property in the Netherlands

Under theDutch taxation system, both local and foreign citizens or companies owningreal estatein this country need to file tax returns. The advantage of filing tax returns in this country is that for foreign citizens, the authorities here give them the right to claim various tax benefits under the form of deductions from certain levies.

With respect to theDutch property tax, residents of this country need to report their income and assets earned, respectively owned everywhere in the world when filing their tax returns. In the case of non-residents, they need to declare the real estate owned in the Netherlands.

Taxation in the Netherlandsrelies on the box system which requires natural persons to check specific boxes which corresponds to their tax situation. When it comes to theproperty tax, a Dutch resident needs to check the following:

• – Box 1 if they own a property they use as a main place of residence;
• – Box 3 if they own one or more properties which are not the main residence.

When checking Box 1, theDutchresident can be subject toproperty tax deductions for mortgage interests, notary fees and the purchase costs associated with the mortgage. For properties entering the Box 3 category, they will be subject to taxation at the WOZ value from which the mortgage value is deducted.

From a reporting point of view, all properties entering the possession of a Dutch resident starting with January 1^stmust be declared in the tax return for the respective year.

Dutch citizens with real estate properties abroad must declared them in their tax returns submitted in the Netherlands, however, it should be noted that in this case, special rules under double tax treaties (where such treaties exist) apply. This means thatDutchresidents will need to pay theproperty taxin the country where the real estate is located. Where a double tax treaty applies, citizens or residents of the Netherlands are entitled to tax reliefs equal to the taxes they would pay in the Netherlands.

If you need assistance related to filing personal tax returns, you can rely on ourDutch accounting firm.

Businesspersons doing business through companies can also benefit from ouraudit services in the Netherlands.

The Dutch property tax for non-residents

Foreign citizens who do not have residence permits for the Netherlands can own real estate here. Just like in the case ofDutchresidents, in the case of foreign citizens, theproperty taxon real estate will be paid here. If between the country of origin of the foreign citizen and the Netherlands adouble tax agreementis in place, the conditions of the respective treaty will apply.

As a real estate owner in the Netherlands, a foreign citizen is required to report the property with the Dutch tax authorities in order to pay theproperty tax. Just like in the case of residents, Box 3 on the tax return must be checked and the tax paid will be calculated at WOZ value from which the mortgage will be deducted (if it is the case).

Ouraccounting firm in the Netherlandscan provide extended assistance to foreign citizens and investors liable for taxation in this country. Also, where adouble tax treatyis in place, our accountants will consider the provisions of the respective convention to the best interest of the client.

Deductions of the property tax in the Netherlands

Interest payments on mortgages aredeductiblefrom thepropertytax in the Netherlandsif thepropertyis used as a principal residence and if the owner is a registered resident of the country. Mortgage interest can be deducted over the amount of the mortgage, except for any the portion of the loan utilized to acquire furniture or any other type of consumer products. Thisrefundcan be demanded in advance and refunded monthly.

Residents of the Netherlandscandeduct their mortgage interest pay only on their main residence and have topay a wealth taxon any othersupplementary real estatesthey own in the country. Partial non-residents, though, can deduct the mortgage interest pay on their main residence, however theydo not pay the wealth taxon otherreal estatethey own inthe Netherlands.

Changes in the property tax system in the Netherlands

In 2020, thetaxation of real estatehas suffered a few modifications. The changes refer to Dutch properties held as main places of residence, but also to those held as investments. It is important to note that in 2020, the rental value represents 0.60% of the WOZ value for properties valued below 1,090,000 euros. For properties exceeding this value, the WOZ value is 2.35%.

For real estate wheremortgage interestsare deductible, the highest deduction rate for 2020 is 49.50% to which a tax rate correction of 3.50% is added.

The Box system is subject to minor changes every year which is why when filing tax returns the assistance of anaccounting firm in the Netherlandsis necessary for a correct submission. This way, you will be able to take advantage of all tax benefits offered by the local authorities.

You can also rely on us for information on the incometax incentiveavailable whenbuying a property in the Netherlands. Ouraccountants in the Netherlandscan help you apply for various tax deductions and reliefs.

You can also watch our video below:

What are the current prices for Dutch residential real estate properties?

Foreigners wishing topurchase a property in the Netherlandswith the purpose of relocating here must know that theprices for residential real estate propertiesexpanded due to the increasing demand. The prices increased for all types ofresidential propertiesand the latest data presented by theStatistics Netherlands, the country’s national statistics office, show the following:

• • inAmsterdam, the prices forresidential propertiesincreased by 6,23% ( measured at the level of the first quarter of 2019);
• • the current average price of aproperty in Amsterdamstands at EUR 472,375;
• • at a national level, the average increase for apropertystood at 8,31%;
• • in the latter case, the average price for aDutch propertyis of EUR 301,279;
• • the price of anapartment in the Netherlandshas an average value of EUR 264,409;
• • the average price for aterraced house in the Netherlandsis of EUR 278,167;
• • adetached house in the Netherlandshas a price of EUR 437,633;
• • asemi-detached househas an average price of EUR 319,663.

It is important to know that othertypes of taxesare deductible inthe Netherlands– for example, the closing fee established with a bank when concluding a mortgage on areal estate property, a situation which is also applicable to notary costs related to the registration of the mortgage. We invite you toget in touch withour accountants in the Netherlandsfor any further information on theDutch property tax.