Gifts and inheritance

Gifts and inheritance

As parents you can support your children financially. For example by giving money when your children buy their own house, or by decreasing the future inheritance. As it stands, inheritance tax has to be paid over an inheritance and the lower the inheritance, the lower the inheritance tax.

Giving

Giving to others is always fun. As soon as this is more than just a minor gift, legal and tax aspects can come into play. For example, it is often a good idea to give during your lifetime - legal term: ‘donation inter vivos’ - considering the tax advantages, both for giving to family members or donating to charities.

We can help you to implement a one-time gift in a responsible manner or to draw up a gift plan. In doing so, we shall of course consider the consequences for your financial position, any gift or inheritance tax owed and income tax.

In a gift plan you can outline your wishes and possibilities on the long term, while having complete freedom on whether or not to implement the plan. Of course if a plan has been drawn up, it can always be amended, for example if the circumstances change.

Giving an annuity

If you want to donate money to charity, you can give the donation in the form of an annuity, committing yourself for 5 years. The instalments can, under conditions, be deducted from income tax. 

Tax-free donations

Each year parents can give their children €6,604.= free of taxes (in 2021). If you give no more than this amount, you do not have to declare this for taxes.

If your child is between the ages of 18 and 40, you can give your child in 1 year no more than € 26,881.= (in 2021) free of taxes. You can only use this one-off increased exemption once. This arrangement also applies to children that are older than 40 but have a partner younger than 40. If you use this one-off increased exemption you have to declare this with the tax authorities, noting the appeal to the exemption.

Gifts on paper

Whether you have to pay taxes on a gift depends on the value of the gift and your relationship to the giver. You can also give something without actually involving cash. A notarial deed can then state that there is debt to the receiver. This is also called a ‘paper gift’. The claim that the receiver has on the giver can be claimed, for example on decease of the giver.

Inheriting

Anyone who inherits has to look into inheritance tax. The amount of tax owed depends on the amount of the inheritance and relationship with the deceased. Sometimes inheritance tax does not have to be paid at all or over a part of the inheritance. This also depends on the relationship with the deceased. For example, if a partner inherits he or she has a tax exemption of € 671,910 and children have a tax exemption of € 21,282 per child. Everthing above the tax exemption will be taxed with inheritance tax. Ones a year the Dutch government sets publishes the tax rates and exemptions for the coming year. So amounts and tax rates may vary per year. Please contact us if you need more information about inheriting or inheritance taxes in The Netherlands.

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If you have any question, please do not hesitate to call with one of our specialists during our office hours. You can contact us by calling our office (040) 244 88 55.

Of course you could also reach out to us by filling in our contact form. We would be happy to help you and advise you on the best solution for your personal situation.

mr. Anique Wetzels

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