In the gift tax and inheritance tax act there are tax free amounts under which you are not liable for inheritance/gift tax. The inheritance tax you cannot influence and if you can, you are excluded from the entire inheritance. But gift tax you can influence, by giving at the right moment.
Annual gift tax free amount for your children
December is the right moment to see if you can still use this years balance of the tax free amount. For instance, parents can give to their children per child EUR 5.229 in 2014 tax free. Enough to deposit in a savings account for your children, and maybe inform them about the existence of this account later in life. If you continue depositing per month or year within the tax free amount, the balance on the account has seriously grown without any tax being paid. For instance if you pay EUR 50.000 now, you pay EUR 5.000 gift tax, EUR 45.000 in the bank. If you deposit for 9 years EUR 5.229, you exceeded the EUR 45.000 already without paying tax.
One time substantial increase to EUR 25.096 gift tax free!
The annual amount can be increased in one year to EUR 25.096 if your child is between 18 and 39 (including 39) years old. This amount can even increase substantially more if you would like to help your child purchasing a house or have an education.
One time substantial increase to EUR 100.000 gift tax free, under conditions
Parents can give to their children, per child, EUR 100.000 gift tax free under the condition this amount is used for:
- Purchase of a home being their main residence;
- Reconstruction or maintenance of a home being their main residence;
- Repayment of the mortgage of their home, being the main residence
- Settlement of erfpacht with the city
The other condition is of course that the parents have not taken out a loan in order to make this EUR 100.000 which is basically preplacing the existing mortgage loan. Moreover we have to stress that parents should only make such a gesture if they can afford it.
As long as you, giving hand, are a tax resident in the Netherlands, Dutch gift tax rules apply, even if your child lives abroad. But please be aware that when you leave the Netherlands, you are subject to Dutch gift tax if you make a gift during the first year after you left the Netherlands.