We can only assume you cannot wait to go for the holidays abroad and visit your family. You enjoy the meal, have a coffee and while some are doing the dishes, you, you pop the question: “Dad, ever thought about gift tax?” – Tax is exciting!
Gift tax is a subject that comes up once in a while and often that is when family meet each other over the holidays. What happens if you were to be given a gift from your parents? The first question asked to us is about tax. But my first reply is about siblings, do you have brothers and sisters? If the answer is yes, the following question is: do they get the same gift?
Indeed not a tax related question, but if one part of the family gets an advance on the inheritance and the others do not, by the time the inheritance takes its effect, family relations are not good. If you are indeed the only child, please accept the gift.
The main rule is that if you get a gift, the gift is subject to gift tax in the country where the person giving is living.
Inheritance tax is for some reason never a topic during the holidays. Nobody wants to spoil the holiday mood. That said. Inheritance tax is in line with the gift tax legislation, which implies that the country where the person deceases, is the country that will tax the inheritance. If you then think you can push the hospital bed over the border into another country with lower inheritance tax rates, just before the last breath leaves the body, that will not make a difference.
Inheritance tax legislation is keen on creative actions before death. Gifts done during 180 days before death are nullified. The person going to decease can move country to a lower taxed or no inheritance taxed country. But if the person moves less than ten years from the Netherlands and dies, the Dutch tax office will tax the inheritance.
No gift, a loan
In the situation you are indeed not the only child but you have brothers and sisters, we recommend no gift, but a loan. If that is put in writing, the tension over the inheritance is less.
Family loan and tax
If your family provides you with a loan to purchase a house in the Netherlands, or to contribute to the purchase, as the mortgage is not good enough on its own, then this could be interesting. When the loan is made in a manner that the loan is paid back in a max 30 year period and interest is paid over the loan. When the loan was used for the purchase of the house, the interest is tax deductible.
If the family is reluctant to provide you a loan, as they want security for the amount loaned to you, the notary can put a mortgage on behalf of the family on the house. That said, if there is also a mortgage bank providing a loan, the mortgage bank will have first rights on the assets.
Orange Tax Services – tax is exciting
Tax is exciting, gifts are exciting, inheritance is often the consequence of death, not exciting. Death and tax go hand in hand if you refer to certainties in life. With gifts and inheritance this is no different. Rules are in place where a gift or inheritance is taxed.