One hurdle less for making a gift

Last week the Dutch Secretary of State for Finance issued a decision to remedy a not intended and unfair consequence of a tax rule related to gifting or an inheritance.

The Dutch tax system is a multi-headed animal; sometimes a definition is treated differently under various tax laws. Being or becoming a fiscal “partner” is an important step. It sometimes means you get some relief as a “tax couple” or vice versa (because you can afford more being with two).

The Successiewet has thresholds for different family relationship situations above which tax is levied in a low (10%) and/or high (20%) bandwidth. The gift and inheritance tax law (“Successiewet 1956”) has a different notion of a tax partner than e.g. the income tax law. The definition of tax partner in the Successiewet until this week resulted in unintended often higher taxation if siblings (and other family relationships in the same degree) lived at the same address for 5 years and received a gift or inheritance from the same person living in the Netherlands simultaneously.

This situation is not so rare as it may seem. The tight housing market keeps families under one roof longer so it is possible that there are two tax partner couples at one address: mum and dad are one but brother and sister may be the second. The second “couple” is often beneficiary to support expensive studies or to buy a home. In such situations losing 10% of the gift or inheritance because simultaneously received amounts as partner is undesired. The Secretary of State of Finance has adjusted the rules under three conditions we will not mention here (the above is hard as it is).

The reason we bring this technical looking adjustment to your attention is that is not just interesting for future situations. It also applies to any gift or inheritance received from 17 April 2017 (this is not a typo!).

If you or your family did pay too much gift tax or inheritance tax because of the former definition the paid excess will not come to you automatically. An application must be made to the relevant Tax Authorities within five years the beneficiary received the amount.