The Netherlands is home to many high net worth families and individuals (HNWIs). Their residence is in most cases not so much tax driven, but based on historical (family or business) ties with the Netherlands and their appreciation of the quality of life and the stable political environment.

During the last decades of the 20th century, common practice in Dutch private wealth planning was to migrate to jurisdictions such as Switzerland, the United Kingdom, Curaçao, Belgium and – in certain cases – Monaco. Although for Dutch HNWIs, emigration can still result in substantial savings of inheritance and gift tax, it appears that Dutch HNWIs have, however, become more reluctant to emigrate. This may have evolved out of the anti-abuse provisions in Dutch tax laws and shifting personal priorities.

The tax facilities in the Netherlands are important for the transfer of business assets by means of inheritance or gift. These facilities significantly reduce the inheritance and gift tax on the transfer of business assets. In addition, the income tax claim on business assets may be rolled over to the acquirers and therefore does not become payable upon the transfer.

Tax and legal structuring to optimise the use of tax facilities for the transfer of business assets – inter vivos or upon death – is a key focus for Dutch HNWIs.


i Domicile and residence

The Netherlands has no concept of domicile. Residence is important for Dutch tax purposes and is determined based on the relevant facts and circumstances. The decisive factor for determining residence is normally the individual’s centre of vital interests. If the individual’s closest economic, family and social relations are located in the Netherlands, he or she is considered tax-resident in the Netherlands.

ii Corporate income tax

Corporate income tax is levied from entities specified in the Corporate Income Tax Act. Examples are public and private companies with limited liability, limited partnerships with open end and cooperatives. These entities are deemed to run a business with all their assets. Associations and foundations are subject to corporate income tax insofar as they run a business or (potentially) compete with other businesses.

Resident entities are subject to tax on their worldwide profits. Non-resident entities are taxable in the Netherlands to the extent that income and gains are derived from certain Dutch sources (e.g., a permanent establishment in the Netherlands or Dutch real estate). The Dutch corporate income tax rate is 20 per cent for profits up to €200,000 and 25 per cent for profits in excess of that amount. Proposals are pending to reduce the corporate income tax rate, in particular through a raise of the 20 per cent threshold.

For HNWIs that have a substantial passive investment portfolio in their corporate structure, it may be worthwhile setting up a tax-exempt investment fund (the ‘vrijgestelde beleggingsinstelling’ or VBI). The VBI was introduced for professional investment funds, but may also be used by private clients. Subject to certain conditions, a VBI is exempt from Dutch corporate income tax and dividend withholding tax.

To set up a VBI, the following requirements must be met:

  • a the legal form of a VBI must either be a public limited company or open fund for mutual account;
  • b the VBI needs to have at least two shareholders or participants, whose interest may not exceed 90 per cent;
  • c the VBI is open-ended, so participants should be able to sell their participations without prior unanimous consent of the other participants;
  • d the VBI may only invest in financial instruments as defined in the Act on Financial Supervision or maintain deposits at banks (a VBI is not allowed to acquire Dutch real estate or to operate a business); and
  • e the VBI applies the principle of risk spreading.
iii Personal income tax

Tax residents are subject to Dutch personal income tax on their worldwide income. Non-resident taxpayers are subject to Dutch personal income tax for income from Dutch sources, including, among others, Dutch real estate. The tax year is equal to the calendar year. In principle, taxpayers must file their tax declaration before 1 May of the calendar year following the tax year concerned. There are three categories (boxes) of taxable income for both resident and non-resident taxpayers.

Box 1

In Box 1, the income from employment and owner occupied dwellings is taxed. This includes income from business activities, income from present and past employment, income from other (e.g., freelance) activities, certain periodic payments and deemed income from owner occupied dwellings.

The progressive rates in Box 1 vary from 8.4 to 52 per cent. If an individual is insured under Dutch social security schemes, he or she additionally has to pay 28.15 per cent social security contributions on the first €33,715 of the income from employment.

Box 1 has a limited number of deductions, the most important of which is interest paid on a loan contracted for the acquisition, improvement or maintenance of the principal, owner-occupied, dwelling. Over the past years this tax incentive has been economised several times. Since 2001 this interest deduction is limited in time to a period of 30 years as of the first moment a deduction is taken in the personal income tax return. As of 2013, mortgage interest payments on new loans will only be tax deductible if the loan is fully repaid within a maximum of 30 years on an annuity basis. Loans entered into before 1 January 2013 will under conditions be grandfathered. In addition, with effect from 1 January 2014, the maximum rate for the deductibility of mortgage interest of 52 per cent will be reduced by 0.5 per cent per year resulting in a 42 per cent rate over a 20-year period. This reduction will apply for both existing and new mortgages. As such, in 2016, mortgage interest will be deductible at a maximum rate of 50.5 per cent instead of 52 per cent (before 1 January 2014).

An important incentive for expats (incoming employees) immigrating to the Netherlands is the 30 per cent ruling. Under conditions this ruling allows for a deduction of 30 per cent of the incoming employee’s income for deemed extraterritorial expenses. More importantly, the individual can opt to be treated as foreign taxpayer for Box 2 and Box 3 (see below). As a result he or she will in principle not be taxable for a substantial shareholding in a company resident outside the Netherlands or private wealth (with the exception of rights related to Dutch real estate). The 30 per cent ruling is granted for a period of eight years. This eight-year period is reduced with the period (in months) spent in the Netherlands ending in the 25-year period prior to immigration. Furthermore, to be eligible for the ruling, the incoming individual should not have resided within a 150km radius of the Dutch border during more than two-thirds of the 24-month period prior to emigration. The latter requirement has been challenged before the Dutch Courts and the European Court of Justice. In the spring of 2016, the Dutch Supreme Court, following a ruling of the European Court of Justice, upheld the 150km requirement.

Box 2

In Box 2 the income from substantial interests is taxed. A substantial interest is a shareholding2 in a company of 5 per cent or more. Taxable income includes both dividends and capital gains. Box 2 also applies to non-resident taxpayers with a substantial interest in a company with its effective place of management in the Netherlands.

The personal income tax in Box 2 has a flat rate of 25 per cent. Dividends paid by companies resident in the Netherlands are subject to a 15 per cent dividend withholding tax. This dividend withholding tax may be offset against Dutch personal income tax.

In case of a substantial shareholding in a low-taxed or exempt portfolio investment company (such as the previously mentioned VBI), a deemed 4 per cent yield will be imputed on the income of the substantial shareholder. Following the changes to the Box 3 income taxation, this yield will increase to 5.5 per cent as of 1 January 2017 (see ‘Box 3’, infra).

Next to true alienations of substantial shareholdings, the Income Tax Act contains several events whereby the shares are deemed alienated, such as the repurchase of shares by the company, liquidation of the company, inheritance of the shares and emigration of the substantial shareholder (Exit Taxation) or the transfer of the effective place of management of the company out of the Netherlands.

Under the Exit Taxation, individuals with a substantial shareholding receive a protective assessment for the gain from the deemed disposition of their substantial shareholding upon emigration. The emigrating individual is granted an interest-free delay of payment for the income tax (25 per cent) due on this assessment. The taxpayer must provide security if he or she emigrates outside the EEA.

Until 15 September 2015, the assessment was collected if, inter alia, the individual disposed of all or part of the shareholding within 10 years following the individual’s emigration. As of the first day of the 10th year following the year of emigration, the remaining amount of the protective tax assessment was waived following a written request by the taxpayer.

As of 1 January 2016, the legislation concerning the Exit Taxation was changed with retroactive effect to 15 September 2015. For emigrations of substantial shareholders after this date, the protective assessment is no longer waived after 10 years, but will be imposed for an unlimited period. Furthermore, each euro of dividend distribution received on the substantial shareholding will result in a pro rata collection of the protective assessment (while respecting double tax treaties). Previously, only the distribution of over 90 per cent of the distributable reserves upon emigration would result in the collection of the protective assessment. Emigrations prior to 15 September 2015 are grandfathered.

Box 3

In Box 3, the income from savings and investments is taxed. The taxable income is a deemed income of 4 per cent over the net value of assets and debts that qualify for Box 3, irrespective of the actual income or capital gains generated with the assets concerned. The reference date for the valuation of the taxable assets in Box 3 is 1 January of the relevant year. The deemed income is taxed at a flat rate of 30 per cent, thus resulting in 1.2 per cent taxes payable on the net value of assets and liabilities.

For non-resident taxpayers, Box 3 applies, among others, to Dutch real estate and rights that are directly or indirectly attached thereto. Debts connected to Dutch real estate may be deducted.

Over the past years the deemed yield of 4 per cent has been subject to much debate. With a market interest rate of below 1 per cent, taxpayers are in some cases confronted with an effective income tax rate of over 100 per cent. Several court cases are pending in which the taxpayers are arguing that they are under an excessive tax burden. The courts have in most cases ruled that the use of a deemed yield remains within the ‘wide margin appreciation’ left to the legislator. However, in one case whereby a landlord could prove a historical substantially lower yield, the Supreme Court decided that only the effective yield should be subject to income tax. In view of the number of appeals filed (subsequently) against the income taxation in Box 3, the State Secretary of Finance decided in June 2015 that decisions on all of these appeals were to be put on hold until the Supreme Court had decided in a selection of pending court cases. The Supreme Court rendered its decision on 10 June 2016. Contrary to the advice of the Advocate General, the Supreme Court ruled that the Box 3 taxation was within the ‘wide margin of appreciation’ left to the legislator and did not impose an excessive burden for the taxpayer in the case at hand. In its decision, the Supreme Court also pointed out, however, that the legislator should carefully monitor whether the deemed yield of 4 per cent remains reasonable in the long term.

Parallel to these court proceedings, the Dutch government has introduced an amendment of the Box 3 taxation as part of the budget for 2016. Under the amended Box 3 taxation, which will apply as of 1 January 2017, the deemed yield is made progressive depending on the amount of net wealth, using the following thresholds:

  • a up to €100,000 the deemed yield is 2.9 per cent;
  • b from €100,000 to €1 million the deemed yield is 4.7 per cent; and
  • c above €1 million the deemed yield is 5.5 per cent.

The deemed yields are determined under the assumption that people tend to hold their wealth up to €100,000 in savings accounts, and that with an increase of their wealth, they shift their wealth allocation to securities, with a full allocation to securities as of €1 million of wealth. Subsequently, the deemed yields are annually adjusted based on a five-year moving average of yields on savings accounts and a certain mix of securities. The new system has been scrutinised since its introduction. As part of the legislative process, the Dutch parliament has requested the government to come up with a proposal for the taxation of the actual yield on an individual’s wealth. Although the government has consistently turned this alternative down for being too complex, it has agreed to come up with an alternative proposal before 1 January 2018.

iv Inheritance and gift tax

The Netherlands levies inheritance and gift tax if the deceased or donor was or is resident in the Netherlands. The residency of the heirs or donees is not relevant in this context.

As of 2010, the Netherlands no longer levies inheritance or gift tax from non-resident taxpayers in relation to situs assets (e.g., Dutch real estate or business assets). The Netherlands is unique in this respect.

The acquisition of Dutch real estate by means of a gift is subject to Dutch real estate transfer tax. The general rate for Dutch real estate transfer tax is 6 per cent. The transfer tax rate for dwellings is 2 per cent. If the gift was also subject to Dutch gift tax, the real estate transfer tax may be (partly) offset against the gift tax due. If Dutch real property is acquired by inheritance, no real estate transfer tax is levied.

For inheritance and gift tax purposes, Dutch nationals are deemed resident in the Netherlands for 10 years after their emigration. Non-Dutch nationals are deemed resident in the Netherlands during the first year following their emigration, for gift tax purposes only.

Inheritance tax is not only due on the assets acquired from the estate. The Inheritance Tax Act 1956 holds various provisions to prevent tax avoidance by inter vivos transactions.


For inheritance and gift tax, the following rates apply:

  • a 10 per cent (up to €121,903) to 20 per cent (on the remaining amount) for transfers to spouses, cohabitants and children;
  • b 18 per cent (up to €121,903) to 36 per cent (on the remaining amount) for transfers to descendants in the second or further degree (e.g., grandchildren); and
  • c 30 per cent (up to €121,903) to 40 per cent (on the remaining amount) for transfers to parents, brothers and sisters, and non-related persons.

For inheritance tax purposes, the most important tax-free allowances are as follows:

  • a for partners: €636,180;4
  • b for children and grandchildren: €20,148;
  • c for parents: €47,715; and
  • d for others: €2,122.

For gift tax purposes, the most important tax-free allowances are as follows:

  • a for children, €5,304; and
  • b for others, €2,122.

A one-time increase of the annual tax-free allowance for children is allowed if the child is aged between 18 and 40 at the time of the gift. The increase is permitted up to an amount of €25,449. If the donation was made for the acquisition of a principal residence or ‘the financing of an education’ that is more expensive than average studies, the increase is permitted up to an amount of €53,016.

As of 1 January 2017, the latter amount of the one-time increase of the annual tax-free allowance is raised to €100,000 if the donation relates to the acquisition or renovation of a principal residence, or is used to repay a debt in connection with the principal residence.

v Business succession facilities

As mentioned in our introduction, several tax facilities exist for the transfer – inter vivos or upon death – of business assets.

Subject to satisfaction of strict conditions, the following inheritance tax and gift tax facilities apply to the transfer of business assets, including substantial shareholdings in companies that (indirectly) hold business assets:

  • a the difference between the liquidation value of a business and the value as a going concern can be tax-exempt conditionally;
  • b the first €1,060,298 of the value as a going concern and 83 per cent of the excess above the first €1,060,298 of the value as a going concern can be tax-exempt conditionally; and
  • c for the tax on the 17 per cent of the remaining value as a going concern, a conditional extension of payment for a period of 10 years can be obtained.

The main condition for successfully applying the business succession facilities for inheritance and gift tax is that the business must be continued by the recipient for at least five years after the deceased’s death or the gift.

Furthermore, there is a facility for the income tax claim on business assets (Box 1) and substantial shareholdings in companies that hold business assets (Box 2). Upon request, this claim may be rolled over to the heirs or donees who acquire these assets. Non-resident heirs or donors will receive a protective assessment for the rolled-over income tax claim. The taxpayer must provide security if he or she resides outside the EEA.

Donees must be employed by the enterprise for at least three years prior to the gift to benefit from this rollover. As a result of the rollover, the income tax claim does not become payable upon the transfer.

All in all, when the business succession facilities apply, the gift or inheritance tax on the transfer of the business to the next generation is effectively reduced from 20–40 to 3.4–6.8 per cent; and in the case of a substantial shareholding, the 25 per cent income tax claim may be rolled over. From a tax perspective, it is therefore very attractive to invest or reinvest in business assets.

It is exactly this difference between the succession taxation of business assets and non-business assets, which has caused taxpayers to argue that the tax incentive given to the owners of business assets is disproportional. In its decision of 22 November 2013, the Dutch Supreme Court ruled that the business succession facilities for inheritance (and gift) tax do not contravene the prohibition against discrimination under Article 14 of the European Convention on Human Rights and Article 26 of the International Covenant on Civil and Political Rights. On 27 May 2014, the European Court of Human Rights confirmed the Dutch Supreme Court’s ruling.

Despite the fact that legal discussions about these facilities may have come to an end, from a political and economic perspective it remains possible to argue that the business succession facilities are too generous and should be limited. For example, at the beginning of his office period in April 2014, the new State Secretary of Finance, Eric Wiebes, announced that he would investigate whether the business succession facilities should be limited or altered. He was highly criticised for this announcement and was forced to withdraw his plans. Nevertheless, if the political climate changes, it is possible that business succession facilities will be limited.

Given the significant impact of the business succession facilities, it is essential that the business assets are well structured in this respect, and that the matrimonial property regime and the last will and testament of the owner of the business assets enable optimal use of the facilities.

vi Real estate and business succession facilities

Because the Dutch tax authorities take the position that real estate portfolios are to be considered passive investment assets even if it concerns an actively managed portfolio, real estate owners in principle cannot apply the business succession facilities. Fortunately, recently there has been a number of (lower) court cases considering real estate portfolios as entrepreneurial assets. On 15 April 2016, the Dutch Supreme Court confirmed one of these lower court rulings. Nevertheless, the qualification of real estate portfolios either as entrepreneurial assets or passive investments is highly dependent on the facts and circumstances of each case, and the outcome remains very uncertain.

vii Cross-border structuring

In the past, Dutch HNWIs regularly migrated abroad. With this in mind, many anti-abuse provisions have been introduced to Dutch tax law over the years.

As previously mentioned, for inheritance and gift tax purposes Dutch nationals are deemed tax-resident in the Netherlands during the first 10 years following their emigration. As a consequence, in this respect it takes a waiting period of 10 years before a Dutch national may benefit from a tax-friendly foreign regime.

One solution to escape the 10-year period is to relinquish Dutch nationality and adopt another nationality. This is a drastic step, but may be worth considering. Another solution to avoid the 10-year rule is a migration to Curaçao. Under the former tax regulation for the Kingdom of the Netherlands, for tax residents of Curaçao, the right to levy inheritance tax was attributed to Curaçao. As such, the Netherlands was no longer entitled to levy inheritance tax once tax residence had been established in Curaçao. For gift tax, the Dutch 10-year period was in fact shortened to one year. As per 1 January 2016, a new tax arrangement between the Netherlands and Curaçao entered into force. Under this agreement, a five-year waiting period applies for both inheritance and gift taxes. Persons that were residents of Curaçao prior to 10 June 2014 may still apply the old regime.

viii Voluntary disclosure

In view of international developments such as the conclusion of many exchange of information treaties and declining banking secrecy, the past few years have shown a significant increase of voluntary disclosure procedures. A voluntary disclosure is only successful if all relevant facts and circumstances are disclosed to the authorities prior to the moment at which they could reasonably be assumed to be aware of the non-disclosed assets. With the entry into force of the multilateral European exchange of information directive, this moment is only a couple of months away. In case of an unsuccessful voluntary disclosure or discovery of the assets by the tax authorities, a 300 per cent penalty over the unpaid taxes is imposed. This penalty is lowered in case of a voluntary disclosure. However, the voluntary disclosure penalty was increased to 120 per cent as of 1 July 2016.


i Succession law

Generally, in the Netherlands a last will and testament is executed in the form of a deed prepared by a Dutch civil law notary. A holographic will (handwritten by the testator) is also possible, although very uncommon.

The Netherlands is party to the HCCH Convention on the Conflicts of Law Relating to the Form of Testamentary Dispositions 1961. Under this Convention, a will made in another jurisdiction is regarded as valid if its form complies with the internal law of:

  • a the state where the testator made the will;
  • b the state of the testator’s nationality, domicile or habitual residence (either at the time when he or she made the will or at the time of his or her death); or
  • c the state where the assets are located (for immoveable property).

As of 17 August 2015 the European Succession Regulation (the Regulation) entered into force, also applicable to the Netherlands. The Regulation provides for rules on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European certificate of succession. Under Article 22 of the Regulation a person may choose the law of a state whose nationality he possesses, either at the time of making the choice or at the time of death, to govern his succession as a whole. In the absence of the designation of the applicable law, under Article 21 of the Regulation the law of the state in which the deceased had his last habitual residence is applicable to his succession as a whole.

If the deceased leaves behind a spouse (or registered partner) and one or more children, under Dutch law on intestacy the spouse and children will inherit the estate, each taking an equal share. To protect the surviving spouse, the law provides that all property of the estate vests into the surviving spouse, under the obligation to discharge all liabilities of the estate. The children receive a pecuniary claim equal to their share in the estate, which in principle can only be collected upon the death of the surviving spouse. This statutory division applies by law, unless the deceased has provided otherwise in his or her last will and testament.

In principle, under Dutch law a person may freely dispose of his or her assets by a last will and testament, including the disinheritance of any children.

Although children can be disinherited, as a result of their forced heirship rights they may always make a pecuniary claim of 50 per cent of the value they would have received on intestacy. This claim needs to be made within five years of the deceased’s death.

Children can collect their forced heirship rights six months after their parent’s death. However, the parent may stipulate in his or her last will and testament that the children can only collect their forced heirship rights after the death of their deceased parent’s spouse or registered partner, or a life partner with whom the parent entered into a notarial cohabitation agreement.

This provision can also apply if the deceased’s spouse, registered partner or life partner is not a parent of the children.

A child claiming his or her forced heirship rights does not become an heir. He or she only has a pecuniary claim against his or her deceased parent’s estate that may not be immediately collectable. In this respect, the Netherlands is unique among civil law jurisdictions.

ii Matrimonial property law

The Netherlands is party to the HCCH Convention on the Law Applicable to Matrimonial Property Regimes 1978, which entered into force on 1 September 1992. The Convention only applies to the matrimonial property regime of couples that were married on or after 1 September 1992, or that have designated the applicable law to their matrimonial property regime after that date, even if they were married before then.

The Convention’s general rule is that the spouses are free to designate the law applicable to their matrimonial property regime. If no designation has been made, in principle the law of the state in which both spouses established their first habitual residence after marriage governs the proprietary consequences of the marriage. If, however, both spouses have Dutch nationality, Dutch matrimonial property law applies regardless of the state of the first habitual residence of the spouses.

If a couple marries without making a prenuptial agreement, under Dutch law the community of property regime applies. In principle, this regime covers all property, including property acquired before marriage and property acquired by inheritance, legacy or donation.

Under an exclusion clause, a testator or donor may stipulate that an inheritance portion, legacy or donation is the heir’s, legatee’s or donee’s private property, and therefore will not form part of the community of property.

Spouses can agree upon marriage conditions before marriage. Marriage conditions must be incorporated in a notarial deed, prepared by a Dutch civil law notary. During the marriage, marriage conditions can be made or amended. The spouses may freely negotiate their marriage conditions. A common arrangement is the exclusion of any or some property from the community of property regime. Spouses can also agree on a periodical settlement clause regarding unexpended income, a final settlement clause regarding the value of certain or all assets, or both. The Dutch Civil Code contains general rules regarding settlement clauses in marriage conditions.

Same-sex couples can enter into a marriage or registered civil partnership. In relation to property law, succession law and tax law, same-sex couples are treated in exactly the same way as heterosexual couples. A registered civil partnership enjoys the same legal treatment as marriage for the purpose of property law. There are no special provisions in family law in relation to cohabitants.


In the Netherlands, foundations are commonly used for wealth structuring. In more international situations, trusts and trust-like entities are also used.

i Foundations – civil law aspects

Foundations are mainly associated with non-commercial activities, such as charitable, cultural and social activities. A foundation under Dutch law is a legal entity with two main characteristics:

  • a a foundation does not have any members or shareholders; and
  • b the foundation aims at realising a goal, as defined in its articles of association, by using capital designated for that purpose.

The founder of a foundation may stipulate its goal (as long as such goal does not contravene the law). Its goal is not necessarily limited to charitable purposes and may also include commercial activities. As a consequence of the legal personality of the foundation, in principle, the liability of persons involved with it (as board members or otherwise) is limited.

A foundation is to be incorporated through the execution of a notarial deed by a Dutch civil law notary, which deed must contain the articles of association of the foundation. The foundation and its board members must be registered with the Trade Register of the Dutch Chamber of Commerce.

The foundation is a rather flexible structure, mainly for the following reasons:

  • a the only mandatory corporate body of a foundation is its board. The articles of association must provide for the appointment and dismissal of the board members. There are no requirements, however, as to the manner of providing for appointment and dismissal (unlike, for instance, in respect of a private company, where the board members must be appointed by the general meeting of shareholders, or in specific cases the supervisory board);
  • b several types of board members may be created, with varying powers;
  • c apart from the board, the articles of association may define other corporate bodies with specific powers within the foundation (such as a supervisory board), to be defined in its articles of association;
  • d there is no requirement for the Dutch Ministry of Justice to approve the articles of association as a condition to incorporation; and
  • e in addition, a number of capitalisation, auditing and publication requirements that apply to a company do not apply to a foundation.

When contemplating the setting up of a foundation, it should be borne in mind that, pursuant to statutory law, a foundation may not make distributions to its incorporators and the members of its corporate bodies, and may only make distributions to other persons if such distributions are of an idealistic or social nature.

In the Netherlands, foundations are often used as a trust office. When used as a trust office, assets (e.g., shares in a company or an art collection) are transferred to the foundation against the issuance by the foundation of depository receipts. As a result, the legal and beneficial title and interests to the assets concerned are separated. Statutory law does not set out any specific provisions in this respect. General contract law does, however, apply. The relationship between the trust office and the depository receipt holders is governed by the provisions that apply to the issuance of the depository receipts. These provisions are called the trust conditions and are usually agreed by the transferee of the assets concerned and the foundation.

The issuance of depository receipts is often used to safeguard continuity within a company. A shareholder in a private limited company can convert his or her voting shares into non-voting depository receipts with the voting power accumulating to the board of the foundation. Usually the shareholder or any persons designated by him or her will acquire control in the board. Consequently, the depository receipts can be transferred to the next generation, if so desired, under further terms and conditions (such as an administration to a certain age). Any future dividends or other payments on shares and increases in value will accrue to the depository receipt holders without any gift or estate tax being due. By making specific arrangements on the constitution of the board once the shareholder has resigned, the shareholder can strengthen the continuity and the independence of the (family) enterprise.

For Dutch tax purposes, foundations used as a trust office are set up as tax transparent. As a consequence, the assets of the foundation are attributed to the holders of the depositary receipts.

ii Foreign trusts and similar entities

As a civil law jurisdiction, the Netherlands does not have trust law. However, it is a party to the HCCH Convention on the Law Applicable to Trusts and on their Recognition 1985 (the Convention). The Netherlands recognises trusts governed by another jurisdiction’s laws if they were created according to the rules of the Convention. A foreign trust is governed by the applicable law, as designated by the settlor. If no applicable law has been designated, a trust is governed by the law with which it has the closest connection.

Generally speaking, trust assets are not affected by succession and forced heirship rules. It is possible, however, that the settlement of assets into a trust is regarded as a gift that infringes forced heirship entitlements. This could result in a claim of a forced heir to the trust assets. Under the Convention, a trust may not need to be recognised if it harms forced heirship entitlements.

Since 2010, the Dutch laws on income tax and inheritance and gift tax regulate the tax treatment of trusts and trust-like entities. A private foundation, Stiftung or Treuhand is considered an equivalent structure to a trust.

In fact, a trust is treated as tax-transparent. For tax purposes, the assets of a trust are attributed to the settlor and income taxes are levied from the settlor (or his or her heirs after death). Therefore, assets can be placed into a trust free of taxes, as the assets are still attributed to the settlor for tax purposes and therefore no taxable event has occurred.

Exceptions apply if, for example, the trust (or equivalent) is subject to an effective taxation of 10 per cent to be determined applying the relevant Dutch tax legislation or if a beneficiary has a fixed interest. In both instances attribution does not apply. In the latter case, the beneficiary is taxable for the fixed interest in Box 3 of the Dutch income tax.

In relation to payments made from a (foreign) trust to beneficiaries other than the settlor, gift tax is charged on payments when the settlor is (deemed) resident in the Netherlands. If the settlor was, upon his or her death, (deemed) tax resident in the Netherlands, the trust assets are taxed with inheritance tax.


The Netherlands is home to many HNWIs and is seen as a jurisdiction of choice by many others. Taxation is in this respect only part of the equation. The Netherlands arguably has one of the most developed tax systems in the world, which on the one hand offers a beneficial tax treatment for some, for example entrepreneurs and expatriates, while on the other hand limiting the tax planning opportunities for others. Bearing this in mind cross-border tax planning is becoming increasingly important. Not only in order to optimise the HNWI’s tax position, but also to avoid double taxation in a setting where jurisdictions anxiously attempt to preserve their tax claims when the individual moves abroad (e.g., through a protective tax assessment or source taxation).

In tax planning, HNWIs nowadays tend to primarily seek comfort and are becoming more and more risk-averse. Tax savings are still an important consideration, but it is no longer a race to the bottom. The focus is shifting to other key aspects of preserving family wealth, such as family governance. In addition, privacy is an important consideration, resulting in a desire to set up corporate structures in such manner that the dimensions of the family wealth cannot be deduced from public registers. The modern and flexible Dutch legal system offers excellent tools to achieve both goals.


1 Dirk-Jan Maasland is a deputy civil law notary, Frank Deurvorst is a tax adviser and attorney at law and Jules de Beer is a tax adviser at Bluelyn.

2 Including, under certain circumstances, options on shares, profit rights and economic ownership.

3 2016.

4 Half of the cash value of pension rights derived by a partner from the death of the deceased is deducted from this amount.