NETHERLANDS Trends and Developments Contributed by: Frans Sonneveldt, Mike Vrijmoed and Bianca de Kroon, Forvis Mazars NV
future legislative changes are often preferred over structures that merely achieve the lowest effective tax burden under current legislation. A similar trend can be observed in Box 2. Higher tax rates and anti-deferral measures have increased the effective tax burden for many entrepreneur-share - holders. The Excessive Borrowing Act continues to limit shareholders’ ability to extract economic value through intra-group financing arrangements. At the same time, charitable planning through personal structures has regained importance following changes in the treatment of corporate donations. Despite the increasing combined corporate income tax rates and box 2-rates, many high net worth individuals and their advisors opt to structure wealth through companies. Gift and Inheritance Tax: Refinement The applicability of Dutch gift and inheritance tax is determined by the donor’s or the deceased’s place of residence. These taxes are levied on the total value of assets acquired through gift or inheritance from an individual who was a resident of the Netherlands at the time of the gift or death. In this context, the recipi - ent is considered the taxpayer. For Dutch tax law purposes, residency is determined based on all relevant facts and circumstances. How - ever, certain individuals are deemed residents of the Netherlands for gift and inheritance tax purposes. Firstly, a Dutch national who has been residing in the Netherlands and either dies or makes a gift within ten years of departing the country. There are discussions about further broadening this scope for Dutch nation - als in certain situations. Secondly, any person who has resided in the Netherlands and makes a gift within one year of leaving the country is deemed to live in the Netherlands at the time of the gift and the gift is therefore taxable. Certain exemptions may apply, depending on the rela - tionship between the donor/deceased and the donee/ beneficiary and on the object of the gift/inheritance. Inheritances and gifts acquired by qualifying charities ( algemeen nut beogende instellingen , ANBI’s) are fully exempted.
For family businesses, the business succession facil - ity is of great importance. The facility combines a tax deferral on income tax and an exemption from gift and inheritance tax. Upon request and if certain conditions are met, business assets up to EUR1,543,500 are fully exempt from gift and inheritance tax and the effective tax rate for business assets exceeding EUR1,543,500 is 5% in 2026 instead of 20% (parents/children). A conditional deferral of payment can be obtained for the remaining taxes. Some of the other changes: • from 1 January 2024, real estate rented to third parties is excluded from the facility; • a minimum age of 21 has been introduced for both the income tax facility and the gift and inheritance tax exemption; • the continuation period for the inheritance tax exemption has been reduced from five to three years from 1 January 2025; and • from 1 January 2026: (a) restructurings during the continuation period should be less restricted; and (b) the holding-period requirement for the inherit - ance tax exemption will be gradually extended for entrepreneurs who establish a business or acquire an interest in a business more than two years after reaching the State Pension age, increasing by six months for each additional year thereafter. These adjustments are intended to better align the schemes with business succession practices. They offer more flexibility for families in planning business transfers, but require a careful approach to make the most of the facilities. Also, the legislator will minimise misuse of this facility as much as possible. International mobility International mobility continues to be one of the defining features of the private wealth market. Dutch resident families regularly consider relocating to juris - dictions such as Switzerland, Italy, Monaco, Portugal and the USA. At the same time, foreign entrepreneurs and investors continue to view the Netherlands as an attractive location for managing international busi - nesses and investments. The option for partial for -
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