Wealth tax Netherlands - The TaxSavers (2024)

FAQs

How is the wealth tax calculated in the Netherlands? ›

The Dutch tax authorities use a different fictitious return for each asset component. You pay 32% wealth tax on the total notional return in 2023. From 2024 this will be 36%. In the table below you can see the fictitious returns that the Tax Authorities calculate.

Arguments Made in Favor of a Wealth Tax

Proponents of the wealth tax argue that it could help address the United States' rising wealth and income inequality while also generating revenues.

Those who argue that the United States should create a wealth tax argue that doing so will ensure that top-earners pay their “fair share” in taxes. They claim that multi-millionaires and billionaires find tax loopholes that allow them to pay a lower tax rate than other Americans, which they say is economically unfair.

You pay tax on income from your wealth, including savings, shares and a second home. It is calculated as the value of all assets (such as savings and shares) minus any debts. Part of your wealth is not taxable: the capital yield tax allowance. You pay 30% tax on your taxable income from savings and investments.

However this varies from country to country, the highest would be that of Luxembourg where it accounted for 7.18% of total tax revenue in 2018, the lowest would be Germany where it accounted for 0.03% of total tax revenue in 2018. Estimates for a wealth tax's potential revenue in the United States vary.

The tax revenue funds public spending in the Netherlands, including healthcare, education, and social security benefits. In 2024, the Dutch government is projected to raise around €402.9 billion in taxes. Most of this will come from income tax, social security contributions, and Value Added Tax (VAT).

Wealth taxes are also bad for the economy overall. Even owners of successful firms might not have enough cash to pay the tax on the value of their companies in any given year, especially if the tax is as much as 20% on unrealized gains, and may need to dilute their ownership.

A wealth tax is difficult to administer, tends to encourage tax evasion, and has the potential to drive the wealthy away from countries that enforce it. These caveats, coupled with debates about how to implement it fairly, perhaps explain why so few countries in the world impose such a tax on their residents.

The revenue collected will fall short of expectations. Worse, the tax will damage the economy. Today's ablest entrepreneurs will be forced to devote their time to defending their fortunes against the predation by the one or more states that lay claim to their wealth.

A wealth tax has all the existing bad features of the current income tax — complex, expensive to administer, costly to comply with, subject to manipulation and avoidance by those with the most resources and badly distorting of economic activity and capital formation.

Does a wealth tax violate the Constitution? ›

rule into a fundamental limitation to Congress's taxing power. Under this interpretation, the Constitution allows Congress to enact an unapportioned wealth tax but would still require apportionment for some other forms of taxes, such as a tax on real estate alone.

Effectively, the Netherlands is a conduit country that helps to funnel profits from high-tax countries to tax havens. Particularly the Dutch Special Purpose Entities attract income, often as interest and royalty payments, and pass it on, effectively untaxed, to tax havens.

In the Netherlands, you pay inheritance tax on any inheritance you receive. Inheritance consists of the estate (assets and liabilities) left by a deceased person, but there are some exceptions. Therefore, it is good to know the basics of Dutch inheritance law and respective taxes to avoid any surprises.

This rule is applied for a maximum duration of 60 months / five years but will decrease progressively. In the first 20 months, eligible individuals will continue to receive 30% of their gross salary tax free. In the following 20 months, the tax-free allowance will be reduced to 20%.

The top 10% wealthiest households own roughly two thirds of total net wealth (Graph 3), with the top 1% owning more than 25% in 2017. According to the OECD Wealth Distribution Database, the Netherlands has the second highest wealth inequality after the United States (OECD 2018).

While the United States currently uses a federal income tax system rather than a wealth tax, most places around the country do have property taxes — which is a form of a wealth tax — but those are collected by state and local governments.

The 30% reimbursem*nt ruling (also known as the 30% facility) is a tax advantage for highly skilled migrants moving to the Netherlands for a specific employment role. When the necessary conditions are met, the employer can grant a tax-free allowance equivalent to 30% of the gross salary subject to Dutch payroll tax.

Again according to the OECD, the country with the highest national income tax rate is the Netherlands at 52 percent, more than 12 percentage points higher than the U.S. top federal individual income rate of 39.6 percent.