An Expat's Guide to Transfer Tax in the Netherlands

So you’ve navigated the pitfalls of the market and found your Dutch dream home! Congratulations! You have many years of happy, gezellig living ahead of you. But before you get carried away with plans for a housewarming, there’s one more thing to contend with.

Like most countries, the Netherlands charges a property transfer tax. Expats from places like the US or Ireland might not initially think that’s a huge deal. But the Netherlands has a higher potential rate than those places. Internationals need to plan for paying transfers as part of their acquisition.

At a time when so much of your life is up in the air anyway, this is an extra headache you could do without. Luckily, we at Expat Republic have a handy guide for dealing with transfer tax – and how you could even be exempt from it.

What is Transfer Tax in the Netherlands?

Tax laws in a new country are complex. Internationals contend with local and national rates they might not encounter back home. Take care here. Don’t confuse the transfer tax with real estate levies by your local municipality. For example, it is not related to yearly property and sewage taxes in the area.

Property transfer tax is a national levy on the passing of title to property between owners. You pay transfer tax (overdrachtsbelasting) for two main reasons in relation to housing.

You are becoming the owner of immovable property, like a residential building. This includes the land the building is on and other attached buildings, such as a garage.
You are buying the rights to immovable property such as a leasehold. This is where you own a property but not the land or building it is in. For example, you are a leaseholder if you buy an apartment in a larger complex.

The Going Rate

For housing, the rate you pay can differ on several fronts. You should keep this in mind throughout your acquisition.

Buying to let. You are liable to pay the rate for commercial property, which is 10.4%.
Buying for long-term residency. Until 2021, if the property could function as a private dwelling, it was eligible for a lower 2% transfer tax rate. But that has since changed. To qualify for that rate now, you must show you intend to live in the property on a long-term basis.
Buying for short-term residency. If you are not buying a long-term home, tax authorities treat it like a commercial investment. The transfer tax rate is then 10.4%.
Buying secondary buildings. If you buy other buildings as part of the property but at a different time from the house, the rate is 10.4%. For example, if you buy a leasehold in an apartment, then buy a spot in its collective garage later.

How to Pay the Transfer Tax in the Netherlands

There are two ways of paying property transfer tax. These depend on the nature of your property acquisition and if you use a third party to finalize it.

Via a notary. This should be straightforward enough. A notary is a person authorized to perform certain legal formalities. They can certify documents, including house deeds, for use in other jurisdictions. Most often, a notary arranges the ownership transfer of your home after you sign a property deed. This includes filing the transfer tax return and payment of the due tax to authorities.
Self-filed. This is a little trickier. If you do not have a notary deed drawn up, you must tell the Dutch tax office (Belastingdienst) yourself. Following the acquisition, you have one month to file and pay a transfer tax return. You can request the relevant tax return form from the Dutch Tax Information Line.

Exemptions

A famous quote often attributed to Benjamin Franklin suggests, “In this world, nothing can be said to be certain except death and taxes.” The former is never going to come with loopholes. But we do have some good news relating to the latter. There are situations where you could be exempt from property transfer tax.

These include:

When someone transfers a business to a relative.
When they transfer immovable property into a private limited company.
If they qualify for exemption as a ‘starter’ in the housing market.

For expats arriving in the country, the first two are less applicable. Arriving in a new country, you may not have family here. And having a plc waiting for you is every bit as unlikely.

What might be more helpful is the ‘starter’ rule. This could see you exempt from transfer tax in the Netherlands on four conditions.

The four conditions for the starter rule

A residential home. As mentioned before, you must be buying a residential home. A property you will live in yourself for the long term.
Specified ages. You need to be at least 18 years old but younger than 35 years old when you buy the property. The rule is in place to support young, first-time buyers.
Defined timeframe. ‘When you buy the property’ is the moment in which you sign the notarial deed of transfer. If that occurs before you turn 18 or after you turn 35, you do not qualify.
Market value. The property market value must not exceed €510,000 as of early 2024 (it was €440,000 before that). This is the ‘fair value’ of the property, its maximal value on the open market. That price includes the house’s extra appendages: gardens, sheds, garages, and so on. And while it is often the price as stated in the deed of transfer, it can vary. For example, if a family member sells you the property at a reduced rate.

Opportunities Ahead

If you’re a younger expat, the rise of the threshold at the start of 2024 represents a key opportunity. The heightened threshold in transfer tax in the Netherlands can hedge against rising house prices. And that opens up all kinds of other benefits by moving out of rented accommodation. For example, mortgages have tax benefits, which rent doesn’t. Interest on annuity or linear mortgages in the Netherlands is tax deductible. Rebates from the Dutch tax office could help your money go further in lean times.

Even so, with the Dutch housing market continuing to see prices rise, investing at any stage of life is a good idea. For more information on the benefits of buying a house in the Netherlands, check out our handy guide.

As with any investment, though, you need to be clear on what you’re getting into. Homeownership comes with risks, as well as rewards, compared to renting. Again, you can get the full run-down from Expat Republic here. And whatever you decide, keep an eye on our extensive Housing section. It also features webinars and seminars catering to all your accommodation needs.