Bert van Essen, Author at XPAT.NL

Financial Considerations Surrounding Finding a Home

One of the most important issues involved with buying a house – in fact without these you could not buy one – is finances.

You either have to be able to rent a home, buy it, or finance it and there are certain tax issues to be taken into account, as well.

Renting a Home

Renting a house in the Netherlands is expensive, especially if you need to rent in the western part of the country or close to international schools. There is no tax facility for renting a house whatsoever. With any luck, your employer will choose to compensate you for the housing costs. But in that case, be aware of the tax consequences, see the following paragraphs:

Free Housing Taxable

If you are a resident of the Netherlands (resident taxpayer or partial non-resident taxpayer), any compensation for housing provided by your employer constitutes taxable income. Whether you will have to pay the tax yourself depends on your contract; is it net or gross?

If you are a ‘real’ non-resident taxpayer, you may benefit from an exemption during a period of two years, under certain conditions.

Special Treatment Under 30%-Ruling

Residents

If you are a resident of the Netherlands (also if you are a partial non-resident taxpayer), in principle the full benefit resulting from the fact that your employer is providing you with housing is a taxable benefit.

If you benefit from the 30%-ruling, special rules apply. A part of the rent may be qualified as an ‘extraterritorial expense’. That part of the rent can be compensated free of tax (thus reducing the amount of the fixed 30%-allowance!)

Non-Residents

If you are a non-resident of the Netherlands, any compensation of double housing expenses is regarded as compensation for extraterritorial expenses: tax-free, but resulting in a reduction of the 30%-allowance.

Buying a Home – Taking Out a Mortgage

If you have decided to buy a house, you are faced with the question of what will be the most appropriate type of mortgage. The recommended mortgage depends on your special tax position and whether you are likely to move again. In these paragraphs we provide a brief explanation of the relevant types of mortgages available in the Netherlands – whereby we point out that if you take out a new mortgage, you will only be allowed to deduct your mortgage interest from your taxable income if you take out a mortgage with straight line redemption or an annuity mortgage. We will also give a few recommendations as to which types are best suited to your specific tax status.

Usually a mortgage has a duration of 30 years. Here, we will discuss the three principal types of mortgages and give a brief summary of the mortgages that can no longer be newly taken out.

Mortgage With Straight Line Redemption

The most important characteristic of this mortgage is that the loan is repaid yearly in equal installments (i.e. straight line). As a result of the repayments, the amount of interest payable diminishes every year. Since the interest expenditure decreases steadily, this mortgage is best suited for borrowers who cannot fully benefit from the tax relief on the interest payments.

Annuity Mortgage

The chief characteristic of an annuity mortgage is that the yearly total of redemption and interest payments remains the same throughout its duration. Although the total remains the same, the mix of interest and redemption of course changes over the years. Owing to this balance between interest and redemption, the redemption is not on a straight line basis.

In the first years, the amount paid by the borrower consists mainly of interest payments. Hence there is a large tax relief in the initial years. Consequently, an annuity mortgage is ideal for people who wish to have a large tax relief in the early years and expect to have a sufficiently high income in later years to be able to make the redemption payments that do not qualify for tax relief.

Nationale Hypotheekgarantie (NHG)

With a Nationale Hypotheek Garantie (National Mortgage Guarantee), the Stichting Waarborgfonds Eigen Woningen (Homeowners’ Guarantee Fund) guarantees payment of the mortgage. In return for this you pay the NHG a one-time fee (0.7% for 2020). If you cannot meet your payments, NHG pays them for you – and becomes your creditor for this amount. The advantage to this system for the mortgage provider is that they are guaranteed payment, in return for which they offer a reduction in mortgage interest of anywhere between 0.3 and 0.7% (in some cases, even 0.9%).

An NHG mortgage loan can be taken out to a maximum of € 320,000, or 6% more if you take special measures to reduce energy expenses.

Other Mortgages

With the following mortgage types you will no longer be allowed to deduct the related mortgage interest from your taxable income. For this reason, they are basically no longer offered. If you already have one of these mortgages and lower your mortgage interest, or change mortgage providers, you can keep it – including the deduction. These mortgages are:

Endowment mortgage: No repayments are made during the term of the mortgage. Instead, the whole loan is redeemed in a single lump sum at the end of the term.

Special endowment mortgage (Spaarhypotheek): This is a variation on the Endowment Mortgage. It too provides for a lump-sum redemption of the mortgage loan at the end of the term, with an interest rate on the loan equal to the gross rate of return on the investment under the endowment policy.

Banksparen mortgage (SEW): A special savings or investment account is linked to the mortgage, and the savings must be used for paying off the mortgage.

Interest-only mortgage: No redemptions take place during the term of the mortgage. It is usually part of an ordinary Endowment Mortgage.

Dutch Tax Issues For Expatriates

In essence, a mortgage is a tax-driven product. Hence, to determine the most appropriate type of mortgage for you, it is necessary to first consider your tax status. In the Netherlands, the two major tax issues with which an expatriate is faced are the 30%-ruling and the choice between resident (binnenlands belastingplichtige) and partial non-resident tax status (partieel buitenlands belastingplichtige).

The 30%-Ruling

Simply put, the 30%-ruling allows an employer to grant an employee a tax-free allowance of up to 30% of his total remuneration to cover expenses related to his placement abroad that he would not have had had he not been sent abroad – such as, for instance, housing-related expenses. Your total gross remuneration is reduced by 30% and in return you receive a 30% tax-free allowance. The result of the 30%-ruling is a higher net salary. When applying for the 30%-ruling, the employee may choose to have resident or partial non-resident tax status, see the following paragraph.

Partial Non-Resident Tax Status

Expatriates who are partial non-residents owe taxes on income derived from certain sources specifically stated in the Dutch income tax legislation.

Partial non-residents are also entitled to tax deductions insofar as they relate to specific income sources, alimony payments and mortgage interest payments for their principal place of residence.

A final important observation regarding partial non-residents is that, contrary to resident taxpayers, their net wealth (i.e. assets minus liabilities, taxed in box 3, over a ‘fictitious’ yield, at 30%) is not taxed here. Hence, the ideal mortgage for a partial non-resident takes advantage of the fact that the interest payments on the mortgage are tax-deductible and that the investment income is not taxed. The corresponding mortgage is discussed further on.

Resident Tax Status

Unless an expatriate chooses to be treated as a partial non-resident taxpayer, he is viewed as a resident for Dutch tax purposes. He is then taxed just as any ordinary Dutch citizen. Resident taxpayers (as well as partial non-resident taxpayers) are only entitled to mortgage interest relief on the principal place of residence. The value of every other residence is subject to wealth tax (over, in principle, the fair market value of the property minus the mortgage loan – over a fictitious yield, at a rate of 30%). Whether this also applies to a house abroad depends on whether this is dealt with in a tax treaty between the Netherlands and the country in which the house is situated.

Expatriates: What Mortgages Are Appropriate?

The recommended mortgage depends on your special tax position and whether you are likely to move again.

The ordinary and the Special Endowment Mortgage are not appropriate for a number of reasons. This has to do with the likely duration of your stay. If you leave within, say, seven years and upon leaving decide to surrender the endowment policy, you may receive back only the total of premiums paid. The reason why there will be hardly any investment return is that insurance companies write off all policy costs during the first years of the insurance. Hence, if you surrender within this write-off period, the investment return will only be marginal.

Most expats opt to pay off the mortgage amount (either through an annuity or straight line mortgage), or to accrue the related amount on a savings account – on a special ‘Own Home Bank Savings Account’, or SEW, see earlier on – and sometimes they opt for an investment mortgage (investment account linked to a mortgage). The redemption-free mortgage is also a reasonably popular option. Generally speaking, mortgages that are linked to insurances are no longer taken out, especially not by expats.

You Are a Resident Taxpayer

If you are benefiting from the 30%-ruling, this will mean that you have a high net salary. This will enable you to make repayments. At the same time, income from wealth is tax-free. For that reason, barring special circumstances, repaying the loan will usually not be tax-efficient.

You Are a Partial Non-Resident Taxpayer

In this case you need to find a mortgage which allows you to benefit from the tax-deductibility of the interest payments while at the same time allowing you to benefit from the tax-exempt investment income (since there is no ‘wealth / box 3’ tax for partial non-resident taxpayers). A special type of mortgage can be found, allowing you to fully benefit from these advantages: a redemption-free mortgage combined with a compulsory savings scheme. Since there are no repayments, you benefit to the full from the tax-deductibility of the interest payments.

And since the investment income on the savings scheme is not taxed, you can use this to generate capital with which all or part of the mortgage can be repaid once your partial non-resident tax status ceases to apply. Because the savings are not taxed, it is better to save than to make repayments: the after-tax effect of the repayments will usually be lower than the tax-free effect of the savings. It follows that it is advisable to borrow as much as possible provided that it can be demonstrated that the funds are used for the acquisition of immovable property in the Netherlands. Finally, as partial non-resident taxpayers benefit from the 30%-ruling; here too this allows you to make savings.

U.S. Taxpayers

Special provisions apply to U.S. taxpayers; these are not covered here, but can be discussed with your tax advisor.

Economical, Not Stingy

By Chris Smit

Most of the work I do consists of giving 1 or 2-day workshops and giving lectures (anything between 20 minutes to 2 hours, I consider a lecture) about cultural differences. And to ‘ease’ the delegates into to the subject of culture, I start talking about stereotypes; which are, of course, an incomplete representation of reality or a society. Sometimes they are true and sometimes they’re not true. Sometimes they’re in between.

Of course, I ask about what stereotypes people hold about the Dutch as well. Here are some: bikes, orange, marijuana (almost always immediately followed by the Red Light district in Amsterdam), cheese, and many more. And also always the word stingy or cheap (sometimes reluctantly or quietly, because they are afraid to insult me. Trust me, you can’t insult a Dutchman. We’ll insult you, though, or at least be rude to you, albeit unwillingly).

And so the word is out; the Dutch are stingy. But are they?

Are the Dutch Stingy?

When the people in my workshops tell me the Dutch are stingy, I tell them that it’s is not true. Instead, I tell my audience that the Dutch are… well, economical… Which almost always makes them laugh. But listen to my defense:

The Dutch, per head of capita, give more to good causes (such as a relief fund aimed at helping the victims of a hurricane disaster) than any other country in the world. Compared to our neighbors in the south, the Dutch, on average, give about three times as much as the Belgians. Using another source on this topic, the World Giving Index, the Dutch rank a respectable 13th place (source: https://en.wikipedia.org/wiki/World_Giving_Index). Germany holds the 21st place, Belgium the 32nd place, and France holds position number …81.

For this poll, the following questions were asked: “How often have you…”

helped a stranger, or someone you didn’t know who needed help?
donated money to a charity?
volunteered your time to an organization?

The Dutch, per head of capita, give more to good causes than any other country in the world

Shops

Furthermore, the Dutch don’t have cheap shops either. There are many Dutch shops, that can also be found in Belgium, Germany, and France, that are economical, but not cheap. Here are some examples:

C&A (sells clothes)
Zeeman (sells clothes and assorted household items)
Kruidvat (sells anything from deodorant, candy, to protein powder)
HEMA (do you know what this abbreviation stands for? Hollandse Eenheidsprijzen Maatschappij, roughly translated: Single Price Company)
Blokker (sells random household stuff; but never what I need…)
Action (one of the recently most successful retailers from the Netherlands; they sell anything from light bulbs to towels to protein powder as well).

…To name a few.

These stores sell things that are reasonably priced and of reasonable quality. Which is different from selling cheap stuff.

From a Cultural Perspective

From a cultural perspective you could argue that these types of stores thrive here due to the Calvinistic nature or culture of the Dutch – who don’t do things that are over the top, work to live instead of the other way around, and believe in quality of life over quantity.

The Scandinavians even have a virtual law for this: “The law of John”. Whereby John shouldn’t think he’s better, more, richer, or above anyone else. The Dutch don’t use this saying, but do act accordingly. Which explains their love for economic shops mentioned before; why spend more when you can buy something of reasonable quality, for a good price?

Some Related Comparisons

If you look at the countries that surround us, Belgium and Germany, you will notice that overall, the houses in the Netherlands tend to be smaller. As well as the cars we drive; after all, a small car will get you where you want to go as well, so you don’t need a big car…

From a cultural perspective, the Dutch follow the same trend as the Scandinavian countries. One good example of an international success is IKEA. Reasonable to good quality stuff (who has an IKEA-free house?), for a reasonable price.

So, be honest; why pay more if you don’t have to?

ABOUT THE AUTHOR

Want to better understand the Dutch and learn how to work with them? Get in touch with Chris Smit at culturematters.com or send an email to chris.smit@culturematters.com.

How to Meet Locals in Amsterdam

Being far from home in a foreign city or country can be one of the hardest things that a person can face. Imagine having no friends to talk to? However, if you are new to Amsterdam, there are several ways in which you can meet the locals.

Many people who go to visit foreign cities and countries usually have the tendency of keeping to themselves. I have some news for you though! Staying holed up in your accommodation in Amsterdam all day long will only hinder you from experiencing what the city has to offer.

Get out, meet some locals and make a few friends and you will be guaranteed to have a much enjoyable stay in Amsterdam. You might be wondering how to go about meeting the locals, right?

Read on as we discuss some of the ways in which this can be achievable.

Join a Local/International Organization

You will find that Amsterdam has a lot of these organizations that you can join. Many of these organizations are formed based on interests.

You can find some that interest you, and you will be surprised to meet many people who share your passion.

Do not be afraid to interact and to know more people

Be Social

There are many global communities for expats whose main aim is to help you feel at home regardless of where you are.

Joining groups such as Internations, Meetup and other expat forums and Facebook groups is also a nice way to meet locals and other foreigners living in Amsterdam.

Party With a Local

Amsterdam locals are hugely known for their free-spiritedness. If you are the quiet type that likes keeping to himself, maybe it is time to loosen up and discover the beauty of partying with a stranger.

Take advantage of the friendly nature of the locals and do not turn down an invitation to go partying. Who knows, that stranger can turn out to be the friend that you need.

Learn Dutch

There are some regular language classes that you can take up to help yourself settle in. Having basic knowledge of the local language also helps you navigate easily when it comes to things such as greeting the locals, ordering coffee and even your shopping sprees are made much easier and enjoyable.

Making an effort to learn the local language will also help you to communicate more easily with the locals hence making new friends.

Enjoy The City Life

Considering that Amsterdam is one of the cities that bustles with life, going for walks along the city streets is also another way to meet with the locals.

Staying silent and clamming yourself up will not help you to make new friends. Therefore, make sure to strike conversations as you take your walks around the city.

Do not be afraid to interact and to know more people, this way, you will end up making more friends.

Conclusion

Whatever reasons you may have for visiting Amsterdam, just do not stay holed up in your house.

Go out, meet locals, keeping in mind that the more people you meet and the more friends you make, will make your visit to Amsterdam even more exciting and unforgettable.

Mortgage, Liability and Marriage

You must be wondering: what’s the connection between the words in the title? I can assure you; more than you would expect. Allow me to explain.

Home – Mortgage

When you buy a house without having the amount of the purchase price, expenses and taxes in your bank account, you will need to arrange a loan with a bank. And because the bank does not necessarily have confidence in the fact that you will be able to repay your loan, they will ask for some form of surety – being a mortgage right on the house you will be buying. Furthermore, the bank will first thoroughly check your personal situation, such as: how much income you earn, whether you are married, what your career perspectives are, whether there are any other financial obligations, etc. Plus you will need a residence permit and a BSN (burgerservicenummer, or citizen service number – for tax purposes). If the bank decides to give you the green light, then you will be issued a mortgage loan. The civil law notary will draw up a mortgage deed, which will be signed at the same time as the transfer deed of the home.

Until now, nothing new.

What If You Are Married?

Often, married couples decide to buy a house together and to share the responsibility for the repayment of the mortgage. Their position, when it comes to ‘property’ and ‘debt’, is equal.

When one of the partners pays off more of the debt or invests more in the home, then this should be put in writing. After all, if you are both 50% owners, then you should contribute 50% to the expenses. If you don’t share the expenses in this way, then one partner ends up with a debt towards the other – which should be settled once the home is sold or the relationship is terminated. Particularly in the case of divorce, this type of situation can lead to conflict. The more you put in writing, the more you avoid this type of situation.

It is clear that if the home is put in the name of only one of the partners, while they are both liable for the mortgage debt, this can lead to a skewed situation. The ‘ownership’ is not shared, but the ‘debt’ is. More often than not, this is not what the partners had in mind.

In this context, I would like to point out that most banks require both partners to be liable for the debt. Should you want to arrange this differently, then be sure to bring this to the table as early as possible in the process. Make sure that the bank will agree to having the mortgage debt solely in the name of the person buying the home. This is of particular relevance if there is no community property between the partners.

Most banks require that both partners are liable for the mortgage debt

Community Property or Not?

If you are married in community of property then, consequently, both the home and the mortgage debt could become part of the community, regardless of whether they are in name of one or both of the partners.

Until January 1, 2018, general community property was the norm when it came to the Dutch matrimonial property regime. As of that date, to all marriages entered into after that date, a regime of limited community property applies.

This can be avoided by entering into a prenuptial agreement. In order to ensure that third parties (such as the bank issuing the mortgage) are aware of this prenup, and therefore of the fact that there is no community of property, this prenup should be registered with the court.

Foreign Law

Non-Dutch expats who live abroad, get married abroad and then move to the Netherlands (with or without a family), are – in most cases – not automatically covered by Dutch matrimonial property law. But – then which matrimonial property law applies? Does the foreign law also contain community of property or do the spouses retain their own property after marriage? Did the spouses draw up a prenup abroad? And how do third parties in the Netherlands – take, again, the bank issuing the mortgage – know what has been arranged pursuant to this foreign law?

Statement

Recently, in our practice, we have been receiving requests to issue a statement declaring which matrimonial property regime applies to the expat who is requesting a mortgage in the Netherlands. This is not a ‘copy-and-paste’ type of statement – to the contrary. Determining which law applies is often a complicated process, meaning that it can be quite time-consuming and costly. And once it has been determined which law this is, the Dutch civil law notary cannot make any statements regarding its contents. Advice will have to be sought abroad. In short, it takes time and money to provide the bank with clarity on the matrimonial property regime.

Something which you may not have once you initiate the mortgage negotiations…

Determining which law applies to your matrimonial property is often a complicated process, meaning that it can be quite time-consuming and costly

Advice

Are you married and planning on buying a home in the Netherlands and requesting a mortgage? Then be sure to prepare for questions regarding your matrimonial property regime. Make sure you know which law and which regime apply.

How do you do this? By choosing an applicable law when drawing up a prenup. You can do this once you are married, but even better would be to do this before getting married. This will help you avoid a lot of problems.

In the Netherlands, the civil law notary draws up the prenup. A civil law notary who is specialized in international matrimonial property law can give you further advice on the matter.

Utilities in the Netherlands

Don’t you love those cozy winter evenings, when you’ve taken a warm shower, made yourself a hot cup of tea, turned on the light and crawled into your comfy bed in a nice, warm bedroom? None of that would be possible without the services of a utility company.

So, how do you go about arranging your utilities in this country?

You start out by visiting a site such as www.gaslicht.com or www.independer.nl – which offer an independent overview of all suppliers – or www.energievergelijken.nl/en, which offers the same information in English. You type in your postal code, your house number and select your current supplier. This list contains all the suppliers in the Netherlands as well as the options onbekend (which boils down to ‘don’t know’), geen i.v.m. verhuizing (‘just moved, don’t have one yet’) and verschillend voor gas en stroom (‘different one for gas and electricity’). At the top of the list of suppliers are the three biggest companies of the moment.

Next, you can fill in your annual use, or – as you probably don’t know this yet, as you’ve just moved here – the number of people in your household. You can also indicate whether your house has solar panels. This will give you an approximation of your use; only a year later will you of course know the actual numbers.

On the next page, you will find an overview of the various offers, plus the option of selecting 100%-sustainable (‘green’), 50% sustainable or 0% sustainable energy, the duration of the contract and whether you want fixed or variable rates.

Based on your (actual or estimated consumption), you will find a list of offers of monthly (or annual) amounts that you will pay the various companies for the utilities they supply. A number of issues to look at when comparing these offers are

The per-unit cost of gas
The per-unit cost of electricity
The delivery (administrative) costs of each of these; a low per-unit cost may be neutralized by high delivery costs
Any introductory (‘welcome’) rebates the company may have to attract new customers.

On the page with the overview, you can select three companies in order to compare their prices. Here you can take a closer look at the items mentioned above: per-unit price, delivery costs, and welcome rebate.
At the end of the year, you will receive an overview of your actual use. If you exceeded the calculated use, you will owe the additional amount, if you stayed below it, you will receive a refund. The company will also determine what you will owe per month over the next year, which they will base in part on your past use and in part on expected price developments (unless you’ve opted for a fixed rate). However, you are not held to this amount; online – once you have created an account – you can adjust this monthly amount upwards or downwards. Of course, adjusting it downwards creates the risks of owing the excess amount – should there be one – in one go at the end of the contractual year.

Tip
Get a quote for your utilities from Ampeer in a few easy steps

Keep in mind that some of us like to keep it toasty and warm all day long, and throughout the house. Not so the Dutch. Many of them sleep with the windows open at night (even in the winter), and turn off the radiators in certain rooms, or during certain hours. This means that the monthly price quoted for a four-person household will probably be lower than what you will personally end up using. Consequently, you might want to raise your monthly price, or be psychologically prepared to pay a substantial difference at the end of the contractual year.

Don’t forget to request a ‘smart meter’ (slimme meter) to be installed in your house. This will allow you to set up your own schedule, depending on your family routine. It will also allow you to monitor your daily use of both gas and electricity, as well as – if you really have time to spare – the amount of electricity certain gadgets use (an electric water boiler for your tea generates an impressive spike!). The services offered by the smart meter depend on the utilities company and it is worthwhile to know that if you switch to a different utilities company, you might no longer be able to make use of all its features (programming will always be possible).

As for the contract period; you can opt for a one-year, two-year, three-year, four-year or five-year contract – the longer the duration, the lower the price. This makes some people nervous; they would rather pay a little more and be able to switch after one year. Maybe you, being new to the country, would like to take this route too. If you do opt for, say, a three-year contract, then you will owe a fine if you make an early switch (for instance, more than three months before the end of the contract). Often, your new supplier will offer to pay this fine for you, but be careful about making a switch after the winter. The monthly amount you pay is an average, meant to cover the more expensive winter months, and the cheaper summer months. If you switch in March and are more or less halfway your contractual year, then your monthly payments will not cover your actual expenses and you could find yourself paying several hundreds of euros more – which your new supplier will not cover. A little tip: if you switch suppliers every year, this will allow you to enjoy the ‘welcome’ rebate every year too.

Don’t forget to request a ‘smart meter’ (slimme meter) to be installed in your house

You can opt for fixed rates and variable rates. It might seem attractive to opt for variable rates (they change every January 1 and July 1) if you are confident prices will go down. Nonetheless, according to the consumer site PriceWise (www.pricewise.nl) it is wiser to go with fixed anyway, as often the prices are actually cheaper, while – if the price is continuously rising – you are locked into this contract for its duration, with the accompanying obligation to go with the rising prices.

If you want to make sure that you contribute to sustainability, the Dutch consumers’ association (Consumentenbond) has looked into the various companies offering ‘green’ energy. They evaluate the companies based on the sustainability of the produced or purchased utilities, how the utilities are delivered to the consumers, and their investment policies. The use of fossil fuels, gas and nuclear energy is ‘penalized’, while the use of wind energy, solar energy, and (certain types of) biomass is rewarded, as is the (direct or indirect) investment in sustainable production capacities. The most recent overview can be found on www.consumentenbond.nl/energie-vergelijken/

Useful links
www.gaslicht.com
www.independer.nl
www.energievergelijken.nl/en
www.pricewise.nl
www.consumentenbond.nl
www.ampeer.nl

Estate Planning: Is That What We’re Working For Now?

By Yolanda Bokhorst

Don’t we all want the best for our children? We provide them with a safe and sheltered home, we raise them well, make sure they get an education and try to give them the tools to find their way through an increasingly complex world.

What role does money play in all of this? The question that arises is of course how we can best transfer our assets to our children – the following generation(s).

Dutch Taxes

Many people think that this largely involves trying to reduce taxes. Of course, taxes play a role, but opinions differ as to whether minimizing taxes should be the determining factor.

Be it as it may, when you live in the Netherlands, you deal with two types of taxes when you transfer property: gift tax and inheritance tax. Gift tax is owed by the recipient over any gifts made by a donor during their lifetime. Inheritance tax is due by the beneficiary over what they inherit upon the death of a person. The rates of these two taxes are the same. Both gift tax and inheritance tax have exemptions – these are not the same; you can find the rates and exemptions on www.belastingdienst.nl.

When determining whether taxes are due, the Netherlands applies the principle of domicile: if the donor or deceased lived in the Netherlands, Dutch inheritance and gift tax apply. If a home that is located in the Netherlands is gifted, transfer tax also applies, but when a home is inherited, it does not. When shares in a privately-owned company are gifted or inherited, then in some cases income tax is due. In short, when it comes to estate planning, there can be a maze of tax consequences.

Foreign Taxes

From an international perspective, taxes have not been harmonized, and personally I believe this will be hard to accomplish. The plain fact is that each country has its own tax rules. These various rules can apply when a non-Dutch person, who is living in the Netherlands, gifts something to their children or passes away here. This could give rise to double taxation, should the country of nationality levy taxes based on nationality while the Netherlands levies taxes based on domicile. In this case, it is up to tax treaties or unilateral regulations to make sure that double taxation is avoided – or at least limited as much as possible.

Estate Planning

The aim of estate planning is to limit the tax effects of the transfer of your assets to the next generation. The basic principle in the Netherlands is that the entire family profits most if the assets are split 50-50 among the parents first, after which they are passed on to the children in two equal parts. This allows everyone to make optimal use of the gift and inheritance tax exemptions and rates.

The next point to consider is whether the assets should be transferred before or after the death of the parents. Sometimes, it is a good idea to gift them and to accept the consequences of gift tax (at a lower rate), knowing that more taxes might be due if it is all inherited in one go.

Three Pillars

In short, there are three different areas in which matters must be arranged – all of which must be coordinated with each other:

– Matrimonial Property Law: a prenup can help you ensure that your assets are split 50-50 over both parents. When the first parent passes away, the first half goes to the children, when the second parent passes away, the second half does.

– A gifting plan: when and what do you gift your (grand)children? And how much should you hold on to for now, for yourself?

– The will: how do you ensure that, after your death, the assets go to the right persons?

The aim of estate planning is to limit the tax effects of the transfer of your assets to the next generation

No Trust

In Common Law countries, many people make use of a trust to arrange matters. This is not only often fiscally advantageous, but it is also an excellent way to manage the assets. This helps avoid that children, at a young age, have a say in what happens to the family assets. In the Netherlands, no one makes use of trusts. It is not fiscally attractive and therefore quickly becomes unappealing. Trusts set up abroad might be recognized in the Netherlands, but then they have to meet certain criteria. Which means that their fiscal consequences in the Netherlands remain unclear.

Limiting the Children’s Say

In the Netherlands, administrators are appointed in order to avoid that children (who are too young) have control over what they are gifted or what they inherit. A parent who gifts something can remain administrator until the child reaches a certain age. This way, the child cannot access the assets themself. Of course, the assets can be used for ‘wise’ things, but the person who decides whether this is the case is the administrator, and not the child.

In a will, you can also appoint an administrator , who will manage the assets your children inherit upon your death. Depending on the type of assets, there are other ways of limiting the say your children have over them. But this is something I can go into in more detail some other time.

Finally

Estate planning has to be tailor-made. It should take into account not only fiscal aspects, but also the way you want your assets managed within the family. A civil law notary, who is specialized in international inheritance law, can tell you more about this.

New Alimony Law as an Emancipation Tool for Women?

By Edith van Ruitenbeek

On the 21st of May 2019, the Dutch parliament voted to review the law for spousal alimony, with the aim of limiting the period during which spousal alimony is paid out. According to the majority in Dutch parliament, now that society has changed, the old law is no longer adequate.

The new law limits the duration of spousal alimony to 50% of the total duration of the marriage, with a maximum of five years, with two exceptions. If the marriage lasted more than 15 years, the entitlement to spousal alimony could, under circumstances, last 10 years. And, if there are young children, spousal alimony might, under circumstances, be extended to up to 12 years. Furthermore, there is a hardship clause that will allow judges to extend the duration of the spousal alimony.

An argument that is often heard is that this change reflects the emancipation of women, and the fact that marriage can no longer be considered a life insurance. The statistics do not support this argument, however; in most situations there is hardly enough paying capacity to pay child support and therefore no paying capacity at all to pay spousal support. Taking into account the fact that one out of three marriages breaks down, this means that there already are a lot of divorced women who have to support themselves, even under the old law. The new law will certainly have more of an impact on wealthier couples, though.

It is a good idea to write down the underlying intentions in the divorce covenant and parenting plan

Divorce Is a Transfer from Married Life

As a lawyer specialized in family law, I have seen men who did not want to pay their ex-wife spousal alimony – sometimes moving abroad or giving up their job just to try to dodge these obligations. I have also seen women who simply refused to work themselves, although they could have made a living, or secretly living with another partner, all the time denying this – even in court. The children involved, however, are the ones who are traumatized for life.

I therefore, always try to create awareness among my new divorce clients, by making them consider divorce as a transfer from married life to a life after marriage… for both. I also inform them that, according to Dutch law, if one of the spouses is unable to support themselves at the standard they were used to, they are entitled to spousal alimony – provided, of course, the other spouse has the paying capacity to afford spousal alimony.

It should be obvious that if the spouses reached an agreement during their marriage regarding their joint tasks, for instance the care and upbringing children and career options, this should be the basis for a fair agreement regarding spousal alimony once the marriage is over. For my expat clients, the fact that one of the spouses gave up a career to join the other spouse for career options in another country, is often an additional issue. I like to emphasize that issues like these should be kept in mind not only by the spouse who needs this support, but also by the other spouse, especially when children are involved. It can be hard for them to understand why mom is ‘poor’ and dad is not.

Parents who realize that, despite the fact that their marriage is over, they will remain parents forever, generally recognize the common challenge of creating a life after marriage, including a sustainable relationship with the other parent. Spousal support is one of the important issues, sometimes best dealt with by paying a lump sum.

Mediation

To create a liveable life for both after divorce, a mediation approach is to be recommended, as the most important asset of mediation is that the parties themselves reach a solution together. This increases the commitment to, and acceptance of, the solution and therefore the sustainability of the divorce agreement.

Writing down the underlying intentions in a divorce covenant and parenting plan is advisable as well, especially for expat clients. This, as their divorce agreements often face challenges caused by changing circumstances in the future.

Alimony issues in mediation, both spousal alimony and alimony for children, can be a tough nut to crack, though, especially as it is hard to foresee how a court might rule on the divorce, particularly regarding the more wealthy (expat) clients. The new law will certainly not change that. To the contrary.

Should You Adjust Your Marriage Contract?

Taking into account this new law, it is probably advisable to add an alimony paragraph to you prenup or adjusted marriage contract before moving abroad as a married couple, especially if you are Dutch.

Forum Shopping Outside the Netherlands?

If it is to be expected that one of the spouses will not act reasonably, then – especially when it comes to alimony – it could be a good idea to choose the applicability of the law of a common country, if you have the option of choosing a forum.

One of the most-heard motivations for introducing this new law is that it is meant to foster awareness among (especially) women that marriage is not a life insurance and that they should always aim to support themselves. A curious emancipation tool!

Edith van Ruitenbeek is lawyer and partner at van Hilten Advocaten & Mediators, Nassaulaan 15 Den Haag and De Lairessestraat 129 Amsterdam.

www.vanhilten.nu

Who Decides, When You No Longer Can?

Being in control – also during the last stages of your life – is something that more and more people are looking into. This has resulted in a huge increase in the number of living wills over the past years.

A living will is drawn up with the help of a civil law notary. In it, you determine who will be in charge of your financial, personal and medical affairs once you are no longer able to take care of them yourself. Once this has been arranged, we find that our clients – and those directly involved – feel they can relax again.

Trusted Person

It goes without saying that it is very important to think long and hard about whom you are going to appoint for the purpose of taking care of your – often very personal – matters. As you yourself might no longer be able to verify that this is done in accordance with your wishes, you need to be able to trust that your agent(s) will not abuse their position. This is why some people appoint two.

As an extra measure, you can appoint a supervisor to ensure that your agent sticks to the agreed plan.

By talking to your doctor and those around you, and putting things in writing, you make sure your wishes are known

Medical Affairs

And what about your medical affairs? For instance; which treatments do, or don’t, you want? Under what circumstances do you want treatment to stop – or continue? What are your thoughts on euthanasia? In the Netherlands, there has been a long-going discussion, quite nuanced, regarding the degree to which the thoughts of the patients should be deciding in this type of situation. This has resulted in legislation that, on the one hand, emphasizes the duty of the doctor to exercise due care and, on the other hand, makes it possible to respect the wishes and convictions of the patient.

Openness Is Crucial

Precisely because of the due care that the doctor is expected to exercise, it is crucial that they know what your ideas and convictions regarding these matters are. This means that the first thing you should do is discuss them with your doctor. The doctor will have to keep a record of this conversation in your medical file. Furthermore, it is advisable to put your wishes and possible requests to your doctor in writing in order to ensure that this document, signed by you, ends up in your medical file as well.

Besides sharing your wishes with your doctor, you should of course also discuss them with those close to you. This way, all involved will know how you feel about these matters, so that they – when the times comes – can make the right decision.

Only if the doctor can carry out your wishes while not violating medical, professional and ethical codes will they be able to honor your wishes

Repeat

And, once you have done all of this – discussed everything and written it down – are you done?

No, you will have to regularly confirm with your doctor that you still feel the same way about what you discussed and put in writing. This way, the doctor will know that what you once said was not a one-time idea, but something that you have consistently adhered to over time. Or – should this no longer be the case – you should make sure that the necessary changes are made.

The Doctor Decides

Though talking to your doctor and those around you, and putting things in writing, ensures that your wishes are known – even if, at some point in time, you are no longer be able to express them yourself – this does not mean that the doctor will simply do what you have requested. Aside from their obligation to exercise due care, they also have medical, professional and ethical codes to adhere to. Only if the doctor can carry out your wishes without violating these codes will they be able to honor your wishes.

Role of the Agent

Your medical statements and wishes need to be included in your medical file. Therefore, we usually do not include them in a living will. However, should you have made such statements, you can use your living will to make this known to your agent. You can also add the explicit request for the agent(s) to inform your doctors of these statements and to make sure that your wishes are respected as much as possible.

Property Owned Abroad

Experience shows that many expats who live in the Netherlands own property abroad. In your living will, you can include a power of attorney for your agent, specifically targeted to your property abroad. This will allow them to act on your behalf abroad, if you are not able to. You must first, of course, verify that this power of attorney meets the legal demands imposed on it in the country in question.

For more information on how to draw up a living will, you are recommended to contact a specialized civil law notary.

Private Education

In February 2019, DutchNews.nl editor Robin Pascoe became Dutch. Not because she wanted to or because she felt that the time was right. She became Dutch because of Brexit.

I am, immigration department figures show, one of hundreds of British nationals who are taking Dutch nationality in response to Britain’s crazed decision to leave the EU. For me it was a straightforward process. My husband is Dutch and we have been married for 30 years, so I can use the optie regeling – which means I get to keep my British passport as well.

I did not have to go through the process of inburgering – taking exams to show I speak the language and that I know how to apply for a job at Hema. All I would have to do, they said, was fill in a short form, provide a copy of my birth certificate, and pay €187.

I had, of course, lost my birth certificate, so I applied for a new one. Six weeks later it had not arrived and my appointment at the gemeente was coming ever closer. I phoned Britain. An official told me it had been sent by post and should have been with me weeks ago. She did not seem particularly bothered that it had gotten lost along the way and recommended I request a new one, this time delivered by DHL.

DHL delivered my birth certificate super fast… in perfect time for my first appointment with the council to talk about becoming Dutch. I headed off to my appointment convinced I would be there for hours. I was out again, I think, in seven minutes. My appointment was on time but I, alas, had not read the instructions properly and my birth certificate was missing that all important apostille – a stamp to say the birth certificate that Britain had just sent me was in fact the genuine article. Seems slightly over the top, but there you go.

Two weeks later I was back again… this time with that crucial stamp. Again unbelievable speed from the British authorities, but I guess they are dealing with these things round the clock at the moment. And that, basically, was that. I paid the €187 and was told that I would get an invitation to attend a naturalization ceremony within three months.

Sure enough, a few days after I got a letter from the IND telling me that, as a British national, I should do nothing until they tell me what to do about Brexit, I got a letter inviting me to show up at the town hall and become Dutch.

It was not something I was looking forward to. I had heard horror stories about everyone having to sing the national anthem. As an avowed Republican, I decided to cross my fingers so I would not have to swear any allegiance to a king. There was, of course, coffee and tea on offer in true Dutch style when we arrived. We sat, sandwiched between a young African couple with their baby and a group of Dutch youngsters with a friend I took to be French. Then it all began, and how I wished it was already over.

There I was, surrounded by people who had gone through so much to get here, and who were just so delighted to become Dutch

We listened to a brief homily about what being Dutch is all about (equality, freedom of speech) watched a short video about what being Dutch is all about (equality, freedom of speech and lots of canals, windmills and orange) and then it was time.

One by one, the new Dutchies in the room walked to the stage, said ‘dat zweer en beloof ik’ and were given their official certificate of Dutchness and a book about key moments in Amsterdam history. They were then applauded by everyone in the room and had their photo taken in front of a photo of the palace on the Dam.

There was a big pile of books on the table in front of the civil servant in charge of it all. I had seen from the list when we came in that I was third from the bottom. It was going to be a long afternoon.

One by one, the names on the list were called to the stage. There were lots of names I took to be Eastern European, bright young girls and men who raised their right hand and swore in crisp, accented Dutch. There were a couple of women, perhaps from Somalia, who came on stage with their husbands and children, dressed for the occasion in their best clothes, and who posed for the photo in a happy family group.

There were several young women in Islamic headscarves who were obviously born and raised in Amsterdam, judging by their accents. One young man in a suit and bright orange tie hugged and hugged his male partner after making his pledge. The wife from the young African couple in front of us came back from the stage beaming with delight. An elderly Turkish woman – grandma perhaps – who could not get the words out straight and collapsed in giggles after her fifth attempt, posed happily with the rest of the family for the photo to great applause.

It was a never-ending stream of new Dutchies from all over the world. As the pile of books on the stage diminished, I knew my time was getting closer. When my name was called I walked to the stage and made my pledge.

Then it was all over. At the back of the hall there was wijn en fris, plus the classic Dutch staples – herring, bitterballen and cheese. We joined the queue for a bitterbal and a glass of wine and watched as one of the catering workers tried to deal with question about whether the bitterballen were halal or not. He did not know the answer and muttered under his breath.

Group by group, we filed out of the room and went our separate ways. I was left feeling enormously humbled. There was me, loud-mouthed Brit with my cynicism about the whole process, surrounded by people who had gone through so much to get here, who were refugees, or partners who had given up lives in another country and who were just so delighted to become Dutch.

I have not yet applied for a Dutch passport, but my certificate of Dutchness sits in the in-tray in my office. The whole process was, all in all, a lesson in humility. Despite Brexit and all the nonsense that it brings, I realise that I am one of the lucky ones.

Robin Pascoe is editor of www.dutchnews.nl

Rotterdam International Secondary School (RISS)

A Remarkable School Indeed!

During 30 years of RISS, starting as a small department within the Wolfert Bilingual School, we have grown to become a symbol of Rotterdam’s growth, international importance and multicultural awareness.

We serve the expat community that comes to Rotterdam to work and that is seeking quality education for their children. RISS provides an education that not only addresses these academic needs, but also seeks to instil key values and a wider social commitment, all designed to enhance the learning experience of students in line with the expectations of international education. Our values – courage, respect, responsibility and relationships – are embedded in all we do, and serve to support our overall vision which we have proudly declared to be ‘educating for self-awareness, curiosity and integrity in a changing world’. In this way, we fit nicely alongside the wider Wolfert aims of serving a wide range of students with diverse needs, backgrounds and aspirations.

With many recent changes, RISS is now a school that is fully discovering its identity and purpose as a true international school within the Wolfert group, and we are committed to being a high-quality provider of education that is academically successful, value-driven and genuinely internationally-minded. These aspirations were fully ratified by our re-accreditation by CIS and NEASC, two prestigious international accrediting bodies who gave their thumbs up not only to what we do, but also to what we are planning to do.

All with the help, support and reassurance of being part of such a prestigious group as Wolfert.

Enjoying Youth

Where many schools seem to concentrate their efforts on what their children and young people will be, perhaps one of our most powerful public declarations has been our desire for all children and young people to enjoy being what they are now – children and young people. Rather than simply seeing school as one long process of working towards external exams, university and beyond, we work to make sure we are living by our stated mission that all our students ‘enjoy their youth’. It is in their early teens that young people should have the opportunity to more freely explore the world around them, develop and practise the skills they need to best work with other members of the communities they are part of, develop a sense of mission and service to something bigger than they are and, most importantly, learn about themselves through a wide range of opportunities and challenges. This is done via high-quality teaching, involving students as much as possible and letting them be reflective about their learning and aspirations.

This is the new promise we have made to the students who come to RISS and to the families who entrust their children to us each day and it is at the heart of the many developments that have taken place in the last year or two. There has been a great deal of change as a result of a deep rethinking of what we do and how we do it, and we are proud of the progress we have made in all areas of school life. In particular, we have learned, as a school community, that we can and should come together to generate innovation, change and new opportunities – to create a school we are genuinely proud of. This rediscovery of our capacity to collaborate and lead has become the new hallmark for our school.

An Exceptional Example

Currently, the school has a new timetable to helps us deliver both existing and new subjects, and to do so in a way that balances student learning and well-being. We have a new pastoral care programme that ensures our students are looked after both academically and emotionally. We have new leaders of faculties and departments to ensure that our learning is constantly monitored. We are developing a programme of student leadership and action that gives our students more agency in their learning. Our senior campus refurbishment is almost complete, giving our senior years a strong identity that enables them to develop a sense of the new adult they are becoming. Lastly, our renewed energy, focus and drive is captured wonderfully in our new RISS ‘look’, something that can be seen across the school, both inside and out, and demonstrated perfectly on our new website. In this way we feel we have genuinely captured the spirit of who we aspire to be: ‘an exceptional example of an international school’.
Strong and Meaningful Policy

Perhaps one last mention is for our next major project at school, one that will involve stakeholders from every area of school life – teachers, leaders, parents and students. This is to establish a strong and meaningful Teaching and Learning Policy for RISS, one that will define in detail our definition of learning and how we recognise outstanding practice in school. This policy will lead our core educational business when it comes to providing an education for students coming from different corners of the world. Rather than some off-the-shelf document, this important and exciting work in progress serves to underline the special and unique nature of RISS.

RISS is reinventing itself via the opportunities it is creating for all, via a renewed belief in the capacity of its staff to deliver world-class teaching, via its commitment to childhood and youth as an important period of time, in and of itself, and via its constant seeking out of new scenarios with which to enrich the lives of all of those who wish to engage with us and be part of our community.

It is a process that entails bravery, vision, creativity, a willingness to change and a commitment to collaboration. This is something that RISS has embraced fully, and where better for this collaboration to take place than in the wonderful city of Rotterdam?