Author: Bert van Essen

For most people, the purchase of a house is an important and exciting event.

This is especially so for expats who find themselves buying a home in a country other than their own. Of course, finding the right house in the right place is a first priority – but once you have done that successfully; then what? What are the legal issues that you have to take into account?

Purchase Agreement

The agreements reached with the seller should be put in writing in a purchase agreement. This agreement is often drawn up by the realtor. If there is no realtor involved in the transaction, it can be drawn up by a civil law notary. In Amsterdam, these agreements are always drawn up by a civil law notary.

Once the seller and the buyer have signed the agreement, the buyer is given a three-day period to reconsider. Within this period, he can cancel the purchase without further explanation. The purchase agreement can contain dissolutive conditions. For instance, it can be made subject to the ability of the buyer to obtain financing, the sound structural state of the building, or the absence of ground pollution. This allows the purchaser to investigate whether he can obtain a mortgage, or to have building inspectors investigate the premises for defects.

Arranging a Mortgage

A mortgage can be requested with a bank. The bank will investigate the purchaser’s entire financial background before deciding whether or not to grant the loan. This could take a couple of weeks, which should be taken into account when drawing up a time line. The entire request for a mortgage must be approved by the bank before the transfer can take place through the civil law notary.

Transfer of Property and the Mortgage Deed

On the date that has been agreed to with the seller, the transfer of title and the mortgage deed will be signed in the office of the civil law notary. Both documents will be entered in the Land Registry by the civil law notary – after which ownership will truly transfer to the purchaser.

While preparing the transfer, the civil law notary will investigate whether the seller really is the owner, whether anyone else has any claim on the property, and whether it is encumbered by any easements or other obligations – and that creditors have not seized it.

Before ownership is transferred, the buyer must deposit the purchase sum on a bank account belonging to the civil law notary. The civil law notary arranges with the bank granting the mortgage that the amount it is loaning to the buyer is paid on time. Also the paying off of the mortgage by the seller – after the transfer of title – goes through the civil law notary.

This procedure ensures that the buyer obtains property that is entirely unencumbered.

Registration

If you buy a home together with a partner, how is it registered? Do both of you become 50% owners – or is the percentage different? How do you arrange things when one of you pays more than the other for the property?

These are important questions that do not have a simple answer. It depends on a variety of factors. For instance, are the partners married, is there a prenuptial agreement and which national law of matrimonial property applies? And if they are not married, do they have a cohabitation agreement that has to be taken into account?

An important premise is that when both partners can be held accountable by the bank for the payment of the mortgage, then they must both be owners. This creates equilibrium!

Whereby it should be kept in mind that, once the property has been entered in the Land Registry, the division of ownership has been officially established. Changing it is not easy; it requires a new deed, drawn up by a civil law notary. And probably involves the need to pay transfer tax – which can make the whole procedure quite expensive.

In practice, things work out best when the partners become equal owners and it is laid down in a separate document who contributed what to the purchase price. Furthermore, this type of agreement is flexible as it can simply be adapted down the road should one or both partner(s) make additional investments in the future.

The agreement must, however, be in keeping with the existing agreements or rules that apply to the marriage or relationship in question. In order to judge that, it is best to request the assistance of a civil law notary who specializes in marital property law. Be sure to obtain timely advice.

Will

And what happens to the home when one of you dies? Which inheritance law applies and do you need to draw up a will regarding the home that you have in the Netherlands?

If you die while your principal place of residence is the Netherlands, then Dutch inheritance law will apply to your estate; both to your property located in the Netherlands and your property located abroad. Also if you do not have Dutch nationality. This has been decided in the European Inheritance Regulation that entered into force in August 2015.

All expats who are not living in their country of origin are advised to have themselves informed on the inheritance law of their country of residence. In most cases, it is wise to draw up a will. In this, you can determine who inherits what, who becomes the executor, who will take care of your children and who will manage your assets.

Do you have property in more than one country? Then the will must contain rules that can be implemented in the countries in question and that will have the desired fiscal consequences. Particularly in international situations, a will can greatly simplify the winding up of the inheritance for the surviving family members. In the Netherlands, all wills – in order to be legally recognized – must be drawn up by a civil law notary.

Be sure to consult a civil law notary who specializes in international inheritance law.

This article was originally published in The XPat Journal Winter 2017 Issue

A stranger who’s been through your stuff, who’s taken some of it with him and who has left a path of destruction in his wake. This can have quite an impact on your life. Be aware of the fact that most burglaries are committed in a moment of opportunity – upon discovery of a ‘weak spot’ in your home. So make sure your house is secure; the harder you make it for burglars to get in, the sooner they’ll give up.

The Right Locks

Often, all you have to do is make a few simple modifications to your windows and doors. Any locks and hinges that have the Police Seal of Approval ‘Veilig Wonen’ will ensure that the thief will have to make a considerable effort to get in. If it takes him too long, he’ll give up. This includes security fittings, latches, deadbolts and cylinder guards – so that the lock cylinder cannot be removed or damaged. Be sure you have locks on your window (latches) too.

Discourage Burglars

As mentioned earlier, burglaries are often opportunity-based. If there is clearly no one home, or if the windows or doors are open or poorly secured – then the chances are greater that someone will try their luck. To avoid this, only open those windows that you can keep an eye on, or install metal bars or rods that limit how far the window can be opened – even on higher floors. Also during the day.

Also be sure to secure those parts of the house where burglars could get to work undetected by neighbors or passersby, for instance by using lighting that turns on once it’s dark.

Lighting

Make sure you have lights shining on all doors that can be accessed or seen from the road. A lamp that turns on automatically when it gets dark, is a good idea. Lamps with motion sensors also scare away potential burglars. In order to make sure that the sensor is not de-activated, place the light at a height of at least three meters. And make sure it lights up the face of any visitors, so that you can see whether it’s safe to open the door.

Timers

You can use timers to create the impression that you are home. Either you can program them to go on and off at a fixed time, or you can buy a more luxury model that can be programmed per day. You can also buy devices that connect to your Wi-Fi and that you can use to turn on and off your lights from wherever you are – also abroad. Be sure to light up several rooms, to create the illusion of activity. Timers can also be used to turn on radios.

Combine Measures

Opportunity burglars often use pretty simply tools, such as screwdrivers and crowbars. That is why they hate solid locks – such as those offered by SKB. These locks are awarded stars; the more stars, the more secure they are.

Even better is to install a variety of measures. For example, the combination of a lock and anti-lift pins when the hinges are on the outside. And adapt your security measures to your type of window: sliding or pivoting.

Police Seal of Approval

On www.politie.nl and www.hoeveiligismijnwijk.nl you will find a variety of measures (and combinations thereof) that you can take to reduce the chances of a burglary by up to 90%. They also list popular burglary methods and how you can protect yourself against them.

Vacation

During the holidays, there is an increase in burglaries. Here are a few tips as to what you can do to protect your home.

• Do not report on social media, twitter or through blogs that you are going away.
• Close and lock all windows and doors. Remove the keys and put them away.
• Use dusk-to-dawn lights for access doors.
• Install timers, in more than one room (a dark house is an invitation).
• Don’t leave the curtains closed. Leave plants in the window sill.
• Ask you neighbors to collect your mail and water the plants.
• Don’t leave a ladder or container in the backyard that can give anyone a leg-up.
• Place valuables in a safe or give them to someone else to keep for you.
• Don’t display all your attractive possessions in the living room.
• Leave a note behind with the telephone number of a contact person for the police, in case of emergency.
• Prune bushes in the front yard so that your front door and windows remain visible.
• Always report any burglary.

Don’t drive around with a roof box on your car for days. Burglars who are scouting the area for vulnerable houses will make note of this

An Unusual Situation? Call 112

Also if you are home, keep an eye out on the neighborhood. Do you see someone suspicious? Approach them or call 112. Burglars dislike ‘nosy’ neighbors.

Christmas and New Year’s

We all like to celebrate the seasonal holidays in the company of good friends or family. If you are going away for Christmas or New Year’s Eve, ask your neighbors to keep an eye on your house and give them an extra key. Another prime moment for a quick snatch of your property is when you are lighting fireworks and leave the front door open. Don’t forget the back door! You can find more advice on: www.maakhetzeniettemakkelijk.nl (which translates into: don’t make it too easy).

A Few Additional Tips

Don’t leave the keys on the inside of doors or windows. A small hole is easily drilled, a window pane is easily shattered. Not to mention the convenience of a well-placed mail slot for burglars with a metal wire.

• Put your possessions out of sight, particularly televisions and computers. Close the curtains at night.
• Put away (car) keys, cell phones and wallets.
• Don’t leave the packaging of valuable new purchases on the curb.
• Don’t attach a tab to your keys with your address on it.
•  Verify the identity of anyone at your door. And don’t just buzz anyone in, also not if they claim they are there for your neighbors.
• Ask for the ID of anyone who wants to come in. Countless burglars have managed to talk their way in, in broad daylight, with a good excuse.
• Never give your bank card’s pin to anyone, even if they say they are with the police or the bank. Your bank card may have been copied or stolen – and your account could be empty in no time.
• Also garden sheds and rabbit hutches can be used as a leg-up by thieves.
• Take photographs of your valuables and write your postal code and house number on these. Also mark the brand, series and type number. This will help the police identify your possessions and return them to you.
• If you have surveillance cameras, be sure to report this to the police if someone has broken into your, or one of your neighbors’, house. This could help find the perpetrators.

A Few Burglary Prevention Videos

These videos are in Dutch, but they are self-explanatory.

Breaking a cylinder
Removing a cylinder
Opening a door with credit card
Using the mail slot
Climbing in
Kicking in
Breaking / pushing open
Tips on preventing burglary
Why call 112

It would be nice if the process of buying a house were simply a matter of “yes, I would like that one” and handing over your credit card. Though this may be the case for the top 1% wealthiest people in the world, the rest of us have to make sure we can get a mortgage, that we get the right mortgage, that we can find a house that meets our needs, that we can afford this house, and that we won’t be confronted with unnecessary surprises (claims, easement, structural problems)… to name a few issues.

For this reason, we have developed a short step-by-step buyer’s guide, aimed at preparing you for the various steps you will take when buying your new home – so that you know what to expect and can start taking the necessary measures in the right order.

The Process

When buying a home, you will have to consider the following steps:

• You contact a mortgage provider, to find out exactly how much mortgage you can take out, whereby you take into account additional expenses involved in the purchase of the home (these are discussed further on).
• You select a real estate agent, and discuss what you are looking for, what you need and what is realistic.
• If you have any special wishes regarding the property, make sure your real estate agent and the real estate agent of the seller are aware of this. If they are not, and it turns out your home does not meet these wishes, you cannot hold them accountable for it.
• You visit property.
• When you have found a home you like, you discuss all issues such as city council regulations, but also issues such as soil contamination.
• If you want this home, you can inform your real estate agent of this verbally.
• You contact your mortgage broker (or bank) again to start the official mortgage application process (which takes 4 to 6 weeks)
• Your real estate agent will contact the selling party and relay this message.
• Have a building inspection carried out. If you fail to do this and there is a problem, more likely than not, you will have lost your right to hold the seller accountable.
• Make the purchase of the house contingent upon its passing the building inspection.
• The initial verbal agreement you reach with the seller is put in writing in the preliminary purchase contract. A penalty clause is usually included in case the seller or the buyer does not meet his obligations.
• After being signed by all the parties, the preliminary purchase contract is sent to the civil law notary who deals with the transfer of the title of the house.
• A three-day ‘cooling-off’ period starts the day after the buyer receives a copy of the signed contract. During these three days, the buyer can cancel the deal without any repercussions and without having to state the reason.
• The civil law notary inspects the public registers of the Land Registry regarding mortgages and/or attachments with which the property may be encumbered.
• The transfer of ownership takes place at the civil law notary’s office by means of a deed of transfer that is drawn up by the civil law notary and signed by the seller, the buyer and the civil law notary. You will receive a draft of this deed and of the mortgage deed beforehand. Also your agent will receive these and check them.
• The agent will check together with you to see whether the house has been vacated, and is in the agreed condition.
• The civil law notary takes care of the financial settlement of the transaction and ensures that the deed of transfer is entered in the public registers (Land Registry).
• The transfer then becomes official and you receive the keys of your new house.

Deposit

The deposit on the house is generally 10% of the purchase price – due approximately five weeks after the deal has been made – and arranged by the mortgage advisor or the bank itself by means of a bank guarantee issued by a Dutch banking institution. This deposit is to be paid to a civil law notary and can be part of the financing agreement reached for the purchase of the house.

Additional Costs

The purchase transaction will cost you an additional approximately 5-6%. These include:

• appraisal fee (expense for having the house officially appraised in order to secure a mortgage)
• notary costs mortgage deed (hypotheekakte)
• cadastral registration fee mortgage deed
• cadastral investigation fee
• administration fee mortgage deed
• structural survey of the house
• bank guarantee fee
• mortgage commission fee (paid either to the bank or the broker)
• National Mortgage Insurance – Nationale Hypotheek Garantie
• transfer tax
• estate agent fee
• notary costs for the transfer deed
• interpreter fees.

Tax-Deductible Costs

The costs listed below are tax-deductible and can be declared (one-time) on your income tax return:

• notary costs mortgage deed (hypotheekakte) (VAT/BTW)
• mortgage commission fee (paid either to the bank or the broker)
• cadastral registration fee
• cadastral investigation fee
• appraisal (taxatie) fee
• administration fee (afsluitprovisie) mortgage deed
• bank guarantee fee.

Resolutive Conditions

If you need to obtain a mortgage to finance the purchase, any purchase agreement should be made subject to financing. If necessary, other resolutive conditions should be part of the agreement, such as (if applicable) being able to obtain a permit to occupy the real estate, or even more importantly, the option of having a constructional survey carried out.

Negotiations

Prices and conditions quoted in the listings for sales and rentals are usually negotiable. In close consultation with the agent, price and conditions will be negotiated with the agent representing the owner. These negotiations can consist of several rounds of verbal bidding and counter-bidding.

Mortgage Expenses Deductible

The most important reason to buy real estate – instead of renting it – is most probably the fact that interest paid on a mortgage is deductible when you use the house as your principal place of residence. The maximum rate of deductibility is now 50%, but this will decrease by half a percent per year, until it reaches 38% in 2041.

Furthermore, mortgage interest is deductible over a maximum period of 30 years, provided the mortgage provides for monthly redemption payments (straight line or annuity), while – starting in 2018 – the maximum amount is 100% of the purchase price. This means that buyers can no longer completely finance the additional expenses related to buying a house by means of the mortgage.

If you decide to take out a higher mortgage than required to finance the purchase of the house itself or for its reconstruction, the related part of the mortgage interest will not be deductible. Other expenses related to the house (such as insurance premiums and, of course, capital repayment) are never deductible.

What Type of Mortgage?

You should seek proper advice on the type of mortgage that is suitable in your situation, particularly in view of the limited period of time during which you may need the mortgage. Do not forget to inform the bank if you are benefiting from the 30%-ruling. If the mortgage is linked to a capital insurance, you may be faced with additional tax consequences. Be sure to get expert advice!

Deemed Rental Value and WOZ-Value

Those who own a house and use it as their principal place of residence have to report a certain amount – related to the home ownership – on their income tax return. This amount is a percentage of the value of the house, and is called the eigenwoningforfait (or deemed rental value). The eigenwoningforfait based on the official value of the house, also known as the WOZ-value, which is determined every year by the municipality. Every year, the owner receives a so-called WOZ-beschikking (WOZ-decision), ‘confirming’ the value of the house, which is used as a basis for determining a number of levies and taxes and has been created in order to rule out the possibility of arbitrariness. The general applicable rate of the eigenwoningforfait is 0.75% of the WOZ-value (a higher rate applies if your house is worth more than € 1.06 million).

The balance of the deemed rental value and the interest can be deducted from your income. You can only deduct your own share in the mortgage.

Preliminary Tax Refund

You can receive a tax refund on the mortgage interest deduction every month by requesting a preliminary negative tax bill from the tax authorities. This is done by means of a special form. The tax authorities will then deposit the refund directly into your bank account.

By Godelijn Boonman

Employment law in the Netherlands offers employees a number of protections against dismissals. Unfortunately, many internationals are unaware of their rights.

Permission

To start, employees with a permanent contract are given very strong protections by the law. An employee with a permanent contract cannot be dismissed without permission from either a judge or the Uitvoeringsinstituut Werknemersverzekeringen (UWV or Employees Insurance Agency.)

Furthermore it is not easy to convince a judge or the UWV to give permission. An employer needs to have reasonable grounds to dismiss someone and also needs to prove that they have tried to move the employee in another role in the company, possibly following retraining.

Fixed term contracts

Permanent or fixed term contracts must abide by the so-called 3/2/6 rule, unless there is a different collective bargaining agreement in place. Since this rule came into effect on 1 July 2015, employers can offer no more than three consecutive contracts, the total duration of these contracts cannot last for more than two years and any break in between the contracts of less than six months is considered continual employment. Any contract exceeding these limits automatically becomes a permanent one.

For example, these rules allow three consecutive fixed-term contracts of eight months each, or two one-year contracts. A period of over six months, e.g. six months and one day, is needed to “break the chain” and allow the parties to start afresh. .

Another change is that the employer must (though there are exceptions) inform a fixed-term employee in writing no less than one month before the end date of the contract about whether the contract is to be extended and, if so, under which conditions. The penalty for failure to give timely notice is monetary compensation equal to the salary for the unobserved period.

Eight grounds for dismissal

There are eight reasonable grounds that an employer can use to justify dismissing an employee on a permanent contract. They are:
1. headcount reduction for business reasons (redundancy)
2. long-term (more than two years disability)
3. frequent and disruptive absence relating to sickness
4. incapacity to perform the contractual work other than for a medical reason
5. serious misbehaviour
6. refusal to perform contractual duties for reasons of conscience (conscientious objections)
7. working relationship that has broken down, provided the impairment is so serious that the employer cannot reasonably be required to continue the relationship
8. other reasons that are of such a nature that it cannot reasonably be expected that the employer should continue the employment relationship.

This list of grounds for termination is exhaustive and the grounds cannot be combined. A judge who decides to terminate an employment contract must select one (and only one) of the eight possible grounds for termination.

Incapacity

The fourth reason for dismissal, incapacity to perform contractual work other than for a medical reason, can only be asserted if (i) the employer has informed the employee of the performance issue in good time; (ii) the employer has taken sufficient steps to enable the employee to improve the performance; and (iii) the underperformance has not been caused by insufficient efforts by the employer to train the employee or by poor working conditions.

Wrongful dismissal?

An employee who has been dismissed without consent in the absence of permission or in breach of a dismissal prohibition may ask the court to annul the dismissal or to award compensation. An employee who has been dismissed pursuant to a dismissal permit may apply to the court for reinstatement or compensation. It is also possible to appeal a court order.

Compensation

Under the new rules, every termination (other than following retirement or for serious cause) – including termination as a result of non-extension of a fixed-term contract that has lasted for two years or longer – will give rise to an obligation to take the applicable notice period into account and to pay the departing employee a transitievergoeding (transition compensation.)

The compensation is equal to 1/6 of the last-earned average month’s pay for the first twenty half-years of service and 1/4 of the last-earned average month’s pay for each additional half-year of service. However, employees aged 50 or above with no less than ten years of service are, until 2020, entitled to half a month’s salary for each half-year of service beyond the age of 50.

Certain expenses that the employer has paid during the final five years of employment with a view to increasing the employee’s employability may be deducted from the transition compensation. Only in extreme cases will the employee be able to claim an additional amount. The government has stressed, and it is widely accepted, that such additional awards should be exceptionally rare.

Negotiation

If an employer does not have a good case  for dismissal, then an employee can of course negotiate a higher transitional compensation. Employees who are facing a wrongful dismissal should take care to exercise this right.

Unemployment

An employee who loses their job is normally eligible for unemployment benefits, which are paid by UWV. The benefits equal 75% of last-earned salary for the first two months and 70% thereafter, in both cases calculated as a percentage of no more than the maximum base. The maximum duration of the benefits varies from three to 24 months, depending on how long the employee has been insured.

Godelijn Boonman is lawyer at GMW advocaten in The Hague.
e-mail: g.boonman@gmw.nl
tel.: +31 70 3615048
www.legalexpatdesk.nl

Though most people work directly for an employer, over the past years, a considerable and growing number of people in the Netherlands have chosen to work in self-employment, to the point where, at present, 1.76 million people have self-employment as their main, or only, source of income. Of these, 900,000 are what the Dutch call ZZP-er – Zelfstandige Zonder Personeel, or self-employed persons with no employees.

The percentages show the inevitable entrepreneurial and independent nature of those who work in self-employment. The most important reasons for doing so are: needing a new challenge; wanting to be able to determine for themselves how much work they do and when; always having wanted to work in self-employment; and not liking working for a boss. A smaller group is in self-employment out of necessity: because they lost their job, the atmosphere at work was not good, or because they couldn’t find a job. It is this last category that, starting in 2017, is causing the number of ZZP-ers to shrink. Due to the economic upswing, there is an increase in jobs in employment, while employers are becoming less leery of offering a fixed contract. Also impending legislative changes governing the contracts between clients and freelancers are causing both parties to protect themselves by changing the nature of their collaboration.

As the Netherlands is a country that so easily accommodates self-employment, and that has an economy that is based mostly on the services sector, is an attractive country for also non-Dutch nationals to come and try their luck – be it as an expressly-chosen destination, or as an accompanying partner/spouse. In short, there are plenty of opportunities, practical advantages and tax benefits – but before you get started, there are a few things that are good to know, in order to be well-prepared.

Assistance

First of all, whom do you turn to for information and support? There are several organizations in the Netherlands that can help you along the way.

Chambers of Commerce: The Chamber of Commerce is a public institution and the information desk can provide you with information on how to start a business, which diplomas you need for your specific line of business, how to write a business plan to be able to finance your ideas and what (zoning) plans your municipality has within the area in which you want to establish your firm.

There are more than 20 regional Chambers of Commerce (Kamers van Koophandel). They register (practically) all companies based in the Netherlands, whether they are of Dutch origin or foreign: public and private limited companies, cooperative societies, mutual guarantee associations, sole traders, partnerships and associations of home-owners. Also private persons who work on a free-lance basis and persons who carry out one of the professions specified on the professions list of the Chamber of Commerce, are obligated to register. The purpose of this registration is to enable third parties to find information on a company – such as who is liable, who can make binding commitments; in other words, the legal structure of a company.

MKB-Nederland: Another institution you can turn to for information is MKB-Nederland (Instituut voor Midden- en Kleinbedrijf), an organization that represents the interests of small and medium-sized companies. Various activities are initiated by this institute, aimed at offering its members relevant knowledge and expertise as well as at improving the general position of small and medium-sized companies.

Other Institutions: Other institutions that can offer you advice are banks and the national tax office. Both have information desks for people who plan to start their own business and can provide you with the information you need. And last, but not least, all major cities have a business desk at the town hall.

Proof of Identity

When staring a company, proof of identity will be required when registering with the Chamber of Commerce, as well as an original private bank statement or an original extract from the population register (not older than one month).

The following documents are accepted as valid proof of identity:

a valid travel document (Dutch or foreign passport, European identity card)

• a valid Dutch driver’s license (a foreign driver’s license will not be accepted)
• a residence permit issued by the Dutch aliens police
• a Dutch refugee passport
• a Dutch aliens passport.

Setting Up Establishment

There are no specific restrictions for foreign companies who wish to start a business in the Netherlands, nor are there restrictions on the ownership of real estate or on the remission of capital and profits abroad.

There are various ways in which foreign companies can set up permanent establishment in the Netherlands, which we will describe briefly here:

• branch office
• eenmanszaak: a one-man business
• maatschap: partnership – business involving more than one person, usually used by accountants, doctors, etc.
• vennootschap onder firma (VOF): general or commercial partnership – business involving more than one person, under a common name, each severally liable
• commanditaire vennootschap (CV): limited partnership with managing and ‘silent’ partners
• besloten vennootschap (BV): private company with limited liability
• naamloze vennootschap (NV): (public) corporation.

Branch Office

A foreign company does not require any prior approval from the Dutch authorities to establish a branch office in the Netherlands. It does have to file various details (i.e. name, trade name, objects, manager) and documents (i.e. articles of association) pertaining to the company and the branch office with the Chamber of Commerce. The local manager of the branch office does not have to be of Dutch nationality. Insofar as the obligation to publish the annual report and accounts also applies under the law of the country of formation of the foreign company, these should be filed with the Dutch Chamber of Commerce as well.

Partnership

Under Dutch law, you can set up a partnership with two or more partners: the general partnership (‘VOF’ or vennootschap onder firma) and the limited partnership (‘CV’ or commanditaire vennootschap). The basic difference between these two forms of partnership is the partners’ liabilities. A limited partnership has one or more managing partners (beherende vennoten) and one or more ‘silent’ partners (commanditaire vennoten). The liability of the ‘silent’ partners is limited to the amount of their capital contributions. Each partner in a general partnership is, in addition to the partnership itself, severally liable for the obligations of the company. Under Dutch law, a partnership is similar to a business under single proprietorship, except that there are two or more owners.

Companies with Limited Liability

In the Netherlands, corporate law defines two different types of companies with limited liability: the NV (naamloze vennootschap), which is a public company with limited liability, and the BV (besloten vennootschap), which is a private company with limited liability. The main differences between the two types of companies regard the type of shares, the need for minimum capital, the transfer of shares, the purchase of own shares and financial assistance.

The BV form is particularly suitable for a wholly-owned subsidiary, joint venture companies and family businesses. The NV is suitable for larger companies whose shares may be listed. Ask an accountant, legal or financial advisor or the Chamber of Commerce about the legal and fiscal consequences of the above forms.

Taxes Owed by Self-Employed Persons

If you run your own business you can be held liable for the following:

• wage tax
• income tax
• national insurance schemes
• employee insurance schemes (if you have employees)
• VAT (value added tax).

Self-employed persons who have no employees owe income tax and VAT. Enlisting the services of an accountant will help you benefit from the many deductions that apply to you.

VAT

Those who deliver services and goods in the Netherlands are obligated to charge their customers VAT (Belasting Toegevoegde Waarde or BTW), which they subsequently pay to the tax authorities. The general VAT rates are 21% and 6%. They owe this, no matter whether they (aim to) make a profit or not, the moment an invoice is sent out. To the delivery of goods and services outside the Netherlands, other rules apply.

However, the amount of VAT that you have paid to others who deliver their goods and services to you, can be deducted from the amount of VAT you owe. Those whose ‘VAT income’ does not exceed a certain amount enjoy a full or limited exemption from paying the amount due to the tax authorities.

The amount of VAT due should be reported on the Aangifte omzetbelasting, or Turnover Tax Return, on a regular basis (monthly, quarterly or yearly). This is done online, by means of the so-called electronic, or electronische, Tax Return. The tax authorities issue you a username and a password to do this.

VAR

Until recently, in order to avoid unpleasant (tax) surprises – for you and your client – you requested the tax authorities to issue you a Verklaring Arbeidsrelatie (Statement on Your Labor Relation). This VAR either stated that you were working as an independent person or that you were working as an employee, on the basis of a (fictitious) labor relationship. This way, your clients knew upfront whether or not they would have to withhold wage tax and/or social security contributions on the fee they paid.

This statement has been replaced by standard model contracts, drawn up by the tax authorities, which can be downloaded from their site. These contracts are valid for a period of five years and have been drawn up by the various branch organizations for specific professions. There are three types of model contracts: general model contracts, sector or profession-specific model contracts, and individual model contracts. If you work according to a contract, then your principal will not have to withhold payroll taxes for you. This is not guaranteed, however: if the tax authorities come to the conclusion at a later point in time that you have not, in fact, been working according to such a contract, they may impose a retroactive tax bill.

The implementation phase of this new system will run until January 1, 2018.

Financial Aid and Deductions

The national tax office can tell you about the Tante Agaath-regulation, a scheme that makes it fiscally attractive for private persons to lend money to those who are setting up a business. Of course, you can approach a bank and see what they can do to help you, too.

When it comes to income tax, entrepreneurs enjoy an additional deduction over and above the levy rebate that every taxpayer has a right to every year of € 7,280, irrespective of the actual profits – though it may not exceed them. To this purpose you must prove that you spent at least 1,225 hours over the past tax year working for your own business (if your spouse works for the same company there are additional rules and possible deductions). Those who are starting up a new business (startende ondernemers) have a further deduction, subject to certain conditions, over the first few years of € 2,123. If you are disabled for work and start your own company, you enjoy a generous tax deduction during three of the first five years – subject to certain conditions that you can find on the website of the tax authorities. Furthermore, tax credits are available for investments made in cultural investment funds, green funds and socio-ethical funds.

Diplomas / Permits

Depending on the type of business you want to start, there are a number of diplomas you might need. For most types of businesses, however, no diploma is required. Furthermore, some businesses are subject to a zoning plan, or require a building permit, environmental permit or establishment permit. Before you start your business, you must make sure you obtain the required permits and/or diplomas, for instance by contacting your municipality.

You can ask at the Chamber of Commerce as to what specific (type of) diploma you will need and how or where you can obtain this. If you have obtained a diploma in another country, this diploma can be evaluated by IDW, to see whether it qualifies.

Free-Lancing

There are two ways you can go about free-lancing; either as a self-employed person or through an intermediary agency. In the first case, you can read about some of the rules that apply to you in these paragraphs; in the latter case, you are, in principle, treated as an employee of the intermediary agency for tax purposes.

This article was originally published in The XPat Journal Autumn 2017 Issue

By Yolanda Bokhorst

Many people who have found the love of their life want to formalize this bond.
In the Netherlands, there are various options available for those who want do this; one of these is the registered partnership. The question arises, however, whether registered partnerships are a wise choice in international situations.

Registered Partnership
The registered partnership was introduced in the Netherlands on January 1, 1998. At the time, it had primarily been created for same-sex partners, in order to allow them to give their relationship a legal basis that was comparable to a marriage. At that time, the option of marriage was not available to them and it wasn’t until April 1, 2001, that people of the same sex could marry.

Difference with Marriage
When the registered partnership was first introduced it differed in a number of legal areas from a marriage – but, following a few legislative amendments, they are now virtually the same, from a legal point of view. The only difference is that, in order to terminate a marriage, you still need to go to the court. A registered partnership can be ended without the intervention of a judge, provided no children were born into this relationship and there are no conflicts between the partners.

Legal Consequences
Once two partners enter into a registered partnership in the Netherlands, the rule of general community property applies. All property and debts of each of the partners become joint property and debts.
This system is about to change, for marriages as well. As of January 1, 2018, all property and debts that the partners/spouses had before their union will remain private property and debts. Also inheritances and gifts will remain private. The rest will automatically become joint property and debts.
In the case of death, the estate of the deceased partner includes his private assets as well as half of the joint assets. Partners automatically become each other’s heir, together with the children of the deceased partner.
In the case of divorce, the joint property and debts must be divided, while one of the partners may have to pay alimony to the other.

Conditions for Partnership
If you set conditions for the partnership you can, for instance, determine that you want to keep your respective assets separate, or that you want to share only a portion of them. You can also differentiate between what happens in the case of death vs in the case of divorce. And you can determine which national law is to apply to your partnership.
Any conditions for the partnership will have to be included in a prenuptial agreement that is to be drawn up by a civil law notary and signed, before the registered partnership is entered into. The deed is then registered with the court, so that the conditions can be invoked against third parties.

Is a Marriage Perhaps Preferable?
If you decide, after a while, that you want to get married instead, you can simply have a registrar convert your registered partnership into a marriage. You will be issued an official document: a deed of conversion. This is only possible, however, if one of the partners has Dutch nationality or lives in the Netherlands. Once the deed of conversion has been drawn up, the registered partnership ends and the marriage begins. It is a seamless conversion.

International
Practice has shown that registered partnership can lead to complications in international situations. The most significant ones are:

1. The registered partnership is not recognized
In some countries, registered partnerships are not recognized and have no legal effect. In those countries, the partners are ‘nothing to each other’ – which can have unfavorable consequences for their pensions, fiscal situation, parental authority, alimony and inheritances.

2. The conversion from a registered partnership into a marriage is not recognized
The ‘deed of conversion’ is not seen as a marriage deed, meaning that the marriage that the spouses have now entered into is not recognized either.

3. Which national law applies?
Even if the registered partnership is recognized there can be differences of opinion between the various countries as to which national law applies to it, especially when the partners have not drawn up the conditions for the partnership in which they have chosen an applicable law.

How to Solve This
Sometimes, the only thing the partners can do is dissolve their registered partnership and then get married. However; according to the law, a registered partnership can only be dissolved in case of irreconcilable differences, which is in contradiction with the fact that they are doing this in order to get married…
More serious, however, is the fact, this this is no longer a ‘seamless transition’ into a marriage. A number of weeks generally go by between the end of the registered partnership and the start of the marriage. Should one of the partners pass away in the meantime, the other will inherit nothing. From a legal point of view, the surviving partner is (no longer) the partner and (not yet) the spouse. And should the legal heirs wish to correct this situation and leave everything to the surviving partner, the question remains as to how the tax authorities will view this. It is not at all certain that the low tax rates and high exemptions that apply to partners/spouses will be applied under these circumstances.
Even if the partners include a clause in their will stating that the surviving partner is to be an heir in the intervening period, the fiscal consequences are not clear.

In short, I would advise the following to expats who are considering entering into a registered partnership:
– First find out whether the registered partnership is recognized in your countries of origin or future countries of residence
– Prior to entering into the registered partnership, draw up a prenuptial agreement that includes the conditions for the partnership with a civil law notary who specializes in international matrimonial property law
– Be sure to include which national law is to apply to your registered partnership
– Should you wish to convert your registered partnership into a marriage – knowing that the conversion will not be recognized, meaning that the registered partnership will have to be dissolved – be sure to draw up a will in which you appoint your partner as your heir
– And in general: avoid complications and get married!

ABOUT THE AUTHOR

Yolanda Bokhorst is a deputy civil law notary with Ohmann Notariaat in Wassenaar.
She can be contacted at tel.: 070 – 312 31 31 or by e-mail: yolanda.bokhorst@notariaatohmann.nl

www.ohmannotariaat.nl

.

By Diane Lemieux, co-author of the book The Mobile Life

In The Mobile Life: a new way of moving anywhere, we describe the process of moving abroad like an expedition. Parents on this family journey to an unknown land are the captains on the ship, each with their own role to play in the success of the mission. Your children are your crew.

We all know intuitively that you have a better chance of succeeding in your mission if your team members support the project: you want everyone rowing in the same direction, and with some level of enthusiasm. But it is never easy to move children from the world they know to a vague promise of a new life elsewhere.

Judging by the streams of happy faces in the international schools in the Netherlands, parents do a great job of helping their kids resettle. Sometimes, we aren’t conscious of the skills and techniques we use for helping our children adjust. Below are four skills borrowed from leadership theory that provide an approach to consciously supporting children through an international move.

1. Evaluate each child in terms of their motives, perspectives, needs and attitudes to the move. Each has different needs: the age and character of each child will influence how they react to, and how you can help them deal with, the enormity of the change they face with an international move.
2. Communicate openly with each child individually, and collectively as a family: explain the reasons for the move and the team’s common goal (which should be something like creating opportunities for everyone to have a good life at their new place). Describe the process of change that the family faces, being realistic with the fact that some aspects of the move are good, and others may be less so. Yes, they will miss friends, no, they can’t take their room with them. Most importantly, listen without judgement to their feelings, desires, hopes and fears.
3. Investigate your new environment, like you would explore a new planet, to find the activities that make each child’s life there worthwhile. What is special about the Netherlands that will make the experience of living here memorable for the rest of their lives? How will their new environment contribute to their growth and development as individuals?
4. Motivate your children by being a source of answers to question and solutions to problems. Help them be curious about their new home, and, especially with older children, stimulate them to take responsibility for the way they experience their life here.

Remembering that the family is a team also gives a role to children in the success of the expedition. Children are quick learners and may gain a good command of the Dutch language way before you do. They may get a hang of local habits and be able to explain things to you. Using the skills of this team-oriented approach to moving will avoid having a family member turn to you at some point and say ‘I am unhappy and it is your fault because I moved because of you.’ Children may not have control over the decision to move, but they can contribute to the choices about how to move and what the end result looks like.

For more tips and ideas buy the book at www.themobilelife.eu

Diane Lemieux has lived in 11 countries on five continents during which she collected 4 languages, two passports and several cultural identities. She is a journalist and author of four books including The Mobile Life: a new approach to moving anywhere.

This article was originally published in The XPat Journal Summer 2017 Issue

By Yolanda Bokhorst

I am often asked whether it is really necessary to draw up a will. Isn’t everything already arranged in the law? And when it comes to international situations, don’t we have the European Inheritance Act?

It is a mistake to think that national laws and the European Inheritance Act contain the optimal solution for each individual situation. General rules and regulations by definition do not take into account personal circumstances. Especially in international situations, it is important to draw up a clear will that states what is to happen should you pass away. This will help your heirs avoid a lot of hassle!

Reasons for Drawing Up a Will

1. Including or excluding certain persons
The law contains a certain order in which the persons you leave behind inherit from you. But that is not necessarily the way you want it to be. Sometimes you want your legally appointed heir to receive less – or nothing at all. Or maybe you want to leave something to someone who is not related to you.
Unmarried partners are not automatically heirs. You need a will to leave something to the partner with whom you are living, but to whom you are not married.

2. The position of married partners vs. the children
In the Netherlands, there is the so-called statutory division that applies to spouses and children. The longest-living spouse inherits all property and debts and the children must wait for that spouse to pass away before they get their portion of the estate. The surviving spouse can use up everything, as a consequence of which – for instance – all private property originating from the family of the deceased parent could be gone by the time the second parent dies. Aside from the fact of whether or not this is truly desirable, this system often leads to complications in international situations, as it is a typically Dutch arrangement.

3. Specific arrangements for property located abroad
If you have property that is located outside the EU, then – once you pass away – it is not always clear which inheritance law applies to this property. The national laws of the various countries can be conflicting.
With a clear will, you can determine what is to happen to your house or savings abroad. In practice, the settlement abroad will work out well if there is a testament that clearly states what your intentions are.

4. Appointing a guardian for the under-age children
Should both parents pass away, a guardian will have to raise and represent the children. In your will, you can determine whom this should be. You can also make a list of alternative options, should the initially-appointed guardian not be willing or able to take on the responsibility.

5. Appointing an administrator
An administrator manages the inherited wealth until the children or other heirs have reached a certain age. This helps avoid the situation in which the heirs gain control of the wealth at a very young age. In your will, you can appoint an administrator – and determine until what age of the heirs this will last. You can also determine what the authorities of this administrator are.

6. Fiscal optimizing
If you pass away while living in the Netherlands, Dutch inheritance tax will be due over your worldwide property and assets. Sometimes, property that is located in another country will be subject to inheritance tax in that country as well, which will lead to double taxation.
Though heirs owe inheritance tax in the Netherlands, there are also exemptions that apply to them. The amount of the exemption depends on the relation between the deceased and the heir.
In a will, you can make optimal use of the tax brackets and exemptions. This can help limit the amount of tax due.

7. Avoiding fiscal complications
The European Inheritance Act that entered into force in 2015 has led to a harmonization of the laws applicable to inheritances and their settlement. However, it does not cover inheritance tax. Every country will continue to apply its own rules on inheritance tax. And sometimes, the fiscal rules in one country do not take into account the rules on inheritance of another country. For instance, the Dutch rules on statutory division (mentioned under 2), sometimes result in higher inheritance taxes abroad. A will can help you avoid this type of situation, by declaring the statutory division not applicable and making other arrangements that do not result in this fiscal complication abroad.

8. Appointing an executor
When someone passes away, a lot has to be arranged. To help your heirs do this, you can appoint an executor. This will take a load off their hands. The executor can be a relative, a good friend or a professional executor. They can arrange the funeral, manage the estate, carry out the related administration and take care of the tax returns. They are responsible for the settlement of the estate, so that it can be distributed among the heirs.
Of course, the executor does not have to figure out everything on their own. In the Netherlands, the civil law notary not only draws up and issues the necessary legal statements; they are also an expert who is there to answer any questions the executor may have and to lead him or her through the entire process of settling the estate.

Would you like to know whether your will contains potential ambiguities or complications that can be avoided, and would you like to obtain more information on this topic? Then be sure to make an appointment with a civil law notary who specializes in international inheritance law.

ABOUT THE AUTHOR

Yolanda Bokhorst is a deputy civil law notary with Ohmann Notariaat in Wassenaar.
She can be contacted at tel.: 070 – 312 31 31 or by e-mail: yolanda.bokhorst@notariaatohmann.nl

www.ohmannotariaat.nl