How do taxes for expatriate homeowners work in the Netherlands?
When you buy a home in the Netherlands, you’ll soon be confronted with taxes concerning that new house. Aside from the taxes involved with buying a house, which are usually one-off taxes, there are also a bunch of recurring taxes. Most of the taxes that concern your home are collected by the municipality you live in. A few other taxes are collected by the tax authorities, and a government body called the Waterschap collects one particular kind of tax.
Almost all of the taxes you have to pay for your home are calculated based on the WOZ-Waarde of your house. The WOZ value is calculated every year by your municipality and doesn’t necessarily have to be the same value an appraiser would give your home.
You might have already heard about the possibility to deduct your mortgage interest with the hypotheekrenteaftrek. But unfortunately, when it comes to owning a home, you don’t just get money back from the tax authorities. There are also some taxes that you need to pay. These are the overdrachtsbelasting and the eigenwoningforfait.
When you buy an existing house as opposed to a newly build house, you need to pay overdrachtsbelasting. This is a one-off fee and is 2% of the price of your house. When you buy your home, the notary that also passes the contract handles the declaration of the overdrachtsbelasting. The notary will also pay for the overdrachtsbelasting in your name.
The eigenwoningforfait is a recurring tax collected by the tax authorities from homeowners. Your house is seen as income in kind by the tax authorities. Instead of paying a certain amount of tax for your home, the eigenwoningforfait is added up to your income and you pay for it through your regular income tax filing. It’s calculated based on a percentage of the WOZ-Waarde of your house, and the higher the value of your home, the higher the rate you have to pay.
The eigenwoningforfait is paid through your income taxes every year. Say your house’s WOZ value is €500.000 that means that the eigenwoningforfait is 0,75% of €500.000 is €3750. That amount is added up to the rest of your income. On the other side, however, your hypotheekrenteaftrek is deducted from your income. So, the amount of income tax you’re paying is calculated like this:
yearly salary – hypotheekrenteaftrek + eigenwoningforfait = taxable income
Besides the taxes you’re paying to the tax authorities, there are also other taxes that are paid directly to your district. There are the onroerendezaakbelasting, rioolheffing, reinigings- and afvalstoffenheffing.
Your municipality uses this tax for miscellaneous things. The person that owns a house on the 1st of January is paying for the OZB. Even if you’re moving on the 2nd of January, you’re paying the tax for the entire year. The amount of tax you need to pay is a percentage of the WOZ-Waarde. Every municipality, however, decides what the percentage is that you’re paying. To give you an idea of the percentages of the OZB, the lowest rate in 2018 is 0,04139% of the WOZ-Waarde. Surprisingly, it’s the city of Amsterdam that has the lowest OZB percentage in the Netherlands. The highest rate is collected in Nijmegen, and that rate is 0,2612%.
You pay this tax for the right to use the sewer. With the charge, your municipality makes sure that the water you use in your home is drained. The city also uses the charge to drain and save rainwater, to keep groundwater in check, and to maintain the sewer system. Again, every municipality decides on the tax amount, but they aren’t allowed to tax their citizens more than what they need to finance the tasks as mentioned earlier.
Reinigings- en afvalstoffenheffing
By paying this tax, your municipality can collect and clean up your garbage disposal. Again, the city decides on the amount you’re paying for this tax, but they’re not allowed to ask for more than they need to perform their task.
The Dutch are known to be masters of water. That’s why they are asked to give their expertise on water all over the world. Historically, the Dutch had to learn to manage the water surrounding the Netherlands. To handle that water an individual government body called the Waterschap was created.
The Waterschap is responsible for managing the water in a designated area. It’s their duty to make sure you receive clean water in your home and to protect you from the water surrounding the Netherlands. To fund the responsibilities of the Waterschap, everyone has to pay waterschapsbelasting.
Taxes for the waterschap responsible for your municipality are paid directly to them. They send you an invoice for the charge once a year, or you can agree with them to pay in installments. The amount of the tax depends on where you live and can be anywhere between €150 and €300 a year. The waterschap is a non-profit organization, so they too won’t ask for more tax than they need.
So, those are all the taxes involved in owning a house. Some of which by the way, are also imposed on renters.
If you’re thinking about buying a house in the Netherlands, why not find out how much you can take out in a mortgage? That way, you can start looking at homes that you know are a right fit for you financially speaking. Contact us at +31 (0)23-3030110 or email@example.com to set up a free and non-binding appointment where we can discuss your options.
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