Netherlands: Overview

RENTAL YIELDS

Yields are moderate at 5-7% in Amsterdam

Central Amsterdam is an expensive place to buy property, with prices at €8,000 per sq. m.

Gross rental yields range between 4.50% to 8.25% in Central Amsterdam, and from 3.30% to 5.50% in the suburbs, according to Global Property Guide estimates (for comparison, the IPD has gross yields of 4.2%). In Den Haag and Utrecht, apartment gross yields are at around 7%-7.5%.

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TAXES AND COSTS

Taxes are generally high in the Netherlands at 30%

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	15%	17.3%	20%
Click here to see a worked example
Source: Disclaimer

Rental Income: The income tax on renting residential property is quite high, though the tax is not really an income tax. In reality it is a flat tax, with 30% levied on the assumed rental yield, the basis of assumption being that a rental yield of 4% is made on the assets. In effect, an annual tax of 1.2% is imposed on the value of the assets. If your rental property yields more than 4%, the proportionate tax rate is lower.

Capital Gains: The sale of real estate that was used as part of a rental business enterprise, capital gains are taxed as part of income in Box 3 i.e. 30%.

Inheritance: Wealth acquired by inheritance from an individual who has properties in the Netherlands is subject to inheritance tax. Different rates apply, depending on the relationship between the heir and the testator where there are three categories.

Residents: Residents are taxed on their worldwide income.

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BUYING GUIDE

Total transaction costs are moderate in the Netherlands

Total transaction costs are between 10.5% and 13.74% of the total dwelling price for existing houses, which is moderate by international standards. The bulk of these costs are paid by the buyer, including the Transfer Tax (6%), legal fees and registration fees. Real estate agent’s commission at 2% to 4% (plus 19% VAT) is shared between buyer and seller.

If the property is newly constructed (or less than two years old) the Transfer tax is replaced with the 19% VAT.

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LANDLORD AND TENANT

Almost impossible to evict tenants in the Netherlands

Dutch rental market practices are pro-tenant.

Rent: Landlords can set the rent freely and adjust the rent, for properties above the ‘liberalization rent limit’ of €604.72 per month. A deposit of two to three months is customary.

Tenant Security: The most dangerous aspect for a landlord in the Netherlands is that once a property has been rented, tenants are almost impossible to evict. The basic Dutch rental contract is one of unlimited duration. Landlords can only give notice in strictly defined cases, and it is extremely difficult for owners to evict tenants once they are established.

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ECONOMIC GROWTH

Economic growth has returnedCO-NLO-F02

The Netherlands, with a population of 16.3 million, is one of the most densely populated countries in the world, with a GDP per capita of US$43,386. It was one of the original countries to adopt the euro.

The Dutch economy was in the doldrums from 2001 to 2005, during which it achieved GDP growth of less than 0.75% per annum. Growth has now revived.

The accepted explanation for Holland’s slow growth was the demise of the ‘polder model,’ named after the Low Countries' famous land reclamation projects, called polders.

During the previous decade, policymaking by consensus between the government, unions and employers kept wages low, which led to an unprecedented economic boom in the latter half of the 1990s, with virtually no unemployment, thriving growth, low inflation and strong exports. More recently wages began rising faster than in neighbouring countries, pricing Dutch goods out of international markets.

Now however, increased labour market flexibility has restrained wages, and growth has revived.