Netherlands: Overview

RENTAL YIELDS

Last Updated: Jun 12, 2008

Amsterdam yields good at 7%

Rental yields in Amsterdam have increased to 7.69% on the average. Smaller units of 80 sq. m generate gross rental income of up to around 8.75%. The average selling price of an Amsterdam apartment is around €3,161 per sq. m.

Apartments in The Hague have a higher yield at 8.97% for a 120-sq. m apartment, compared to only 6.63% in Amsterdam. Per sq. m prices are lower at €2,147 per sq. m.

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TAXES AND COSTS

Last Updated: Nov 19, 2008

Taxes are generally high in the Netherlands

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

Last Updated: Nov 08, 2006

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

Last Updated: May 22, 2008

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

Last Updated: Nov 07, 2008

Slower economic growth expected

The Netherlands, with a population of 16.5 million, is one of the most densely populated countries in the world, with GDP per capita of US$46,774 in 2007. It was one of the original countries to adopt the euro.

The Dutch are strong advocates of free trade. Aside from the EU, it is an active participant in the United Nations. The Netherlands is also a member of other multilateral organizations such as the NATO, the Organisation for Security and Co-operation in Europe, the Council of Europe, the OECD, the WTO, and the IMF.

The Dutch government is in the form of a constitutional monarchy with parliamentary system. The Netherlands is commonly described as a consociational state.

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.

Real private sector wages rose by an average of 3.6% annually between 1996 and 2001; while average inflation was only 2.7%.

The Dutch economy was in the doldrums from 2001 to 2005, during which it achieved an average GDP growth of 1.2% annually. Recently, the economy returned to form with 3.0% GDP growth in 2006 and 3.5% in 2007.

However, economic growth is expected to slow to 2.3% in 2008 and 1.0% in 2009, due to the weaker international economy and higher interest rates.

Inflation in 2007 was 1.6%, well below the euro area average. However, inflation is expected to rise to 2.9% in 2008 and 2.6% in 2009, due to higher indirect taxes.