Death, taxes and marriage: What they all mean for inheritance

Death, taxes and marriage - three items which are seldom mentioned in the same sentence. Most people feel unwilling to discuss these topics, so Arnold Waal from Tax is Exciting felt compelled to do this for you.

Death, taxes and marriage / registered partnerships are all important, and mostly inevitable, parts of being a human. Although these things can be difficult to think about at times, it is good to be aware of what you need to do when you eventually encounter these situations.

Death taxes

Even when you die, taxes will have to be paid on your behalf. Specifically, many older people have a written will which states to whom their valuable assets (e.g. money, property) will go in the event of their death. These assets are known as an inheritance.

If you are leaving behind an inheritance for your loved ones, they may be liable to pay inheritance tax on it in the Netherlands. If a deceased person does not have a will, then the inheritance is divided equally between the person's (married or registered) partner and their children.

When do you pay inheritance tax?

Inheritance tax must be paid if you die in the Netherlands and are a Dutch tax resident - regardless of your nationality. If you die in the Netherlands while on holiday in the country, this does not result in Dutch inheritance tax.

The Dutch are good at finding ways to not pay taxes. Some Dutch people anticipate their death, due to illness for instance, which could trigger them to quickly book a flight to the US or another country where the inheritance tax is much lower or even non-existent.

To prevent such "death trips", the following rule is put in place: if a Dutch person dies within a 10-year period from the moment they left the Netherlands and stopped being a Dutch tax resident, it is assumed that this person died in the Netherlands. Even if they died in another country. In other words, Dutch inheritance tax still applies.

For those who are suddenly relieved that they never took up Dutch nationality, you need to be aware that there is another rule: non-Dutch nationals who die within one year of leaving the Netherlands are also assumed to have died in the Netherlands. So if someone did not have Dutch nationality, left the Netherlands and died within the period of one year, Dutch inheritance tax still applies.

Inheritance tax rates

Inheritance tax rates in the Netherlands vary according to the relationship between the deceased person and the beneficiary of the inheritance:

• Children and partners pay 10 percent on inheritances up to 138.642 euros, and 20 percent on inheritances over this threshold.
• Grandchildren pay 18 percent on inheritances up to 138.642 euros, and 36 percent on inheritances over this threshold.
• Everyone else pays 30 percent on inheritances up to 138.642 euros, and 40 percent on inheritances over this threshold.

However, some important inheritance tax exemptions also apply, depending on the relationship of the person inheriting to the deceased. This means that a certain portion of the inheritance is exempted from taxation:

• For spouses and registered or cohabiting partners, the exemption is up to 795.156 euros in 2024
• For children, foster children or stepchildren: up to 25.187 euros
• For grandchildren: up to 25.187 euros
• For great-grandchildren: up to 2.658 euros
• For children with disabilities: up to 75.546 euros
• For parents: up to 59.643 euros
• For other heirs like siblings: up to 2.658 euros

Inheritance tax and marriage

This is where the topic of marriage comes into the mix. As you can see from the information above, your relationship to the deceased person is a key factor when it comes to determining your inheritance tax bill. This can make a huge difference, financially speaking.

For example, imagine you live with your partner in a house you both own, but you are not married and not in a registered partnership. You purchased the house for 600.000 euros and it now has a WOZ value of 1 million euros, with 400.000 euros still left to pay on the mortgage. Let’s say this is the value of the estate.

Should the unthinkable happen – and your partner, a Dutch tax resident, dies – inheritance laws may well mean that you end up with nothing. Instead, your partner’s family (their parents, let’s say) would inherit the estate. They would also receive a hefty inheritance tax bill, with just shy of 60.000 euros of the estate exempt from tax (the exemption rate for parents). On the rest, they would pay 30 percent on the first 138.642 euros and 40 percent on anything above that threshold. That’s a tax bill of somewhere in the region of 100.000 euros. Most likely, your partner’s family would be forced to sell the house to pay the bill, leaving you in a tricky situation.

If you were married or in a registered partnership, on the other hand, you would not only inherit the estate, but also benefit from the inheritance tax exemption of 795.156 euros. That would mean that the same inheritance (that 1-million-euro house with the 400.000-euro mortgage) would be fully exempt from taxation. No inheritance tax would be due.  

As you can see, it might not be the most romantic reason for a proposal, but the topic of inheritance taxes can easily convince a couple that being married or in a registered partnership is a “neater” – and often safer – option, should the unthinkable happen.

There are 2 million people living together in the Netherlands without any legal organisation – not married, not in a registered partnership. Thinking about your own mortality can be a difficult topic to broach, but were the worst to happen, you would want your partner to be in a safe financial situation, with a roof over their head.

Take care of your loved ones

Death is an inevitable part of life. It is therefore important to consider the legal aspects of inheritance so that you do not leave your loved ones in a difficult financial situation. If you are married or in a registered partnership, the inheritance is divided for you. In other cases, you can ensure that your inheritance is distributed in the way that you want by entering a cohabitation agreement with a civil-law notary.

If you are getting married or entering a registered partnership, the team at Tax is Exciting can help, ensuring you take care of your loved ones should the unthinkable happen. They also offer a fixed fee for couples filing their joint income tax returns.