The Netherlands is one of the most stable and attractive countries in Europe for real estate investments. Transparent legislation, developed market, high demand for rentals make this country interesting for both private owners and investors. However, before buying an apartment or house, it is important to understand what taxes you will have to face – both when buying and during further ownership.
The main taxes when buying real estate in the Netherlands
1. Transfer Tax (Overdrachtsbelasting)
This is the main one-time tax when buying a property on the secondary market.
Standard rate: 10.4% of the purchase price (effective January 1, 2023).
For homes purchased for own residence: 2% rate.
For buyers under the age of 35 (first-time buyers of a home up to €510,000): the rate can be 0% (exemption if all conditions are met).
Please note: if you buy a property to rent out, even as a private individual, the 10.4% rate applies.
2. VAT (BTW).
VAT only applies when you buy a new property from a property developer.
Rate: 21% of the value of the property.
In case of purchase with VAT, no transfer tax (Overdrachtsbelasting) is charged.
Annual property taxes
1. Municipal property tax (Onroerendezaakbelasting, OZB)
This tax is paid by all property owners (both natural and legal persons).
It is based on the assessed value of the property (WOZ-waarde), which is determined annually by the municipality.
The rate varies depending on the city, usually from 0.035% to 0.12%.
For example, if the WOZ-value of a house is €400,000, the tax could be between €140 and €480 per year.
2- Waterschapsbelasting – tax on water management
The Netherlands is a country with an active water infrastructure, so there is a special tax:
It is paid by all property owners.
The amount depends on the region and the type of property, but is usually between €100 and €400 per year.
3- Local charges: garbage, sewage, etc.
The property owner also pays a number of local fees that vary by municipality:
Waste disposal (afvalstoffenheffing)
Sewerage fee (rioolheffing)
Charges for public services
Together these can amount to €300-€700 per year.
Taxes on rental property
In the Netherlands, rental income is taxed according to a tax ‘box’:
In most cases, unless you are a professional landlord, the property falls into Box 3 (capital tax).
Income is not directly taxed, but the condition of the assets (including the market value of the property) is taxed.
The effective rate is between 1.2% and 1.71% of net worth (after deducting debts).
Example
Purchase of an apartment in Amsterdam for €450,000 for own residence:
Property transfer tax (2%): €9,000
Municipal tax (approx. 0.1% of WOZ): approx. €450 per year
Garbage and sewerage fees: €500 per year
Waterschapsbelasting: €200 per year
Total annual taxes and fees: about €1,150
Buying property in the Netherlands requires a good understanding of the tax system. The main one-off tax is 2% or 10.4%, depending on the purpose of the purchase. This is followed by annual local and water charges, as well as taxation in the case of renting. To properly evaluate an investment, it is important to consider not only the purchase price but also the long-term fiscal obligations. In case of doubt, it is advisable to consult a local tax advisor or notary.
