Receiving gift/upfront inheritance/loan from DK without paying taxes

Dear All,

I am a Danish citizen, 48 years old, that has been living and working Netherlands for 15 years.
My Dad, who has no wife nor any other children than me, would like to give me money from my inheritance upfront, without any of us having to pay taxes of it. The laws of Denmark and those of The Netherlands both have a low threshold for when taxes must be paid of inheritance, so we are now looking for ways to not do this before it´s too late.
In Denmark, there´s a max of about 8000 EUR that one can give as a gift to a family member without paying any taxes. AFAIK it´s even lower in NL, and I would be interested in knowing whether if NL or DK rules apply here.

For the rest, there´s an option in DK to setup a loan for me as a beneficiary from my Dad. This loan is not taxed, and can be without requirements of interest and down payments. The best is for such an arrangement to once a year write off part of the loan "spontaneously". For this type of agreement, there is no limit and obviously the optimal solution to our "problem".
So I would like to know if any implications may occur if we do so, initiated by the Dutch tax authorities?
I am aware that you can do the same between parties in the NL, but AFAIK there´s a requirement in such a case, for the loan to be for mortage, renovation, etc. of ones property. I guess that this does not necessarily apply when the loan is given from abroad in a country with a different set of rules?

And finally: My Dad lives in a house in which there´s no debt left. If I inherit it upon his death, and sell it, I would  assume that I´d need to pay inheritance tax, but what if he now would take a loan in the house´ free value at a low interest rate, and then lend me the money? Then the impact would be less.

Thanks in advance!

Hi and welcome to the Forum.

I can only speak in general terms, I'm not a tax adviser and I know nothing of your personal situation.

Inheritance is normally regarded as income; where you pay taxes on your worldwide income is decided by where you are regarded as being resident - so in your case the Netherlands.  Further, there is a double taxation agreement in place between the 2 countries; these generally mean that you won't be assessed for taxes in one country if they have already been assessed in the other - so you won't get taxed twice on the same money.  This is normally relevant if there is income which is obtained in Denmark and the treaty insists the taxes are paid there, the Dutch shouldn't tax you again.

So you will pay taxes on it at whatever the appropriate rate is; my advice would be to speak to a Dutch tax-advisor on how best to make use of any benefits that may occur.

I have found an online worldwide inheritance tax guide (link); if you go to page 224, it gives you the details of the Dutch inheritance taxes.  The link downloads a PDF file, I'd recommend you do it on a PC rather than a phone as it's a big document and the bigger screen size will make it easier to read.

One last thing, I only know of one person in a similar situation to yourself, her father just gave her the money upfront in cash and she paid the duties on the property when it became relevant some years later.

Hope this helps.

Cynic
Expat Team

Dear Cynic,

Thank you for your advise. But how about the situation where my Dad grants me a (not-mortage related) loan, are there laws in the Netherlands about taxation of such? If not, that would be the ideal way of achieving this.

Hi again.

Loans have to be paid back, so I suspect the Belastingdienst will want to see proper documentation for that.

Ok cheers, I think I´ll get in touch with belastingdienst for this then, as that´s the optimal solution.

Hi again.

Just be aware that all loans are regarded as income if you don't have to pay them back.  This was a typical tax avoidance scam that the tax people world-wide became aware of when many people with lots of potential "income" were advised by tax advisors that this would be a way to get around the existing tax rules; this gateway was subsequently closed.

Best of luck with it; please let us know how you get on as it may help others in a similar situation further on down the road.

Hope this helps.

Cynic
Expat Team

Yeah, this is why the Danish method works only if you set it up as a loan with a possible yearly downpayment (which then every year is erased by the loan giver). It´s not a difficult thing to do, but it´s important that there´s no doubt about the original intention of that it´s a loan and not a gift.

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