If you receive an inheritance in 2020, you will often have to pay inheritance tax on this amount. However, there is an amount that is exempt from inheritance tax. The amount of this exemption depends on your relationship to the testator. For example, the highest exemption is for the partner of the deceased. This does not have to pay tax on the first 661,328 in 2020. For parents, children, brothers and sisters and non-blood relatives, the exemptions are much lower and the rate is higher.
Inheritance tax 2020
- Inheritance tax, what is it?
- Name change from inheritance tax to inheritance tax
- Exemption from inheritance tax in 2020
- Inheritance tax rate in 2020
- Situations in which you do not pay inheritance tax
- How do you file an inheritance tax return?
- Want to know more about your situation?
Inheritance tax, what is it?
As the name suggests, inheritance tax is a form of tax that you have to pay on an inheritance you receive. This is a progressive tax, the amount of which is largely determined by the answer to two questions:
- What is the amount of the inheritance?
- Who is the recipient of the inheritance and what relationship does this person have with the deceased?
Naturally, the higher the inheritance, the higher the percentage of the inheritance that must be paid in taxes. The capacity principle therefore applies to this. However, it is also important how close to the deceased you are. This means you pay the least tax if you inherit from your parents, and a little more if it concerns an uncle or aunt. If you are not related to the person who leaves you the inheritance, the inheritance tax or inheritance tax will be the highest.
Name change from inheritance tax to inheritance tax
Some people still talk about inheritance tax instead of inheritance tax. The two different terms for something that we mean the same thing may be a bit confusing. The tax underwent a name change in 2010. Since 1956 we have had the Succession Act, which lays down all the rules regarding inheritance. The amendment is officially called ‘Amendment of the Succession Act 1956 and some other tax laws (simplification of business succession regulations and revision of the rate structure in the Succession Act 1956, as well as introduction of a scheme for segregated private assets in the Income Tax Act 2001 and the Succession Act 1956)’ . The most important change in 2010, which accompanied the name change, was a simplification of the operation of the system. For example, the rules for exemptions have become simpler, so you know better where you stand.
Exemption from inheritance tax in 2020
If you receive an inheritance, you do not have to pay inheritance tax on the full amount. There is always an exempt amount. If the amount you inherit is less than the amount of the exemption, you do not have to pay inheritance tax. For example, if you are an inheriting child and you receive 25,000 inheritance, you do not have to pay tax on the first 20,946, but you do have to pay tax on the remaining amount. For more information about the scheme for disabled children, visit the Tax Authorities website. The amount of the exemptions for 2020* is as follows:
- For partners 661,328
- For parents: 49,603
- For children: 20,946
- For children with disabilities: 62,830
- For grandchildren: 20,946
- For great-grandchildren: 2,208
- For siblings: 2,208
- For non-blood relatives: 2,208
*These amounts are re-indexed annually.
Inheritance tax rate in 2020
The rate of tax to be paid on an inheritance in 2020 is as follows:
- For partners: 10% on the first 126,723 above the exemption and 20% on the remainder.
- For children: 10% on the first 126,723 above the exemption and 20% on the remainder.
- For grandchildren: 18% on the first 126,723 above the exemption and 36% on the remainder.
- For brothers and sisters: 30% on the first 126,723 above the exemption and 40% on the remainder.
- For other acquirers, 30% on the first 126,723 above the exemption and 40% on the remainder.
Situations in which you do not pay inheritance tax
If the person who leaves you an inheritance is not Dutch, you do not pay inheritance tax in the Netherlands. You may have to do this in another country. If the testator is Dutch but he or she lived abroad for more than ten years, you do not pay inheritance tax. If the deceased’s employer pays out a one-off benefit after the death, you as a beneficiary do not owe inheritance tax on this provided that the amount does not exceed three times the deceased’s last earned monthly salary. You also do not pay inheritance tax on a survivor’s pension.
How do you file an inheritance tax return?
If an executor has been appointed in the will, he or she will file an inheritance tax return on behalf of all heirs. If this is not the case, you will have to do it yourself. You can also choose to choose one person with all heirs to file a tax return on behalf of all. This is the safest because it prevents all tax returns from not covering the entire inheritance and from an additional assessment later. You can file your inheritance tax return digitally via the Tax Authorities’ website.
Want to know more about your situation?
Complex situations regularly arise within inheritance law where it is unclear what the amount of the inheritance is or how the relationship between the testator and the beneficiary should be defined. If you would like to know more about how much tax you have to pay on an inheritance, it is best to contact the Tax Authorities or a lawyer specialized in inheritance law.
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