If you are like many Americans, you may be gifting amounts to your children, grandchildren, friends, etc. each year. Or perhaps you are the lucky recipient of such a gift. If so, you are probably familiar with the US rules that allow you to gift up to $13,000 in 2010 (or $26,000 if combined with your spouse) to as many related or unrelated individuals as you choose, without having to file a US gift tax return or pay gift tax in the US.
However for Dutch residents, there is a different (additional) set of rules that present a potentially costly trap for the unaware!
Receiving a Gift:
In the Netherlands, the recipient of a gift is the one who needs to pay gift tax (in the US it is the person giving the gift). So it is no problem for you to receive gifts of any amounts from anyone in the world, except for someone who is domiciled in the Netherlands. In the event you do receive a gift from a Dutch resident you may need to pay gift tax (see the next section).
Giving a Gift:
As of 2010, the rules in the Netherlands were simplified quite a bit.
Tax-Free Gifts
There are two categories of recipients with regards to the annual tax free gifts:
1) Children: EUR 5,000 (one time gifts of EUR 24K or EUR 50K allowed for children 18-35, with restrictions and filing requirements)
2) Others: EUR 2,000
Note that for Dutch tax purposes, you only get one amount each recipient if you are married, not double the amount as you do in the US.
Taxable Gifts
If you exceed these amounts, the recipient is subject to gift tax (whether Dutch tax resident or not). There are three categories of gift recipients and two tax brackets for each.
Gift Tax Due on Gifts in Excess of Tax-Free Amounts:
1) Partners & Children: 10% tax on the first EUR 118,000; 20% for amounts above EUR 118,000
2) Grandchildren: 18% tax on the first EUR 118,000; 36% for amounts above EUR 118,000
3) Others: 20% tax on the first EUR 118,000; 40% for amounts above EUR 118,000
Planning tip: If you are very wealthy and plan to live in the Netherlands until your death, it may make sense to gift amounts up to EUR 118,000 (per recipient) each year to take advantage of the 50% lower tax (as compared to the tax on amounts remaining in your estate).