Published on and written by Cyril Jarnias
The Netherlands is often presented as a tax-friendly environment for investors, and real estate is no exception. Between the “wealth tax” regime in Box 3, corporate deductions, transfer tax reductions, special regimes for investment vehicles, and incentives for energy renovation, the framework is rich… and undergoing significant change.
Understanding taxation is essential for any investor, whether resident or non-resident, in order to effectively structure a real estate portfolio in the Netherlands and anticipate reforms already enacted or under discussion.
The Foundation: How Real Estate Is Taxed for Individuals
Before discussing optimization, it is crucial to understand where and how real estate is taxed in the Dutch system. Income tax is divided into three “Boxes”: Box 1 (work and primary residence), Box 2 (substantial interests), and Box 3 (savings and investments).
A property used as a primary residence is taxed in Box 1, whereas a second home, a rental apartment, or a vacation home is treated as an investment in Box 3. It is precisely in this last category that a large portion of the advantages – and risks – for private investors are found.
Box 3: From “Notional Return” to Actual Return
Through the end of 2027, investment real estate held by individuals is taxed under a transitional regime based on a notional return. The tax authority does not look at actual profit but applies a presumed percentage return to the net asset value.
For real estate and other investment assets, this theoretical return is relatively high and increasing. The table below illustrates the evolution of key parameters for an individual investor.
| Year | Type of Asset (Box 3) | Notional Return Rate “Investments & Other Assets” | Allowance (Single) | Box 3 Tax Rate |
|---|---|---|---|---|
| 2024 | Investment real estate, shares | Provisional, lower than 2025 | €57,000 | 36% |
| 2025 | Investment real estate, shares | 5.88% | €57,684 | 36% |
| 2026 | Investment real estate, shares | 7.78% (proposal) | €51,396 | 36% |
Concretely, a single investor holding a net real estate portfolio of €500,000 in Box 3 in 2025 is deemed to have a return of 5.88%, i.e., €29,400. After deducting the allowance of €57,684 (applied to the net asset value, not the return) and then applying the 36% rate, the effective tax corresponds to a levy on a return that the owner may never have actually received.
This system has been severely criticized and found contrary to European law when it taxes a notional return higher than the actual return. The Dutch Supreme Court has paved the way for a major change.
The “Counter‑Evidence”: A New Advantage for Low Returns
Following a Supreme Court ruling in June 2024, taxpayers with assets in Box 3 can now request to be taxed on their actual return when it is lower than the notional return.
This “counter‑evidence” mechanism uses the “Opgaaf Werkelijk Rendement” (OWR) form, which can be submitted from July 2025 via the tax authority’s online portal or through an advisor.
For real estate, several important rules apply:
– The change in value of the property is calculated based on the official WOZ value as of January 1 and December 31.
– In the case of a sale during the year, the annual gain is prorated between the seller and the buyer.
– Rents actually received may be included in the return calculation.
– Ordinary maintenance costs, transaction costs, or bank fees are not deductible in this calculation.
– However, all interest related to Box 3 debts is deductible, with no minimum threshold.
For a real estate investor with high leverage or modest rental income, the actual return (net rents + change in WOZ value) may be low or even negative. In that case, requesting taxation based on this actual return from the tax authority can result in a significant refund or tax reduction. This benefit is conditional on precise and complete documentation of the actual return achieved.
Towards 2028: A Major Reform of the Box 3 Regime
The current system is merely a bridge to a new regime. A bill, the “Wet werkelijk rendement box 3” (Act on Actual Return in Box 3), originally planned from 2028 a taxation as close as possible to the effective return.
Two main categories of taxation would be introduced:
– a capital growth tax for most investments (bank accounts, shares), based on annual income and unrealized capital gains;
– a capital gains tax for real estate and certain shareholdings (start-ups in particular), where the increase in value is only taxed upon realization.
For Box 3 real estate, the projected main principles are as follows:
Minimum number of rental days per year for a property to be taxed on its net rental income rather than a flat-rate surcharge.
Even though political debates are ongoing – the Council of State issued a critical opinion at the end of 2024, and the text must still pass through parliamentary scrutiny – the general direction is clear: for real estate, the future system will give more weight to actual returns, allow the deduction of maintenance costs, and shift the taxation of capital gains to the time of realization. For a long-term investor with a strong “buy & hold” component, this deferral is potentially advantageous for cash flow and gain capitalisation.
Advantages and Trade-offs: Private Investor or Company (BV)?
Beyond the choice of Box 3, a structuring question is the choice of investment vehicle: investing in one’s own name or through a corporation, typically a besloten vennootschap (BV)?
Taxation in a BV: Income and Gains Subject to Corporate Income Tax
A BV is subject to corporate income tax (CIT). The rate schedule for the 2024‑2026 period is as follows:
| Year | Taxable Profit Bracket | CIT Rate |
|---|---|---|
| 2024 | Up to €200,000 | 19% |
| 2024 | Above €200,000 | 25.8% |
| 2025 | Up to €200,000 (projection) | 19% |
| 2025 | Above €200,000 (projection) | 25.8% |
| 2026 | Up to €200,000 (projection) | 19% |
| 2026 | Above €200,000 (projection) | 25.8% |
Rents received, reduced by expenses (maintenance, local taxes, deductible interest, etc.) are taxed at these rates. Capital gains on the sale of real estate are also taxed as profit.
Several elements constitute real levers for the investor:
Tax depreciation of the building is possible up to the WOZ value. Borrowing interest is generally deductible, but rules are tightening from 2025 for rental companies. In case of a sale with a gain, a reinvestment reserve may allow tax deferral under conditions.
In addition, there is the possibility of establishing a “fiscal unity” between a holding company and its subsidiaries. In this context, profits and losses of different entities can be offset, and intragroup transactions are neutralized for CIT purposes. This helps smooth tax flows over time for a diversified real estate portfolio.
Global Comparison: Which Vehicle Is Most Advantageous?
Comparative calculations carried out by various firms show that there is no universal answer. An interesting indicator is the break-even return point estimated at around 4.8%.
– For a projected return above this threshold, investing in one’s own name, via Box 3, may prove more advantageous in the long term.
– Below this threshold, using a BV – especially if it allows significant depreciation, broad interest deduction, and loss carryforwards – becomes more favorable.
For an individual, unrealized losses or years of low returns on investments (Box 3 category in the Netherlands) do not create a stock of carryforward losses to offset future gains. In contrast, for a company, tax losses can generally be carried forward indefinitely to offset future profits, although this carryforward is subject to certain regulatory limits.
One must also consider the cascading taxation: once corporate income tax is paid, dividends paid to the owner (individual) are then taxed in Box 2, with a rate that in 2024 ranges from 24.5% to 33% depending on the amount. However, the BV + holding structure allows deferring this second layer of taxation as long as profits remain capitalised within the group.
Other factors sometimes favor the BV:
– Limited liability, which protects personal assets;
– Greater flexibility for transferring wealth to the next generation (via a holding company and a series of share donations);
– More optimization options (intragroup financing, structuring via transparent vehicles, etc.).
On the other hand, the costs of incorporation (approximately €4,000 to €5,000) and operation (€10,000 to €20,000 per year for governance and administration) are not negligible and must be factored into the profitability calculation.
Transfer Taxes: A Direct Lever on Entry Cost
In the Netherlands, the acquisition of real estate triggers the payment of a transfer tax, “overdrachtsbelasting,” managed by the notary when signing the deed. For an investor, the applicable rate strongly determines the entry cost.
A Differentiated Regime Based on Property Use
The regime distinguishes several cases:
– Primary residence purchased for own occupancy: 2%.
– Residential investment (rental, second home, vacation home, etc.): 10.4% in 2025, with a reduction to 8% planned from 2026.
– Non-residential real estate (offices, shops, warehouses, vacant land): 10.4%.
– Certain acquisitions of shares in real estate companies: 4% in specific cases of “new” buildings via share deals.
This is the announced decrease in taxation on residential properties not used as a primary residence, dropping from this rate to 8%.
The following table summarizes the evolution of these rates for a residential property by use.
| Year | Residential Property Use | RETT Rate |
|---|---|---|
| 2024 | Primary residence | 2% |
| 2024 | Investment (rental, second home, etc.) | 10.4% |
| 2025 | Primary residence | 2% |
| 2025 | Investment | 10.4% |
| 2026 | Primary residence | 2% |
| 2026 | Investment (buy‑to‑let, second home, etc.) | 8% |
In addition, there are targeted exemptions, notably for first-time buyers aged 18 to 35 purchasing their primary residence. Although not directly an advantage for a standard rental investor, this still structures exit demand and can influence portfolio arbitrage strategy.
The Netherlands provides a number of exemptions or mechanisms to avoid hindering economic reorganizations deemed legitimate.
In the context of contributing real estate to a newly established BV, a “contribution exemption” may apply if several conditions are met, including:
– at least 90% of the consideration must consist of shares in the company;
– an entire enterprise (not an isolated property for private use) is contributed;
– the share allocation accurately reflects the economic rights of the contributors in the original enterprise.
In case of exemption, holding conditions generally apply for a period of three years (retention of shares, continuation of the activity). The logic is to prevent tax from interfering with a purely economic reorganization.
On share deals, finally, an important point for club deals: when an independent investor buys less than one third of the shares in a real estate company, a transfer tax exemption may apply. This window is often exploited to structure syndicated participations without additional RETT surcharge.
Incentives and Special Regimes for Investment Companies
For institutional investors and certain funds, the Netherlands has established two main regimes: the fiscale beleggingsinstelling (FBI) and the vrijgestelde beleggingsinstelling (VBI). They aim to offer a competitive tax framework, although the focus is gradually shifting for domestic real estate.
The FBI Regime: 0% CIT Under Conditions
An FBI, which can take the form of an NV, a BV, a mutual fund (FGR), or an equivalent foreign vehicle, benefits from a 0% corporate income tax rate on its worldwide income. In return, several constraints apply:
– obligation to distribute all fiscal profit (excluding capital gains) within eight months of year-end;
– strict requirements for shareholder dispersion (no control by a single shareholder);
– debt limits: up to 60% of the book value of real estate assets and 20% for other assets;
– precise governance and transparency rules.
Distributions from a Real Estate Investment Foundation (FBI) are subject to a Dutch withholding tax of 15% on dividends. This withholding may be reduced or eliminated if an applicable international tax treaty provides for it. Additionally, foreign taxes already paid upstream on these income may be credited against this Dutch withholding.
In real estate, the FBI has long been a preferred vehicle, including for listed groups such as Unibail‑Rodamco, Wereldhave, or Eurocommercial Properties. However, the government now believes that this regime allowed foreign investors to improperly circumvent Dutch tax on certain real estate capital gains.
A major reform has therefore been initiated: effective January 1, 2025, an FBI can no longer apply the 0% rate to direct investments in Dutch real estate. It remains eligible, however, for indirect investments (via a taxable subsidiary) or for foreign real estate. To facilitate restructurings, a temporary transfer tax exemption is planned for 2024 for FBIs that convert into transparent funds.
The VBI Regime: A Tool Now Reserved for Regulated Funds
The VBI, on the other hand, is a vehicle fully exempt from corporate income tax. It has no distribution obligation and its distributions are not subject to Dutch withholding tax, but it cannot recover foreign withholding taxes. Its natural domain is financial instruments: direct investment in Dutch real estate is not permitted.
Since 2024, the VBI (Wealth Management Vehicle) regime is strictly reserved for vehicles subject to financial regulations (AFM, DNB). Former ‘family VBIs’, often used to optimize taxation of international portfolios, must now adopt a transparent tax treatment. Transitional mechanisms, such as spreading tax payments or converting into a company via share exchange, are provided to mitigate the impact of this transition.
For a real estate investor, the message is clear: the Netherlands wants to reserve these highly privileged regimes for regulated vehicles and discourage the use of opaque shells to host Dutch real estate directly.
Energy Renovation: Deductions and Subsidies with High Leverage
The energy transition offers another set of tax and financial advantages for real estate investors. The Netherlands has generalized the requirement for energy labels (energielabel) for homes and offices, with even a minimum floor (label C) for offices, subject to penalties. At the same time, a range of tax measures aim to encourage improvements in energy performance.
EIA, MIA, VAMIL: When Tax Financing Drives Renovation
Three main regimes stand out for companies:
In the Netherlands, three main tax schemes encourage sustainable investments in buildings. The EIA allows a tax deduction of 40% to 45.5% for listed equipment (heat pumps, insulation, etc.). The MIA grants an additional deduction of 27% to 45% depending on the building’s environmental performance, capped at €25M. Finally, the VAMIL regime allows free depreciation of up to 75% of the cost of green equipment, offering cash flow flexibility.
The combined effect of these schemes, at a CIT rate of 25.8%, can reduce the net investment cost by around 7% to over 10%. For a wealth investor, this capex reduction is combined with the market value increase typically seen for more energy-efficient buildings, as well as better liquidity upon resale.
The following table gives an order of magnitude of the impact on the net cost of an environmental investment.
| Scheme | Basis of Calculation | Max. Additional Deduction | Estimated Effect on Net Cost (at 25.8% CIT) |
|---|---|---|---|
| EIA | Investment amount (listed energy assets) | ~40–45.5% | Up to ~10.3% capex reduction |
| MIA | Investment amount (listed environmental assets) | 27–45% (≤ €25M) | ~7–11.5% capex reduction |
| VAMIL | Investment amount (listed environmental assets) | 75% freely depreciable | Cash flow advantage, no “nominal” reduction |
Operating subsidies, such as the SDE++ scheme, complement this arsenal for renewable energy production projects (solar, wind, hydro) integrated into buildings. However, granting these subsidies depends on the legal structure (ownership of panels, “producer” status) and often involves advance rulings with the tax authority and the RVO agency.
Market Impact of Energy Labels: A Value Bonus
Beyond purely tax advantages, improving a building’s energy label generates a value gain that studies of the Dutch residential market confirm. According to the real estate agents’ association (NVM), a home with label C sells on average 12% more than a comparable home with label G, a differential of around €50,000 for a standard property. In some less pressured areas, this gap can reach 15%.
Very energy-inefficient homes face increasing price discounts. Conversely, high-performing properties (labeled ‘green’) benefit from a market premium, reinforced by more favorable financing conditions for buyers, such as the possibility of obtaining additional loan amounts.
In other words, tax incentives (EIA, MIA, VAMIL, SDE++), regulatory constraints (label C for offices, fines for missing labels), and market reaction converge: for a real estate investor, investing in energy improvements is increasingly a strategy with a triple dividend: tax, regulatory, and wealth-related.
Non‑Residents, Expatriates, and Treaties: Protecting Net Return
The Netherlands does not impose restrictions on real estate ownership by non‑residents. From an income tax perspective, a non‑resident who owns a Dutch property must declare rents and capital gains in the Netherlands, as real estate is generally considered taxable in the state where it is located.
The 30% Regime and the End of Partial Non‑Resident Status
For highly skilled employees recruited from abroad, the Netherlands offers a so-called “30%” ruling, allowing up to 30% (27% from 2027) of gross salary to be paid as a net allowance, compensating for extraterritorial costs. This regime is limited in time (60 months) and subject to salary thresholds.
Until January 1, 2025, a transitional regime allowed expatriates to benefit from partial non-resident status. This status allowed being treated as a non-resident for taxes on portfolio investment income (Box 2) and wealth (Box 3), except for real estate located in the Netherlands. Under certain conditions, an expatriate could thus hold a portfolio of non-real estate investments without being taxed in Box 3.
This partial non‑resident status is now abolished for new entrants. A transitional mechanism allows beneficiaries of the 30% ruling as of December 2023 to retain this status for the years 2025 and 2026, but it will disappear completely from 2027. For expatriate real estate investors, this results in a convergence of the tax regime with that of other residents, while maintaining an exclusion from Box 3 for non-Dutch assets during the transitional period.
Tax Treaties: Avoiding Double Taxation
The Netherlands has signed double taxation treaties with over a hundred countries, including the United States, Canada, France, Belgium, Spain, and many others. In the vast majority of cases, these treaties confirm the principle that income and capital gains related to real estate are taxable in the state where the property is located, with the residence state granting a tax credit or exemption.
A French investor holding a rental property in Amsterdam first pays Dutch tax on the income and capital gain, with France then applying its rules to avoid double taxation. A US investor must also report this income to the United States but can generally credit the tax already paid in the Netherlands.
The existence of these treaties is not a “tax advantage” per se, but a safety element that allows structuring the investment with visibility on the overall tax burden.
A Favorable, Yet Technical and Evolving Environment
Taken as a whole, the Dutch framework offers real estate investors a rare combination: attractive transfer tax rates for rental investment, the ability to choose between wealth taxation (Box 3) and a company (BV), privileged regimes (FBI, VBI) for large portfolios, powerful incentives for energy improvements, and soon a regime for taxing actual returns that should correct the excesses of the old notional return system.
The gradual abolition of advantages (partial non-resident status, direct real estate FBI, ‘family’ VBI), the tightening of debt rules, the announced reform of Box 3, and increased scrutiny of structures perceived as abusive (StAK, hybrid structures) require investors to closely monitor legislative developments.
Ultimately, the Netherlands remains one of the most structured and predictable places for real estate investment, provided one accepts a certain technicality and relies on local expertise to fully leverage the numerous available tax levers, without crossing the red lines of anti-abuse rules.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
