Caution! You are investing outside of AFM supervision. No licensing requirement for this activity.

Caution! You are investing outside of AFM supervision. No licensing requirement for this activity.

Caution! You are investing outside of AFM supervision. No licensing requirement for this activity.

For sale

Caution! You are investing outside of AFM supervision. No licensing requirement for this activity.

For sale

Tax aspects of buying a recreational home

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Fiscal aspects

The purchase of a vacation home in the Netherlands involves a number of fiscal aspects. Your personal situation plays an important role. We advise you to obtain information in advance about the specific fiscal aspects that apply to you.

Below is a brief explanation of the rules relating to sales tax (VAT), income tax and the small entrepreneurs' scheme that could be involved in the purchase of a vacation home in the Netherlands. Would you like to know more about the various fiscal aspects involved in the purchase of a vacation home?

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Sales tax (VAT)

The purchase of a new vacation home in the Netherlands is subject to 21% sales tax (VAT). Under certain conditions, it can be reclaimed from the tax authorities. The reclaim depends on how the property is used:

  • Full own use.
  • Full rental.
  • Combination of own use and rental.

We are happy to explain how much sales tax you can reclaim for each component.

Fully own use
If you buy the vacation home for own use, there is no question of entrepreneurship for sales tax (VAT) purposes. Therefore, the sales tax paid on the vacation home cannot be reclaimed.

Full rental
If you rent out the vacation home completely (year-round), then the sales tax (VAT) can be reclaimed. This is because renting out a vacation home is considered entrepreneurship. According to the tax authorities, there is entrepreneurship if the vacation home is rented out on a regular basis. There is no minimum number of 140 days of rental attached to this, as is often said. Even if the vacation home is rented out for less than 140 days, this is also considered entrepreneurship.

Combination of own use and rental
If you partly use the vacation home yourself and partly rent it out, you can reclaim part of the sales tax (VAT) from the tax authorities. How much this is depends on the number of days per year (in percentage) you use the home yourself. You determine this percentage when you purchase the vacation home (in consultation with the seller).

Example:
Upon purchase, the vacation home is intended for 50% rental and 50% personal use. If the purchase price of the vacation home is € 121,000 including VAT, then the VAT is therefore € 21,000. In that case, you are entitled to reclaim VAT of €10,500 (50% of €21,000) upon purchase. You cannot reclaim the remaining €10,500 of VAT because this portion was purchased for your own use.

In the last VAT return of the year, check whether the percentage of the rental of your vacation home matches the previous estimate. If this percentage differs from the previous estimate then you must correct this estimate. The difference will then be deducted from your sales tax return.

Read information here about buying a vacation home for your own use, rental or a combination.

Income Tax

In the Netherlands, an owner-occupied vacation home is taxed in box 3. This is determined on the basis of the value of possessions and debts allocated to box 3 on January 1 of the year in question. Then, after applying the levy-free capital, a percentage is used to determine a notional return based on the value of your box 3 assets.

Due to the Supreme Court ruling on December 24, 2021, the calculation of box 3 income (benefit from savings and investments) has changed. In the new calculation of box 3 income, it is based on the actual distribution of your assets divided into three wealth groups, and no longer on the fictitious distribution that was made. However, this cannot be applied until 2026. This means that the years 2021 through 2025, are so-called transitional years. During this period, the tax authorities will continue to calculate with notional returns, but they will be more in line with reality. The levy-free increase has been increased to €57,000 (for partners: €114,000).

The three asset groups and the notional returns per group are:

Asset groups Flat rate of return
Bank balances, savings and cash 2022: 0,00%
2023: 0,36%
Debts 2022: 2,28%
2023: 2,57%

Other assets
(including investments and real estate)

 2022: 5,53%
2023: 6,17%

Source: New calculation box 3 income 2022 - Tax Office & New calculation box 3 income 2023 - Tax Office

For 2022, the wealth tax rate is 31% on the notional total return, depending on how you divided your assets between savings, investments and debt. In 2023, it will be 32%.

Turnover-related VAT exemption

In 2020, the Small Business Administration (KOR) was replaced by a new relief for small business owners, a so-called turnover-related VAT exemption. This means that you do not have to charge VAT provided the turnover, on an annual basis, is less than a statutory amount of €20,000.

An important difference is that the new turnover-related exemption can only be applied upon request and no longer through a final declaration. If you as an entrepreneur apply the turnover-related VAT exemption, you will end up in a VAT-exempt position. Should you apply this, it means the following for you:

  • You cannot opt for taxed rentals and therefore do not owe VAT on the fee/rental income.
  • You cannot reclaim VAT on expenses (e.g. on the energy bill).
  • You cannot reclaim VAT on investments.
  • You no longer have to file a VAT return in most cases.
  • You do not mention VAT on your invoices. You do not even have to send invoices for VAT at all. You do need to keep your purchase invoices.
  • If you do become a VAT entrepreneur and choose the turnover-related VAT exemption, you may face refund obligations under the VAT revision scheme on capital goods and real estate.

In short, the bottom line is that if you start applying the turnover-related VAT exemption, you stop being a VAT entrepreneur and give up all the financial benefits associated with it in favor of administrative relief.

Advantage
The advantage of this new regulation is that small business owners get an exemption from filing VAT returns and related administrative obligations.

Disadvantage
The new scheme can be unfavorable if you invest or have invested heavily in your business. You will not be able to reclaim the amount of VAT paid to the tax authorities or will have to repay revision VAT. Another disadvantage of this new regulation is that you no longer calculate VAT on your sales and you cannot reclaim the VAT paid. In short, you have a lower net result.

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Be well informed in advance

Buying a vacation home in the Netherlands is an investment from which you can get a lot of (vacation) pleasure and return. However, there are many tax rules involved in the purchase. Always be well informed before purchasing a vacation home.

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This page has been prepared for the Dutch taxpayer. Additional/different tax regulations apply to foreign investors in Dutch recreational real estate.