Complicated inheritance tax from the Netherlands help please!

classicbike

Hi

I'm from the Netherlands and have been living here for over 10 years, my parents want to do a bit tax reduction in Holland.

What happens is they give me a one off gift which I then lend back to them for an annual interest cost.
I'm not exactly sure how this works, as this is Dutch inheritance tax rules being used, but it will cut down on the amount of tax I will have to pay in the future.

I really need advice how this affects me in the UK, also any advice on UK/Dutch inheritance tax rules please.
Thanks

fengirl_2

As this is a UK tax forum, I think you will have to ask elsewhere for information on Dutch IHT.
As far as the Uk is concerned, there is no gift tax, so you would not be liable for any form of tax on this money. IHT is payable by the executors of a UK estate, so you would not be liable if your parents died withn 7 yrs.
You would, however, be liable to UK tax on the interest paid to you by your parents.

dzug1

In the UK you will be liable for income tax on the interest they pay you.

As to Dutch inheritance tax rules - no idea. Consult a Dutch solicitor or equivalent.

Cook_County

As you are a UK resident you would also withhold UK tax on interest that you pay to them.

dzug1

Cook_County wrote: »

As you are a UK resident you would also withhold UK tax on interest that you pay to them.

True - but OP is receiving interest, not paying it

John_Pierpoint

I wonder if it applies the other way round, so you will have to declare foreign income and the double taxation agreement for the Dutch witholding tax so the money does not get too much over taxed?