Good afternoon mike99517 and thank you for your question. Though a
difficult one, I do believe I have an answer for you.
According to Dutch tax laws, individuals residing in the Netherlands
can be liable for the following taxes: income, salaries and social
security contributions, corporate income, dividend withholding tax,
inheritance and gift tax, value-added tax (BTW), motor vehicle tax,
environmental taxes and local taxes.
Individuals are NOT considered residents if they are in the
Netherlands for less than 183 days a year, the location of the family
home is in an another country, and/or that the company they work for
does not have an office or branch in the Netherlands.
As far as gift tax goes, this is what the Dutch tax laws say:
"Inheritance Tax Act has two forms of tax, which are inheritance tax
and gift tax. These taxes are, in general, to be paid by the
recipient. There are substantial exemptions from both inheritance tax
and gift tax?The rates are the same for these taxes, and depend on the
value of the assets that have been received and the relationship
between the giver and the recipient. There is a minimum and maximum
Source: Taxation in the Netherlands (page 8)
( http://www.expatax.nl/Documents/Taxation2001.pdf )
The brochure, Taxation in the Netherlands 2005 states:
"Gift tax is a tax levied on the value of anything received by way of
a gift from an individual resident in the Netherlands."
Source: Taxation in the Netherlands 2005 (page 24)
Another article states:
"If the donor or the deceased is an individual who holds the Dutch
nationality, he will be deemed to be resident in The Netherlands for
purposes of Dutch gift and inheritance taxes if he has been resident
in The Netherlands at any time during the ten years preceding the date
of the gift or his death.
If the donor is an individual who does not hold Netherlands
nationality, or an entity, he or it will be deemed to be resident in
The Netherlands for purposes of Netherlands gift tax if he or it has
been resident in The Netherlands at any time during the twelve months
preceding the date of the gift.
Furthermore, in exceptional circumstances, the donor or the deceased
will be deemed to be resident in The Netherlands for purposes of Dutch
gift and inheritance taxes if the bene?ciary of the gift, or all
bene?ciaries under the estate jointly, as the case may be, make an
election to that effect."
Source: TPG 2004 annual report and Form 20F
This article, if I understand it correctly, indicates that if you are
not a resident of the Netherlands and you have not been a resident
during the 12 months prior to giving your children this monetary gift,
the amount would not be taxable under the gift tax laws. Of course,
this article refers to corporations and shares of stock but I assume
the issue of residency to be the same whether or not it was a monetary
gift from a personal bank account or shares of stock.
"...some amounts are exempt from gift tax. They include exemptions for
gifts made by parents to children..."
Source: Taxation in the Netherlands 2005 (page 24)
Again, if I understand from this statement, I believe that the
monetary gifts you give your children would not be taxable under the
gift tax laws.
According to the Dutch tax tables, gift taxes which are not exempt are
taxed as follows:
For spouse, certain partners and children:
5% for the first 21.509 euro
Everything above 860.095 euro is taxed at 27%.
Source: Dutch Tax Rates 2005
( http://www.dutchtax.net/Dutch/Memos/TaxRates2005.htm )
Per the conversion chart at ( http://www.xe.com/ucc/ ), $11,000 US
Dollars is roughly 9,123.91 Euros (based on 1 USD = 0.829446 EUR) If
this is the case, and your children are not exempt from paying gift
taxes, they will have to pay 27% of 9,123.91 euro, which is
Since the Dutch tax laws are very vague, I would suggest you have one
of your children contact one of the following offices for more
Ministry of Finance
Publiek Voorlichting (Public Information)
070 342 7542
National Tax Information
0800 0543 (free phone)
(recorded menu option 5 for general information)
Local Tax Offices
020 687 7777
070 330 4000
035 626 3201
(recorded menu option 2)
Terra Nigrastraat 10
043 354 5200
Laan op Zuid 45
010 297 6666
H Gorterstraat 55 - 75
030 223 1122
This site ? ( http://www.expatica.com/source/site_content_bizdirec_item.asp?channel_id=1&country=NL&category_id=105
) ? lists several different taxation agent in the Netherlands that
could also be of help.
Lastly, you stated that your children have duel citizenship. If they
are partners in a US based partnership, there might be some sort on
monetary compensation for their role in that partnership. If that is
so, they will also have to pay Federal and State taxes in the United
states on this ?income?. In regards to the ?gift?, the IRS tax
publication 950 states that you do NOT have to pay state or federal
taxes on any gift/inheritance.
IRS Publication 950, Introduction to Estate and Gift Taxes states:
"No tax on the person receiving your gift or estate. The person who
receives your gift or your estate will not have to pay any federal
gift tax or estate tax because of it. Also, that person will not have
to pay income tax on the value of the gift or inheritance received."
Source: ( http://www.irs.gov/pub/irs-pdf/p950.pdf )
I hope this answers your question. If you need any further
clarification before rating, please do not hesitate to ask!
Dutch Ministry of Finance
( http://www.minfin.nl )
( http://www.dutchtax.net/ )
Google Search Terms:
( ://www.google.com/search?hl=en&lr=&q=dutch+taxes )