This article is about tax rates for Dutch owners of a home in Greece. We answer common questions like “How will my home in Greece be taxed in the Netherlands?” and “Will I be Taxed Both in Greece and The Netherlands for my home in Greece?”
Taxation of Investments in the Netherlands
As a resident of the Netherlands, you are subject to taxation on your global income, including income from property in Greece. The Dutch personal income tax system comprises three ‘boxes’. Income derived from investments, such as real estate assets, fall under what is known as ‘box 3’, which also covers properties like a residence in Greece.
Over the past years box 3 is under scrutiny, as the question has arisen whether the current system conflicts with fundamental rights, particularly the right to ownership. Adjustments have been made to the tax system, and further developments are ongoing. However, the impact on the Dutch tax concerning your Greek property is limited.
Under the double tax treaty between the Netherlands and Greece, the authority to impose taxes on the Greek property lies with Greece, as it is the source of the income. Consequently, while income from the Greek property must be reported in the tax return, double tax relief can be sought.
The Current System
Presently, box 3 classifies assets into three categories: savings, other assets (such as shares, bonds, securities, second homes, cryptocurrency), and loans. A predetermined return is assumed based on the asset category to which it belongs.
In 2024, a fixed return of 6.04% is calculated for ‘other assets’ based on the asset’s value (6.17% in 2023). The personal income tax rate for box 3 is set at 36% in 2024 (32% in 2023).
Developments
Due to the assumption-based nature of the box 3 regime, wherein fixed returns are applied rather than actual investment income, some taxpayers may need to dip into their capital if their actual income falls below the assumed returns. These circumstances have led to various court cases, with rulings often favoring taxpayers by reducing their tax base to reflect actual box 3 income.
These cases have been subject to appeals, with the Dutch Supreme Court about to rule on matters such as the potential conflict with the right to ownership and the definition on actual income (including consideration of unrealized increases in value).
The Government announced to introduce a new tax system as of 2027 that will be based on the actual income from investments. A legislative proposal has been presented to the public in September 2023, which still is undergoing changes. Basically, for real estate assets, this system taxes the actual rental income and expenses are deductible. The capital gain is taxed upon the selling of the property.
Other Notes about Box 3 Income
Box 3 income from savings and investments is only taxable if the net difference between the value of the assets and debts exceed the tax free thresholds, set at € 57.000 per person for 2024 (or € 114.000 for fiscal partners). It’s anticipated that the proposed tax system for 2027 will likely introduce a tax-free income threshold.
How is Real Estate Income Taxed in Greece?
Rental Tax
Note that if you don’t plan on renting out your home in Greece, this section won’t be relevant. If you plan on renting out your property, you will need to pay tax on rental income in Greece. For individuals, progressive tax rates apply to rental income and are calculated per owner on the gross rental income of the property.
- Up to a rental income of €12,000: 15 percent
- Between €12,001 & €35,000: 35 percent
- Greater than €35,000: 45 percent
Benefits of Co-Ownership
In general, it benefits couples to buy with two names rather than one, because the above tax rates apply per owner.
With two buyers, the tax brackets are as follows:
- Up to a rental income of €24,000: 15 percent
- Between €24,001 & €70,000: 35 percent
- Greater than €70,000: 45 percent
Double Tax Treaty Between Greece and the Netherlands
The double tax treaty between Greece and the Netherlands governs the taxation of residents in one country with income sourced from the other. Under this treaty, income derived from real estate is allocated to the country of origin, aligning with international standards.
Essentially, while global income is accounted for in tax returns, relief is granted for Greek-sourced real estate income. Consequently, in principle, Dutch residents possessing secondary residency in Greece shouldn’t be liable for Dutch personal income tax in this respect.
Do you Have Other Questions about Taxes in the Netherlands?
For questions about taxes on homes in Greece for Dutch citizens, contact Taxand Nederland.
You can also find Taxand on Linkedin.
