Declaring foreign property in a Dutch tax return

What I take care of

For a foreign property, I look at how it should be treated in box 3. I assess and process matters including:

• the value you must use in your Dutch tax return;
• your share of the property;
• whether an associated mortgage can be included as a debt in box 3;
• whether the deemed or actual return is more favourable for you;
• which tax treaty or other arrangement applies;
• which relief from double taxation must be applied;
• the consequences the property may have for your benefits and allowances;
• whether previous tax returns need to be corrected.

You therefore do not have to work out how to report the property yourself. I assess its tax treatment and include the property, the debt and the tax relief in your return.

What information do I need from you?

To report the foreign property correctly, I will usually ask you for:

• the address, postcode and country in which the property is located;
• the type of real estate, such as a house, apartment, plot of land or garage;
• the date on which you bought, inherited or received the property;
• your ownership percentage;
• the value of the property on the relevant valuation date;
• information showing how you determined the value;
• details of any associated mortgage or loan;
• information about letting the property and the rent received;
• information about any sale of the property.

If certain documents are unavailable, I will consider which other information can be used to support the tax return adequately.

How do I include the property in your tax return?

I include the foreign property in your tax return in a number of connected steps.

1. I use the correct value

You do not use a Dutch WOZ value for a foreign property. You report the market value of the property in vacant possession.

This is the estimated sale value if the property could be sold without an occupant or tenant. For a foreign second home, the Dutch Tax Administration asks for the value on 1 January of the year before the tax year.

I determine which valuation date applies to your tax return. To substantiate the value, you can use information such as:

• sale prices of comparable properties;
• a valuation provided by a local estate agent;
• local cadastral or tax valuation documents;
• the purchase price and price developments since the purchase;
• a foreign property valuation.

The local tax value is not automatically the value you must report in the Netherlands. It may, however, form part of the supporting evidence.

2. I include your ownership percentage

Do you own the property together with your tax partner for Dutch tax purposes? I assess how your joint box 3 tax base can be allocated between you in the most favourable way.

Do you own the property together with someone else? I report only your share. For example, if you own half and your sister or brother owns the other half, I include your half of the value in your tax return. The same applies to your share of any associated mortgage or loan.

I ensure that the ownership proportions, the value of the property and the debt are consistent with one another.

3. I include any mortgage or loan

Did you borrow money to purchase the foreign property? The loan can generally be included as a debt in box 3.

The interest is not deductible as mortgage interest in box 1 because the foreign property is not your main residence. When calculating your actual return, however, interest on a box 3 debt may be relevant.

I assess whether there is sufficient evidence that the loan relates to the foreign property. Relevant documents may include the loan agreement, bank statements and details of the interest paid.

4. I include the property in box 3

A foreign second home or holiday home is one of your assets in box 3. This also applies if you use the property yourself, allow relatives to stay there or let it to other people. Assets in both the Netherlands and other countries must be reported in box 3.

Even if you are a business owner, a property you own privately remains a private asset. Different rules apply if the property is included on your business balance sheet or is owned by a private limited company, known in the Netherlands as a BV.

5. I apply the relief from double taxation

The property must first be included in your Dutch tax return. I then determine which part of the Dutch tax is attributable to the foreign property.

Many tax treaties provide that real estate may be taxed in the country where it is located. The Netherlands then grants relief from double taxation.

We therefore do not leave the property out of the Dutch tax return. The correct process is:

1. report the property;
2. report any associated debt;
3. complete the questions about foreign income and assets;
4. apply the relief from double taxation.

You may have to file tax returns in two countries, but the relief prevents double taxation.

Do you pay Dutch tax on the foreign property?

The foreign property is included in your Dutch tax return and in the box 3 calculation.

The relief from double taxation is then calculated. If you are entitled to this relief, the Netherlands does not levy box 3 tax on the return attributable to the foreign property.

You may still pay box 3 tax on other assets, such as:

• savings;
• shares and investments;
• cryptocurrencies;
• other assets;
• a second home in the Netherlands.

The foreign property may therefore affect the overall calculation, while the Dutch tax attributable to it is subsequently reduced.

Deemed or actual return

Your box 3 income may be calculated on the basis of a deemed return. I can also report your actual return. The Dutch Tax Administration compares both calculations and uses the most favourable outcome.

When calculating your actual return, the actual income and changes in value of all your box 3 assets are taken into account.

For a foreign property, this may include:

• rent received, excluding service charges;
• an increase or decrease in the value of the property;
• interest on a debt that falls within box 3;
• investments that may be deducted when calculating the increase in value.

I assess which information is required and whether reporting your actual return is more favourable for you.

The relief from double taxation also continues to apply when the calculation is based on your actual return. Including rental income or an increase in value therefore does not mean that the Netherlands ultimately levies box 3 tax on it, provided you are entitled to the relief.

Foreign property used only by you

Do you use the foreign property only yourself and not let it to anyone else? You must still report it in box 3.

If you do not receive rent, this does not necessarily mean that your actual return is zero. An increase or decrease in the value of a second home may count towards the calculation of the actual return.

From 2026, an addition for private use of the property is also included in the actual return. This does not necessarily mean that you pay tax on it in the Netherlands. After calculating the return on a foreign property, I also apply the relief from double taxation.

Letting the property and rental income

Do you let the foreign property? The country in which the property is located may tax the rental income under its own rules.

Under the deemed box 3 calculation, the rent actually received is not taxed separately as income. The property is included as an asset in box 3.

When the calculation is based on the actual return, the rent received excluding service charges and the change in the property’s value may be included.

I then apply the relief from double taxation. To the extent that you are entitled to this relief, the Netherlands does not ultimately levy box 3 tax on the return attributable to the foreign property.

Do you provide substantial additional services alongside the letting, such as cleaning, breakfast, reception services or other hotel-like services? The tax treatment may then be different. I assess whether the income still falls within box 3 or may need to be reported in box 1.

Consequences for benefits and allowances

A foreign property may also affect your benefits and allowances.

Asset limits apply to healthcare benefit, housing benefit and the child budget. If your assets exceed the applicable limit, you are not entitled to these benefits and allowances.

The relief from double taxation does not change this. The relief relates to income tax. For the purposes of benefits and allowances, the foreign property remains part of your assets.

It is therefore possible that:

• you do not pay Dutch box 3 tax on the foreign property;
• but the value of the property means that you are not entitled to a benefit or allowance.

When preparing your tax return, I can also assess whether the foreign property affects your benefits and allowances.

Foreign property not reported previously

Did you fail to report the property in previous tax returns? I assess which returns still need to be corrected or can be corrected.

I consider matters including:

• the year in which you bought, inherited or received the property;
• the value of the property in the relevant years;
• your ownership percentage;
• any mortgage;
• how the property was used;
• any rent received;
• your other assets;
• the status of previous tax assessments.

Simply adding the property is not always sufficient. The debt and the relief from double taxation must also be processed correctly.

I therefore review the full tax return rather than looking only at the value of the property.

Watch the video

In this Dutch-language video, I explain which mistakes are commonly made when reporting a foreign property and why it is important to include the property correctly in your Dutch income tax return. You can turn on English subtitles in the YouTube player:

This tax mistake involving your foreign property could cost you money