Gifts on paper in 2025

Gifts on paper are a type of future gift, in that the sum of money is transferred at a later date than the actual gift. A gifted sum of money is converted into a loan, and the giver owes a debt to the recipient. As a rule, the recipient can only claim payment of the debt after the giver’s death.

A gift on paper must meet two requirements:

1. The giver must pay 6% interest on the amount to the recipient each year
   During the term of the loan, the giver must pay 6% interest on the amount to the recipient each year. This 6% rule is linked to inheritance tax. As the gift remains part of the giver’s assets, the giver is liable to pay interest on it. If the giver pays no interest or too little interest, the debt will not be deductible from the inheritance tax due on the giver’s estate. Consequently, the gift on paper would not result in a lower inheritance tax bill.
2. The gift must be registered by notarial deed
   You are legally required to register the gift by notarial deed. A gift on paper that is not registered by notarial deed will expire upon the giver’s death. That also means that the gift on paper would not result in a lower inheritance tax bill. The condition of having a notarial deed applies from the moment the giver dies. If you have a private deed, you can have it ratified by a notary at a later date. For this to be valid, however, the deed must be ratified before the giver’s death.

You can also register several years of gifts on paper on the same day. The gifts for the following years will be conditional, meaning that they only come into being for gift tax purposes in a subsequent year. One advantage of this approach is that you don’t need to make an appointment with the notary each year. One disadvantage is less flexibility, as you take on a long-term liability.

To some extent, a giver of a gift on paper assumes a long-term liability. That’s why it’s important to think about the consequences.

Remember that gifts on paper may be subject to gift tax as soon as the gift is made. People sometimes think they don’t owe gift tax as long as the recipient doesn’t have the gifted amount in their possession.

A gift on paper affects the 'box 3' income tax on savings and investments. Box 3 tax is based on an assumed, flat-rate return that the Dutch Tax and Customs Administration recalculates each year. It’s therefore hard to say in advance how much tax you owe.

Your ‘bank balances’ and ‘investments and other assets’ will also be treated differently. What’s more, you can be taxed according to your actual return if this is lower than the assumed return. However, you will need to provide evidence. More on that below. 

A gift on paper means the giver takes on a debt. In the flat-rate system, the giver may deduct a set lending rate from their income from their assets. This set lending rate for the 2025 tax year will be officially set at the beginning of 2026 and will probably be around 2.6%.

The giver’s assumed income from assets depends on whether the giver has savings or 'investments and other assets' (all assets apart from savings) or both. According to Dutch law, savings or assets are assumed to generate income in the form of interest or return.

The assumed rate of return for 'investments and other assets' for the 2025 tax year has already been set at 5.88%. The rate of interest on savings depends on interest rates on savings accounts in 2025. It will be confirmed at the beginning of 2026 and is expected to be around 1.5%.

As a general rule, debt is not deducted from assets in box 3. Instead, a set lending rate is deducted from your box 3 income.

Generally, the debt will be lower than the value of your assets, leading to positive wealth. However, if the debt exceeds the value of your assets, you have negative wealth. This means you have no positive income in box 3. You therefore won’t owe any ‘box 3 tax’.
 
That said, negative wealth in box 3 doesn’t mean that the giver has overall negative wealth. For instance, an owner-occupied home is classified as income from work and home ownership (box 1) and isn’t used to calculate box 3 tax.

The recipient of the gift on paper has a claim against the giver. This claim falls within the category of ‘investments and other assets’, which means that the recipient is assumed to earn 5.88% return on that income in 2025. At a tax rate of 36%, the tax burden will be 2.12% (rounded percentage) on the amount of the claim (not counting the tax-free allowance of €57,684).

If your actual return is lower than the assumed return, you can request to be taxed according to the actual return. This is especially relevant for the giver. The set lending rate is 2.6%, which is considerably lower than the actual interest rate of 6%. 

To calculate the actual return, you may use the real interest rate of 6%. This reduces your income for tax purposes and may put you below the assumed rate of return. However, you will need to calculate the actual rate of return over your total assets, including your actual income from assets as well as realised or unrealised gains. You may not include tax-free amounts in your calculation. It therefore depends on your situation whether your actual return is lower than the assumed return. 

The recipient is assumed to earn 5.88% interest, but the real figure is 6%. Being taxed according to the assumed interest rate can therefore sometimes save you money, as it’s lower than the actual interest rate. However, as the actual rate of return is calculated over your total assets, the interest on the gift on paper may be just one of several factors to consider.

From 2028 onwards, the Dutch government aims to introduce a tax regime that only taxes the actual return or interest earned. For gifts on paper, this means that the giver can deduct the actual interest and the recipient is taxed on it.

A gift on paper can often balance the giver’s and recipient’s interests. This will be the case in 2025, too. Box 3 tax is complicated, but the opportunity to claim the actual return will be welcome relief to many givers. The actual interest rate has become relevant in calculating your box 3 tax.

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