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What does it cost to have kids in the Netherlands?

You’ll typically spend at least 15% of your income on your children, according to Dutch statistics office CBS. And if you are a single parent and have four kids, that figure rises to 42%. Fortunately, there are various benefits you should be aware of that can ease the burden somewhat (although they will not help in getting your offspring to wipe their feet or tidy their rooms).

From their earliest years to passing on your own wealth, you should be aware of the tax implications of having children in the Netherlands – and what you need to do to comply with the rules and apply for benefits.

Early adventures

In the Netherlands, everyone with children is entitled to child benefit. Currently, parents with a child up to the age of five receive just over €260 four times a year; for each child between six and 11 years there’s an allowance of just over €315  quarterly and for children between 12 and 18 it is almost €375 per child. It is paid automatically, typically to the mother.

The government has pledged to make childcare almost free, following a childcare benefits scandal, but currently there is an allowance for care linked to the income of both parents. The maximum hourly rate is currently €9.12 per child for day care, €7.85 for after-school care and €6.85 for an official, registered childminder: if your hourly rates are higher, you need to pay the difference yourself.

It’s a complex system, especially if you are freelance and your income varies, and is currently paid out by the government in advance: if you earn more than expected, you will need to repay any excess benefits. It’s helpful to use a calculator like Blue Umbrella’s free childcare calculator to see what you are entitled to and if necessary seek professional help in filling out the application form. The benefit can be paid directly to you or to your childcare provider.

Almost free childcare should begin in 2027, although since there are elections this month and there will be a new coalition formed, the plans may change. If your income is below a certain level, you can also claim a child budget, which is higher for single parents.

Studying: the costs

The current generation of students might be known as the “bad-luck” generation because they did not get a government grant, but there’s good news for people with kids who are about to start: grants are back.

There is a basic grant, which ranges from €121 a month for students living with their parents to €466 a month for those with their own home. On top of this is a supplementary grant of €457 a month, which is gifted to students by the government if they finish their studies within 10 years: otherwise, it will become a loan paid back at the relevant interest rate.

Students can also borrow up to €293 a month from the government and these loans are also paid back and linked to the 10-year government bond yield plus a fixed percentage. The interest rate is decided every year, but is fixed for five years at a time for each individual.

Costs for student loans have recently hit the news because interest rates are set to rise from 0.46% this year to 2.56% in 2024 – sparking student demonstrations and an attempt by MPs to cut back a tax break for internationals in order to soften the blow. Even if the loan rate stays, the interest rate in 2024 will only shoot up if a student’s fixed-rate period has ended. (By this stage, hopefully, it won’t be the parents’ problem any more anyway.)

Inheritance and gifts

As your Dutch adventure moves into adulthood, you will face the twists and turns of inheritance tax. Successierecht, as it is called, can be as complex as navigating the canals of Amsterdam. The tax rate varies from approximately 10% to 40%, depending on the value of the inheritance and the relationship between the child and the benefactor.

Apart from being allowed to make an annual tax-free gift (€6,035 in 2023), parents can also currently make a one-time gift of €28,947 this year for children to finance a home of their own, instead of that yearly allowance.

Grandparents may also donate a certain amount per year tax-free. So each grandparent can shower their grandkids with gifts, as long as they don’t exceed the annual limit of €2,418 per grandchild.

Since tax avoidance is likely to be a topic for the next Dutch government, it’s wise to stay on top of the rules for gifts and if necessary take specialist advice. Since you’re also expected to start giving your kids pocket money of up to €2.30 a week from the age of six, and a monthly clothing allowance from the age of 12, it would also be wise to start saving hard at the moment of conception. (Probably, in a foreign savings account).

Blue Umbrella is here to provide tax advice and help you navigate the system.

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