ICP survey: Quality of your Professional Life

 
The International Community Platform* (ICP) aims at increasing the attractiveness of the working and living environment for international talent. In 2013 over 1000 internationals in NL participated in the ICP survey on “The perceived Quality of Professional Life in NL”. In 2014 the employers of the ICP would like to learn more about this topic. We will extend the survey to other ‘expat’-locations in NL and abroad.

Are you an employee, entrepreneur, volunteer, student, or job seeker living outside your country of origin?
Please fill out this survey and share it with your international peers – we appreciate your participation!

Completing this survey will request approximately 15 minutes of your time.
Data will be treated confidentially and used only for the purpose of this research.

Thank you for your cooperation!
The ICP team
*In 2009, international companies & institutions joined forces in the International Community Platform (ICP).* Their aim: create optimal working and living environment for0international talent & their relatives.
ICP articulates your needs as regards quality of life aspects (housing, childcare, education, healthcare, public transport) to enable (local) government and service providers to respond to these.

The ICP Foundation consists of 30 international employers including companies like Shell, AEGON, Schlumberger, the EU institutions (Europol, Eurojust, ESA/Estec), UN tribunals, the international schools and other knowledge institutions (TU-Delft, University Leiden, THIGJ) and more. If you would like to know more about the ICP: check www.icplatform.nl

German bank sets foot on Dutch soil

In January 2013 Holland’s third big bank, SNS, was nationalised overnight. This secured the savings of approximately 1 million account holders at SNS.
After the nationalisation of the bank, three out of four large banks in the Netherlands are on governmental “financial life support.” This has great impact on the competition (or rather lack of competition) between the banks, and a great impact on your options when looking to buy a home.

The EU’s competition law explicitly forbids cartels and related practices in its article 81 of the Treaty of Rome. This article specifically forbids price fixing. So why is it that the mortgage interest rates are higher in the Netherlands than in our neighbouring countries? Why are our rates 1% or perhaps 2% above those in France, UK or Germany? Well, this is due to the fact that there are only a few banks left in the Netherlands. One of them had to be rescued and two others are still paying back the government support they received during the credit crunch of 2008. And until they have paid their debt, the European Commission dictates that they may not compete against the one and only major bank that did not receive financial life support four years ago. A legalised cartel, so to speak.

Volksbank lends to the mortgage market

So it is excellent news that just over a year ago a regional German bank carefully set foot on Dutch soil to lend out money for the Dutch mortgage market. But a careful step it is for this Volksbank of Emmerich, situated on the Dutch/German border. The Volksbank lends up to 70% of the market value of the property, so at least one third of the purchase price will need to be available as a down payment when buying property. Consequently, either you need to empty your piggy bank, or maybe you are fortunate enough to have positive equity in your current home. If this is the case, you could also refinance your current mortgage and enjoy an interest rate between 0.5% and 1% lower than the big three Dutch banks have on offer.

Minimum mortgage loan is €50,000 and maximum €800,000. Interestonly mortgages are not offered by this German option, but for new homebuyers, this is no longer allowed with the Dutch banks either. And quite frankly, having your mortgage paid off by the time you retire may be a new notion for the Dutch, but highly recommendable for everybody, expat or Dutch alike.

The Dutch Minister of Housing, Stef Blok, has recently invited other foreign banks to start operating in the Dutch market. They will not arrive overnight due to legislation and permits, but they will certainly receive a warm welcome once they do.

Source: Access spring 2013

Professional Oath

On April 23th José took a Professional Oath for Financial Consultants:

I solemnly swear/promise,
That I shall faithfully discharge my duties to the best of my knowledge.
That I shall carefully consider all the interests involved in the company, including those of the clients, shareholders, employees and the society in which the company operates.
That in considering matters,  I shall focus attention on the clients’ interests informing them to the best of my knowledge and ability.
That I shall observe the laws, regulations and codes of conduct that apply to me.
That I shall maintain secrecy concerning the information entrusted to me.
That I shall never improperly use the knowledge that I have.
That I shall adopt a transparent and verifiable attitude and I that am well familiar with my social responsibility.
That I shall invest best efforts to protect and promote faith in the financial sector.
So help me God!

Official Document: Professional Oath

Transfer Tax and the Dutch Housing Market

Transfer Tax is tax payable when becoming the legal or economic owner of a property, be it a house with a garden, an apartment, shed or garage, shop or office.

The basis for the calculation of the tax to be paid is the purchase price of the property. Last summer the Dutch Government decided to reduce the transfer tax from 6% to 2% for houses and apartments. Although this was a temporary measure
extending until 1st July of 2012, it has now been extended for an unlimited period.

Consumer confidence is still low and people’s faith in the housing market and the economy may be even lower. A lot of people are worried about losing their jobs and this is delaying their decision concerning whether and/or when to buy a new house. Their understandable anxiety is that it might be difficult to sell their old house. This has meant that the train of buying and selling has gradually ground to a halt. The Government now wants to give the housing market a boost, since a stalled housing market has a disastrous effect on both employment and on the economy generally. Many people earn their daily living in the real estate market: real estate agents, mortgage brokers and bankers, builders, moving companies, painters, kitchen and bathroom manufacturers etc. So a boost to the housing market means a boost for the entire Dutch economy.

If, as a seller, you need to move house (perhaps because of job imperatives), and are concerned about the possible difficulties in selling, you could choose to rent out your current home whilst waiting for the property market to improve (though you would need permission from your mortgage bank to do this). Clearly the last thing you want to face right now is an empty property and so having to pay two mortgages.

A crash course in Dutch Mortgages

Many different mortgage types are available in Holland. Which of the various types best suits your situation depends on your personal circumstances and life style. On the face of it, there appear to be dozens of different ways of setting up a mortgage loan, but if one looks closely, there are only three basic models. In this article it is my intention to give you a crash course in mortgages, so that you will be better equipped to discuss your mortgage needs with your bank or financial advisor.

When taking out a loan, eventually you have to repay the actual loan, plus in the meantime interest on it. In some mortgage models you start repayment of the actual capital from the outset, usually over a long period, say 30 years, whilst also paying interest on the loan. In some other mortgage types you postpone the repayment portion of the loan, simply regularly paying the interest on it,.

There are two capital repayment models: the Annuities Mortgage and the so-called Linear Mortgage.

In an Annuities Mortgage you repay the capital plus interest. The characteristic of an Annuities Mortgage is that in early years you pay a lot of interest and you repay little capital. Towards the end of the mortgage term this turns the other way round, paying off more capital and hence less interest. Another characteristic is that with an Annuities Mortgage you make fixed monthly payments during the mortgage term. (Except of course that the payments may be affected by changes in mortgage interest rates). Due to the redemption (ie the paying-off of the mortgage), the mortgage debt decreases and you pay less and less interest as time goes on. This means however, that your net housing costs will increase a little, since only the interest on the loan is tax deductible (for those of us who are tax payers). In early years of the mortgage term the Annuities Mortgage results in lower monthly payment than a Linear Mortgage.

In a Linear Mortgage you start to repay the mortgage loan by a fixed amount every month. On top of this you pay interest, but the interest payments will reduce over time since you are gradually redeeming the mortgage loan. Since the mortgage amount will actually decrease, so will your interest payments. A linear mortgage can be useful for people who wish to repay their mortgage as quickly as possible and who are expecting a reduction in income sometime in the future. However, the monthly mortgage payments are relatively high in the beginning. If you are a tax payer, this is not an ideal mortgage model either, since you will not be taking full advantage of the tax deductibility of mortgage interest.

All the other mortgage models are variations on the same theme:

  • The Interest Only Mortgage. There are circumstances whereby the bank will actually allow you to just pay interest and repay the capital from savings or investment accounts, giving their name to various different mortgages types linked to an interest only loan:
  • Life insurance mortgage (Levenhypotheek): This is linked to a life insurance. The client pays a monthly or an annual premium, which is often invested in a mutual fund. The premium can include life insurance cover. This policy can be tax-free under certain conditions (rather than being taxed in box III at 1,2%).
  • Guaranteed Life insurance mortgage (Spaarhypotheek): This mortgage type is also linked to a life insurance, but with a guaranteed return. The interest you get on your premium is equal to the interest you pay, hence you are 100% sure that your mortgage will be repaid at the end of the mortgage term. Again this policy can be tax-free.
  • A combination of these two, the Hybrid mortgage (Hybride hypotheek): With this type you can switch from a mutual fund with investment risk to a guaranteed return on your money.
  • Investment account mortgage (Beleggingshypotheek): In an Investment account mortgage you invest a certain premium into a stock market account (not an insurance!). This premium can be a lump sum, a monthly or an annual premium.
  • Guaranteed Savings Account mortgage (Bankspaarhypotheek): This type of mortgage offers a high level of security. With a Bankspaarhypotheek you will save money at a fixed rate. This rate is equal to the mortgage interest rate, and at the end of the term you will be sure that you have saved enough money to repay the mortgage loan. Simultaneously you are optimizing your tax break, since you are keeping the interest payments constant at their original level. It is also possible to invest rather than save in a Bankspaar account, however there is always some risk involved when investing rather than saving in cash.

So as you can see, the wide variety of what’s on offer in the Dutch mortgage market makes it a veritable minefield. But hopefully, this article will have given you a bird’s eye view of what’s available, allowing you to be at least a little cognisant of the options available before seeking advice from your bank or financial advisor.

Leasehold

There are quite a few houses in Holland which are built on land leased from a third part owner. These are called ‘leasehold properties’ and bring certain rights to the land and the property itself. Instead of owning the land, you are in effect renting it. The difference between renting a home and renting the land (leasehold) on which it stands is that this right is transferable and one can establish a mortgage right with respect to it. This type of lease does not end when the lessor (the land owner) dies, nor can the lessor terminate the leasehold without the consent of the lessee (ie the tenant). The lessee therefore holds real property rights from a financial point of view. This means that the lessee has building rights and also the right to sell the leasehold property. The lessee pays the land owner (lessor) an annual fee, called the ‘canon’ which these days is quite often paid in advance for the duration of the leasehold. In bygone days, a canon was often symbolic, paid simply in order to formally register the lessor’s ownership of the land.

In case of perpetual leasehold, the lease is normally granted for periods of 50 or 99 years. Leasehold is an ancient concept, and has an agricultural background. As early as in ancient Egypt, land was issued leasehold for the farmers to work on. The Romans too used the leasehold concept so as to levy additional tax. In Holland it has also been known for centuries; but in more recent history, several municipalities started working with the leasehold concept in order to be able to influence the planning and housing development of their town. Amsterdam, in the 15th century, was the first city to issue leasehold plots, and in a more structured way, since 1896. By leasing out land rather than selling it outright, it enabled (and still enables) the municipalities to enjoy the appreciation in land value. In practice, the lease is renewable at the end of the leasehold term, but the lessor has the right to demand a reappraisal which usually results in a higher canon. In so doing, municipalities can profit from the appreciation in the value of the land. Because of this, some private landowners/developers have adopted the leasehold concept when developing and selling property. Private leasehold is, however, somewhat controversial in the current market, since banks are reluctant to give mortgage loans on privately held leasehold property. This is because the system is inadequately monitored. Ironically, though, home owners whose leasehold is held by their municipality arealso equally uneasy about their landlords. Nevertheless, the banks differentiate between these two groups when it comes to the granting of mortgages on the property.

One of the few good points about leasehold is that the periodic payment for the leasehold, the canon, is tax deductible. And a property built on leasehold land is often (but not always!) cheaper than a property that is not. The disadvantage however is that the annual canon is an additional recurring cost on top of mortgage payments. Regretfully, though, if you decide to pay off (ie surrender) the canon for the leasehold in perpetuity, the amount you pay to that effect is not tax-deductible. However, increasing your mortgage in order to finance the surrender of the leasehold, does at least enable you to deduct the interest payments on the mortgage increase. Generally speaking it is cheaper in the long run to own a property with land owned outright rather than to own a leasehold property.

For this reason it may be worth your while to pay off the leasehold in perpetuity.

Very often it is possible to pay off the leasehold for its term or better still, to acquire full ownership of the land. Whether or not this makes sense depends on the circumstances and I would urge everyone to seek advice first. But the possible advantages are clear since:

  • one is no longer dependent upon the whims of the municipality or the private land owner
  • it is much easier to get a mortgage (especially in the case of private leasehold!)
  • it is easier to sell your property, since the new owner will face fewer uncertainties (and, of course, it is easier for the buyer to get a mortgage)

Most municipalities in The Netherlands are gradually abolishing their system of leaseholds. However, Amsterdam is sticking to its guns and is still issuing new leaseholds. More than 80% of Amsterdam land is owned by the municipality and is thereby earning Amsterdam roughly €50 million per year. Strangely enough, there is virtually no monitoring, either by legal organisations or by the Financial Authorities (AFM) of this leasehold market. And it is also remarkable that the tax authorities, for their determination of the value (WOZ) for municipal taxes etc., do not differentiate between a leasehold property or one where the land is actually fully owned.

Thus there are plenty of reasons to seek advice before buying a leasehold property. And should you already be the proud owner of a leasehold property, from a financial point of view it does not hurt to find what your options are…..

 

Final adjustments in the 30%-ruling

We hereby would like to inform you of  the adjustments to the 30%-ruling as per 1 January 2012. The earlier proposed adjustments have been accepted by the Dutch Lower House. The most important changes are summarized below.

Specific expertise test replaced by salary norm 

The salary norm that replaces the ‘specific expertise’ test will be EUR 50,000. When the full 30%-reimbursement is provided the actual gross salary (excluding the 30%-reimbursement) should thus amount to at least EUR 35,000. For PhD-students the salary norm will be EUR 38,007. When the full 30%-reimbursement is provided the actual gross salary (excluding the 30%-reimbursement) should thus amount to at least EUR 26,605.

The salary norms will be subject annually indexation. The condition that the specific expertise should be hard to find on the Dutch labour market remains in force.

Cross-border workers

The definition of foreign employee will be adjusted in such way that employees who reside within a radius of 150 kilometers
from the Dutch borders are not eligible for the 30%-ruling. An employee will however remain eligible for the 30%-ruling in case in
the 24 months preceeding the commencement of the Dutch employment he has lived more than 150 kilometers for the Dutch borders for at least 2/3 of the time.

Continious interim test 

Already granted 30%-rulings will remain effective, although the interim test may prevent further continuation of the 30%-ruling at a certain stage:

  • Employees who on 1 January 2012 have benefitted from the 30%-ruling for 60 months or more can continue the benefit of the 30%-ruling without any further interim test;
  • Employees who on or after 1 January 2012 have benefitted from the 30%-ruling for less than 60 months will be confronted with the interim test based on the adjusted conditions mentioned above;
  • Employees who will benefit from the 30%-ruling as of 1 January 2012 will be confronted with a continious interim test.

For the interim test it is of importance how long the employee has already benefitted from the 30%-ruling in total and not how long the employee benefits from the 30%-ruling at the current employer.

Duration

The maximum duration of the 30%-ruling will be reduced from 10 years to 8 years for employees who will benefit from the 30%-ruling as of 1 January 2012. For employees who already benefit from the 30%-ruling on 1 January 2012 the maximum duration will remain 10 years.

The 30%-ruling will at least end when the employment in the Netherlands is terminated. As a result the 30%-ruling can no longer be applied to backpayments resulting from the Dutch employment, with the exception of payments that are already known and set on the date of termination.

Reduction rule 

The look-back period in the reduction rule is extended to all periods of previous stay that ended in the last 25 years prior to the start of the employment in the Netherlands, meaning that Dutch nationals have to reside outside the Netherlands for at least 25 years in order to become eligible for the 30%-ruling upon return. Currently this is only 10 years or 15 years in specific situations.

Change of employer

When the employee changes employer the 30%-ruling can be ‘transferred’ to the new employer, provided that between the agreement on the new employment and the termination of the previous employment no more than 3 months have passed. This changes is only a codification of already existing case law.

Closing 

The adjustments will have impacts for several groups of employees. It is advisable to investigate the consequences for your
organisation in order to undertake action in a timely manner.

Questions that need to be answered are for example: can future assignments be accelerated in order to safeguard application of the 30%-ruling under the current rules? Do you know how long your employees already benefit from the 30%-ruling, taking into account also previous employments with other employers in which the 30%-ruling was applicable? Which employees will be confronted with loss of the 30%-ruling during an interim test, as result of non-compliance to the salary norm or the fact that they resided within 150 kilometers from the Dutch borders at the start of their employment? And: what measures can you take in order to safeguard the 30%-ruling on backpayments after the termination of employment?

Source: www.exterus.nl

In case you would like to have more information on how the above influences you or your employees or in case you would like to have assistance with the inventarisation of the consequences, feel free to contact Exterus at: 070-3223136.

News for home buyers

 

Significant savings

Prospective homeowners had a pleasant surprise when on 1st July the transfer tax (“Stamp Duty” in the UK) on property was reduced from 6% to 2%. This reduction – a temporary measure to give the Dutch housing market a boost – is valid from 15th June 2011, retroactively, until 1st July 2012.

This considerably cuts additional costs when buying a home so if you were to buy a property costing €250,000, you save €10,000. And if you have already bought a property recently, but the transfer is still to take place, you can use this additional money to either reduce your mortgage or to make additional improvements to the house. This was the good news, but home buyers should be aware of some other significant changes.

Changing the rules for mortgages

The not-so-good news is that per 1st August there is a new “code of conduct” for mortgages. All new mortgages will be limited to 106% of the purchase price. The buyer’s costs can still be financed and it is still possible to buy a property without any down payment. However, it is no longer possible to clear any outstanding debts (such as credit cards) with the new mortgage.

Secondly, the new mortgage code permits the bank to lend you no more than 104% of the increase in value that renovations (like a new kitchen or bathroom) bring about. The 104% doesn’t sound too bad but the following example illustrates the effects:

Property purchase price € 250,000

Buyers’ costs, 6% € 15,000

Maximum mortgage € 265,000

So far so good, no cash down payment needed. But suppose you wish to have an additional €20,000 for renovations, bringing your total need up to: €265,00 + €20,000 = €285,000 in all.

The maximum finance for the renovation is 104% of the increase in value of the property. Let’s say you get a valuation report that assesses the value of the property after renovation to be €264,000 (so an increase in value of €14,000). This brings the maximum mortgage under the new code to:

€ 250,000 x 106% = € 265,000

€   14,000 x 104% = € 14,560

Total max mortgage loan € 279,560

But the amount needed was € 285,000. The difference of  € 5,440 must therefore be paid from your own savings!

A word of advice

For homeowners who have a property to sell, note that a house that is already renovated will be easier to sell in the future due to the new mortgage code. If your prospective buyer has a choice between a fully renovated house or one that still needs a lot of work, the new rules and regulations will make the renovated house the more attractive option in many cases.

Rent or buy? The pro’s and cons

The first thing every expat has to do when arriving in the Netherlands (or any other country of course) is find a place to live. Most expats choose to rent when they first arrive, since this gives more flexibility. Very often, as an expat, you do not know how long you will stay, and the decision regarding renting versus buying a home is not a decision to be taken lightly.

The advantage of renting is obviously the flexibility. How long will you stay? Do you expect to be employed in the Netherlands for a long or short period? Then, there is location to consider. It is a good idea to take some time to find out which area of the city you would prefer to live in. The locals will always know which are the better areas, but for the newcomer these are often hard to judge. Being close to schools may be an important criterion, but is this an area where you would feel at home? And if the house needs repairs or maintenance, all you need to do is phone your landlord to have the problem solved. However, there are also good reasons to consider perhaps buying your own house or apartment. When you are renting, you are effectively paying or subsidizing someone else’s mortgage. When you buy your own home, you can build up equity in it. For those who are tax payers in the Netherlands, the Dutch Fiscal Authorities contribute towards the interest payments by way of deduction allowances for mortgage interest. This can often make buying no more expensive, or maybe even cheaper, than renting. So, all well and good you might think, but are Dutch banks prepared to lend money to expats for property purchase? Actually yes, they generally are! Maybe not all banks are equally accommodating, but if you seek specialized advice from a financial advisor with a lot of expat knowledge and experience, you will find that owning your house in the Netherlands can become an affordable reality, and soon!

Dutch mortgages

Many different types of mortgage are available in the Netherlands and the most suitable variant depends largely on your personal circumstances and lifestyle. At first glance, there may appear to be dozens of different ways of setting up a mortgage loan, but in essence there are actually only two basic models. Read on to find out which is the best option for you. Read the rest at iamsterdam.com