The Netherlands: Mechanism of obtaining citizenship, residence permit, double taxation and real estate market

Do you dream of living in the Netherlands? Or rather, not just to live, but to become a citizen of this amazing “country of windmills and roses”, one of the most prosperous and developed even by the standards of the European Union? And do not think that it is almost impossible and difficult, that such states turn away from the inhabitants of the “third world”.

Everything is possible, and even not so difficult. To become a citizen of the Netherlands, you just need to get a residence permit through investments in the state of Aruba!

What is this country and where is it located?

It is easy to assume that you know nothing, or almost nothing, about Aruba. And it should not be surprised. It's a tiny island nation in the southern Caribbean Sea. So tiny, in fact, that Aruba could fit 232 times on the territory of the Netherlands - also a small European country! 

Nature of Aruba

The Caribbean islands are known for their beautiful tropical nature; sea and sunshine are no surprise. But even among them Aruba is a champion in the number of sunny days per year, and local beaches have long been favored by wealthy Americans.

Interesting! An invaluable advantage of Aruba is the absence of seasonal hurricanes, which are a real curse of the Caribbean. The island is “in the shadow” of the South American continent, and in clear weather from its beaches you can see the distant silhouettes of the shores of Venezuela.

 Invest not for the beaches

Of course, investing in Aruba is not about its natural attractions. The clue to the country's value lies in its history. For a long time Aruba was the scene of a fierce struggle between the British and the Dutch. And only in the XIX century the Dutch finally secured the island for themselves.

Subsequently, the country was freed from the status of a colony and became an independent state, but is still part of the Kingdom of the Netherlands, and the king himself is the head of Aruba, appointing the governor here.

Thus, by issuing a passport to this paradise island, the investor automatically becomes a citizen of the Netherlands.

What is the mechanism of obtaining citizenship?

It is quite simple. The applicant, having fulfilled all the conditions of investment, receives from the Aruba authorities the status of residence permit for one year. It must be renewed annually, keeping the conditions of investment. After five years, it is possible to apply for a Dutch passport.

What do I need to apply for a residence permit in Aruba?

The local investment program consists of several points, the conditions of some of them are quite complicated. But there is one very simple and straightforward way, which is usually used by wealthy investors. The applicant simply has to purchase real estate in Aruba, for the amount of at least $200 thousand.

Important! Given the nature of the island, its popularity among tourists, especially American, this investment can be considered profitable and reliable, even capable of bringing a steady profit.

What does the Aruba residence permit give?

The main thing is a kind of “gateway” to Dutch citizenship, and this has already been mentioned. But the 5-year waiting period will also present the investor with certain preferences. Here they are:

1. here is the highest standard of living among all Caribbean countries;
2. well-developed infrastructure, decent medicine and education (even with a residence permit you can enter schools and universities in the U.S.);
3. in everyday life - an interesting mix of European and American cultures; excellent and stable air communication with the countries of Europe, South America, the USA and Canada (about a hundred flights weekly);
4. excellent opportunities for luxury vacations. For example, the island is known not only for its beaches, but also for its golf courses, which are among the world's top ten;
5. there is no requirement for mandatory residence in the country.

To the disadvantages can be attributed to the fact that the Aruba residence permit does not allow you to visit Schengen countries without a visa. But with it is easily issued an American multivisa.

Get the coveted passport!

If during 5 years the investor has never interrupted his status and renewed it in time, he is entitled to apply for Dutch citizenship (EU passport). The only serious obstacle in this case is the need to pass a language exam. There is one more condition - you have to renounce your citizenship. However, it can be easily circumvented with the help of experienced lawyers who are able to find appropriate exceptions and loopholes in the legislation.

Ask for help!

And here we have touched upon another important issue. Of course, this article gives only the most general overview and superficial information. If you contact GARANT.in, you will receive not only more necessary information. We will offer qualified legal assistance, help you to collect the necessary documents, familiarize you with the nuances of the procedure. And then your dream of Dutch citizenship will definitely come true!

Russia has proposed to the Netherlands to amend the double taxation agreement

Russia continues to streamline double taxation treaties between the countries. In practice, this means the abolition of dividend exemptions for Russian citizens who are residents of other countries.

Following Cyprus, Malta and Luxembourg, the Russian Ministry of Finance has sent another proposal to its colleagues from the Netherlands.

What the Russians propose

At present, the tax rate for businessmen withdrawing their income in the form of dividends to foreign accounts, in particular to the Netherlands, is 5%. It is proposed to raise it to a similar domestic rate of 15%. The proposal for changes was initiated at the presidential level. The difference from the received funds will be used for social payments to the most vulnerable categories of the population.

Which country will suffer more

The Netherlands, of course, is not delighted with this proposal....

• A number of Dutch business companies operating in Russia will receive a significant tax burden. And by the volume of trade turnover with the Russian Federation this country is on the 3rd place after Germany and China.
• In turn - due to the favorable holding regime, which allows to minimize income from the sale of shares of subsidiaries, the Netherlands is often used to create holding and financial companies.
• Many business groups from the United States, Canada, and Japan also enter the Russian market through the Netherlands, using the country as their European headquarters. If the agreement is renegotiated, they may incur unforeseen costs.

...But Russian businessmen do not want the revision either....

According to statistics, thanks to favorable taxation, they withdrew 70 million dollars in net profits through the Netherlands in 2019.

Dutch banks operating in Russia will raise interest rates on the loan if the agreement is revised. State-owned entities like Gazprom with a presence in the Netherlands will also suffer.

In addition, a large number of Eurobonds are issued through this country. 

Is it possible to break the agreement?

If it is impossible to reach an agreement and “leave things as they are”, both the Netherlands and Russia are ready for such a step.

But the Russian authorities also put forward “counterarguments”. In particular, the possibilities of “Russian offshore” - special administrative districts with centers in Kaliningrad and Vladivostok - are being actively advertised for comfortable activities of foreign companies.

 It is likely that additional consultations will be scheduled, as we see in the example of Cyprus.Note that even in case of termination of the agreement, it will still be valid in 2021.

The Netherlands is breaking 10-year records for housing costs in all progressive parts of the country.

Expected growth over the next 10 years is 14%

Housing prices continue to break records.

In August 2008, home prices peaked. Immediately after the global crisis, they gently dipped to a critical point in June 2013.

The trend then changed direction, and since then prices have only been rising. In May 2018, prices broke their first record, and already in May this year, they have crossed all expected boundaries.

The latest summary shows that the price of residential buildings and offices in May 2020 was on average 7.7% higher than the figure for May 2019.

What is most interesting is the complete lack of pandemic impact on this market. On the contrary, price increases have only accelerated more strongly, which has stimulated the economy more strongly, and attracted new investors.

Compared to June 2013, prices have risen by an incredible 47.8%, which is an impressive result for Holland. Experts and analysts are urging investors around the world to invest in quality housing for students and researchers.

Why specifically for them? Recently, the Netherlands is the center of science and progress in Europe. More and more creative and intellectual migrants are getting grants and moving here to live. We can only expect a continued increased demand for housing, and subsequently excellent earnings for the investors themselves. After all, the Dutch economy is stronger than ever!

It is also worth noting that the total number of real estate sales in the Netherlands is decreasing. For example, in May last year, the number of real estate assets sold was 9.7% more than in 2020. As it is amongst landlords that the housing war is taking place, buying a home to rent out now is a brilliant investment and will pay huge dividends in the future!

Types of housing, and the best prices 

Statistics from the Dutch Cadastral Registry show that private houses and villas have the highest value. Let's understand the rates a little bit more!

• The price of apartments and apartments rose by 11.7% to an average of 264,409 euros in the first quarter of 2020
• The price of terrace homes rose by 8.54% to an average of €278,167
• The price of private, full houses rose by 6.85% to an average of €437,633
• The price of corner and cut-back houses has risen by 6.24% to an average of €287,343 at this time

The Dutch housing deficit has reached a record 263,000 units this year, 90% higher than 3 years ago. Research conducted by Capital Value shows a severe shortage of convenient and affordable housing for all verts of the population.

“Prices up, sales down. That's exactly what it looks like. We expect the same picture from 2020.”

This is how Rabobank, the Netherlands' main private bank, described the real estate market.

 “Because of the low amount of convenient housing, prices are skyrocketing while sales themselves remain low. People are not ready to invest in an outdated building, which in Amsterdam and other cities - a little more than a third. We expect sales to fall to a critical point after 2021.”

Profitable renting

Rental rates in major Dutch cities continue to please investors. Rates, although not the largest, still easily outpace those of Germany, France and even Scandinavia. Given the reliability of the real estate market, rich economy and favorable laws of the Netherlands, for investing in their economy is definitely not worth worrying about.

Investing in small type of housing (apartments, apartments), you have the right to take the highest rate among all types of real estate.

So let's say that the capital Amsterdam has recently shown itself to be on the best side. The percentage of the average rate for renting small housing rose from 3.7 to 5.3%.

In The Hague, this percentage rose from 5.6 to 6.4%. The Hague itself is a much more inexpensive city to move to. With all the necessary infrastructure, this city is trying to overtake Amsterdam in the number of migrant workers and students.

The most important trump card of The Hague is, of course, the offices of the largest companies in the world. This means that the staff of these companies will soon move closer to the center, which will entail the demand for affordable housing. Corporations such as Exxon, Shell and Amazon are already urging their employees to move to the business center of the Netherlands for bonuses. And the municipal government itself is rushing to stimulate and strengthen The Hague's status as a reliable business center.

The latest assessment of the economy

The Dutch economy relies predominantly on international trade. This means that fluctuations in the Euro exchange rate hit the stability and pricing of sales and distribution markets hard.

In 2019, the country's GDP managed to pick up a respectable 1.7% growth from the already impressive figures. The growth projection for 2020 remains the same, in the neighborhood of 1.5 and 2.1%.

Dutch public debt is declining, and the government is gradually shifting the economic category to more niche and deeper options. Already, real estate, education and tourism make up a solid part of the entire spectrum of economic impact.

Outcome

Summarizing the information provided by GARANT.in, we would like to note that the real estate market in Holland will only expand and become more expensive. This is supported by government statistics, and projections of the main banks.

The very same economy of Holland must pass the stages of modernization, which certainly can not take away from the engine of all European progress. According to experts, even the impact of the pandemic did not affect the growth of indicators. Excluding force majeure, we can safely assume that Holland and its economy have a bright and secure future!