Dutch gov't considering scrapping parent-to-child tax-free gifting scheme

Behind the scenes, the Dutch government is debating where to scrap the scheme that allows parents to gift their child up to a certain amount tax-free per year. The government is looking for ways to fill gaps in the budget, with planned cuts stalling due to insufficient parliamentary support and pushback from trade unions, and this scheme benefits wealthier families more, RTL Nieuws reports.

The scheme allows parents to give a tax-free amount to their child, foster child, or stepchild every year. This year, the tax-free amount is up to €6,908. People can also make a tax-free gift of up to €2,769 to someone who is not their child.

According to officials at the Ministry of Finance, this scheme fosters inequality because wealthy families benefit much more from it than poor families do.

Wealthy families can use the scheme every year to transfer assets to their children tax-free over a longer term. Children from poorer families miss out on that tax benefit, the officials said. The officials therefore advised the Cabinet to significantly reduce or scrap the scheme altogether.

In addition to the annual gifts, parents can also make a once-off gift of up to €33,129 tax-free. This scheme, often used to help children buy their first home, will remain unchanged, according to the broadcaster.