Housing taxation: the special case of the Netherlands

Houses are prominent in many taxes in the Netherlands. The system differs from many other countries, for example regarding the very limited autonomy of Dutch local authorities to raise tax, the importance of the local valuation of houses for other purposes both within and outside the tax system and the way houses are treated in the Dutch income tax. Presumably because of these differences, over the past few years we at the Erasmus Study Centre for Local Taxation at the Erasmus School of Law have had many questions from foreign researchers about housing taxation in the Netherlands. For that reason we decided to analyze the situation of Dutch housing taxation in local and national taxes in this article. We show that local and national taxes are intertwined because of the use of one value which is determined at the local level, but used at the national level as well. We briefly discuss the balance between local and national taxation in the Netherlands, the relatively low amount of tax income of Dutch municipalities and the limited autonomy of municipalities to introduce and levy taxes and the importance of taxation of houses for municipalities. Furthermore, we discuss the problems the preferential income tax treatment of home ownership is causing to the Dutch economy. The measures taken to overcome these problems have caused a new problem: a conflict between generations in a time when aging is already causing tensions between older and newer generations.