Dutch tax aspects of a trust

Our friends from our TGS Global member firm in Ontario (Canada) asked us to assist in a very interesting case. One of their late clients established a family trust many years ago. The trust owned among others shares in several Canadian businesses. One of the beneficiaries of the trust is now a Dutch resident. The trustee of the trust was considering to make a distribution to the Dutch resident beneficiary.

Hence, we had to find out what the Dutch tax consequences are of being a beneficiary of an Ontario family trust. Under Dutch tax law a trust must under certain circumstance be ignored. This means that a distribution by the trust to a beneficiary can – de facto – be regarded as a gift from the settlor of the trust directly to the beneficiary. When either the settlor or the beneficiary is a Dutch resident, Dutch income tax and gift and inheritance tax can be triggered.

Luckily for the client we were able to confirm that a distribution in the case at hand would not trigger any Dutch tax.