Iran has regularly executed people it has convicted of homosexual acts
Mehdi Kazemi has said his life is in danger if he is returned to Iran, where he says his boyfriend named him as a partner before being executed.
Homosexual acts are illegal in the Islamic republic.
A Dutch spokesman said Mr Kazemi would now be sent to the UK, the first European country he entered.
A claim for asylum in the UK had already been turned down.
Application turned down
His case has become a campaign cause for gay rights activists across Europe.
Mr Kazemi, 19, said he had travelled to Britain in 2005 to study English, and learned that his lover in Iran had been executed for sodomy, his lawyer Borg Palm said.
After his asylum application was turned down, he fled to the Netherlands in 2006, having narrowly avoided being sent back to Iran.
Dutch immigration authorities are more lenient towards homosexual Iranians, who are afforded special status because of the regime's hard line against them.
'Life in danger'
The Dutch are refusing to consider the case. Under the EU's 2003 Dublin Regulation, the state the applicant first enters is responsible for processing their application.
Mr Kazemi says his life will be in danger not only because he has been named as a homosexual, but also because of the extensive media coverage of his case,.
Mr Kazemi's uncle - who is in the UK - said the family was considering an appeal to the European Court.
A statement from Britain's immigration service said: "We examine with great care each individual case before removal and we will not remove anyone who we believe is at risk on their return."
Iran executed two teenage men in 2005 after authorities convicted them of raping a young boy.