Aruba: Double Tax Treaties
The Netherlands Tax Treaty
Provisions under the NFR and a revised 'BRK' (tax treaty with the Netherlands) came into effect from July 1, 2003. They include:
- dividends from a Dutch corporation to Aruba corporate shareholders, who own at least 25% of the shares in the Dutch corporation, will be exempted from Dutch dividend withholding tax, provided that the dividend is subject to Aruban tax at a rate of at least 8.3%.
- the Dutch corporation will have to withhold 8.3% dividend withholding tax from the gross dividend. The 8.3% which has been withheld upon the dividend distribution in the Netherlands can be credited against tax in Aruba.
- dividends and capital gains derived from shareholdings in a Netherlands corporation will be exempted from additional profit tax in Aruba provided that the shareholding amounts to at least 25% and that 8.3% Aruba tax is paid on the gross amount of dividends received.
- dividends paid by Dutch corporations to Aruban corporations unable to take advantage of the participation exemption will be subject to 15% Dutch dividend withholding tax. Existing Aruban offshore corporations may elect for the new dividend treatment.
- the activities of an exempted company (AEC) will be restricted to investments in debt instruments, securities and deposits
- for Aruban coporations incorporated before June 30, 1999, subject to profit tax and having a book year which ends before 1st July 2002, the grandfathering rules with respect to the offshore regime will remain applicable until 2007 as long as the company continues to have substantial business.