The
Netherlands Antilles had tended to move
away from double tax treaty arrangements
during recent years, but seems to have actively
reversed this policy, having commenced tax
treaty negotiations with about a dozen countries
since late 2006. At one time the country
had treaties with a number of prominent
countries, including the US and the UK.
Most of these treaties have lapsed, and
the only remaining double tax treaty as
such is with Norway. There is also the 'BRK'
tax agreement with the Netherlands. After
negotiations to continue the US treaty failed
in 1987, the remaining 'mini-'Treaty' continues
to give exemption from US withholding taxes
to Eurobonds issued before 1984.
The Netherlands Antilles has signed Tax
Information Exchange Agreements with Australia,
New Zealand, the USA, Canada, Spain, and
plans to sign conventions with the UAE,
Mexico, Denmark, Iceland, Finland, Sweden,
Greenland and the Faroe Islands.
In
2008,
the Secretary of State for Finance, Alex
Rosaria explained that:
"The
importance of TIEAs is the positive positioning
of the Netherlands Antilles. These agreements
confirm the Netherlands Antilles’
commitment to high international standards
and its stature as a responsible international
financial center."
"Since
2000, the Netherlands Antilles has worked
with the OECD countries to develop principles
to improve transparency and exchange of
information in tax matters."
The
statement went on to add that: "Although
of vital importance, TIEAs are do not particularly
bring about new economic activities for
the international financial services sector."
"Furthermore
there is a growing number of smaller countries
that do question the benefits of TIEAs given
the fact that there is no level playing
field. It is hoped that this theme will
shortly be discussed within the OECD."
"DTAs
on the other hand do contribute to economic
activity because they focus on stimulating
investments."
Negotiations
with nine more countries, namely: Sweden,
Iceland, Denmark, Greenland, Finland, the
Faroe Islands, Spain, Canada and Mexico,
are expected to be concluded and possibly
signed this year.
Rosaria
went on to stress again that the Netherlands
Antilles must concentrate more on the negotiating
and entering into DTAs, concluding that:
“The
sector also agrees with me that the ‘beef’
is to be had in DTA’s. I expect that
we can this year negotiate DTA’s with
Mexico, Spain, Surinam, the United Arab
Emirates and Colombia."
A
double tax treaty was substantively negotiated
with Jamaica during 2008.
Netherlands
Antilles The Norway Double Tax Treaty
The Netherlands Double Tax Treaty with
Norway has been effective since 1990 and
is based on the OECD model treaty. Withholding
tax on dividends from a Norwegian company
are reduced; there is anyway no Norwegian
withholding tax on interest, and there
are no Antillean withholding taxes at
all. (However, the New Fiscal Framework
applying from 2002 includes provision
for a 10% withholding tax on profit distributions
by Antillean companies, although this
did not come into effect immediately).
There
are some exceptions to the treaty withholding
tax regime, with relief being unavailable
to:
- Companies
that do not have a genuine business
purpose in the Netherlands Antilles
and less than 50% of whose shares are
held in the two countries;
- Companies
claiming 'offshore' status under Articles
14 and 14A of the National Ordinance
on Profit Tax 1940.
Articles
14 and 14A are being repealed for new
formations, and companies incorporated
as NABVs
under the New Fiscal Framework will not
have access to double taxation treaties.
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The
Netherlands Tax Treaty (BRK)
The Netherlands Tax Treaty (Belastingregeling
voor het Koninkrijk, or BRK or TAK)
applies to the three constituent parts
of the Kingdom of the Netherlands, being
Holland itself, Aruba and the Netherlands
Antilles.
Prior
to 2002, the BRK was last amended in
1997 and included the following provisions:
-
there
is no withholding tax on interest
and royalty payments by Netherlands
companies;
-
the
Dutch withholding tax on dividends
paid to Antillean companies is 15%;
but if the Antillean company owns
25% or more of the Dutch paying company,
the rate is reduced to 7.5% (5% if
the Antillean company accepts some
local taxation).
The
New Fiscal Framework (NFF) came into force
alongside a further revision of the BRK
on January 1, 2002. Under the amendments
and for the time being, the proposed Netherlands
Antilles dividend withholding tax of 10%
will not enter into force.
Futhermore,
the dividend article in the current BRK
has been amended so that dividends from
a Dutch corporation to Netherlands Antilles
corporate shareholders, owning at least
25% of the shares in the Dutch corporation,
are exempted from dividend withholding
tax provided that the dividend is subject
to Netherlands Antilles tax at a rate
of at least 8.3%.
The
Dutch corporation has to withhold 8.3%
dividend withholding tax (at the time
of writing) from the gross dividend. The
8.3% which has been withheld upon the
dividend distribution in the Netherlands
can be credited against tax in the Netherlands
Antilles.
Dividends
and capital gains derived from shareholdings
in a Netherlands corporation are fully
exempted from profit tax in the Netherlands
Antilles provided that the shareholding
amounts to at least 25% and that the dividend
is subject to the Netherlands Antilles
tax of at least 8.3% on the gross amount
of dividends received.
Dividends
paid by Dutch corporations to Netherlands
Antilles corporations which don't qualify
under the participation exemption are
subject to Dutch dividend withholding
tax. Netherlands Antilles offshore corporations
may elect for the new dividend article.
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Netherlands
Antilles Other International Agreements
Agreements
on the taxation of savings between the
UK, the Netherlands Antilles and Aruba
all came into effect on 1 July 2005.
In
April, 2009,
State Secretary of Finance of the Netherlands
Antilles, Alex Rosaria, released a statement
noting that the Netherlands Antilles has
been put on the OECD ‘grey list’
of international financial centers.
Rosaria
had been actively trying to convince the
international community during the last
3 years that the Netherlands Antilles
should not be on a black list. “At
least we now know where we stand, even
though we are not sure why we are on the
grey list and what we need to do in order
to be white-listed by the Paris-based
multilateral organization”.
In
the Netherlands Antilles Rosaria questioned
the list stating that it should be ‘transparent
and not a guessing game’. Rosaria
has requested a meeting with the OECD
to discuss the reasoning behind the Netherlands
Antilles’ grey listing and what
it would need to achieve in order to be
removed.
“We
want to sit down with them. We want to
know why we are on the grey list and especially
what we need to do additionally in order
to be on the white list.”
The
Netherlands Antilles has committed to
OECD standards since 2000 and has been
commended on many occasions by the OECD
as ‘having made most progress on
matters of international tax transparency’,
noted its release.
“Our
unequivocal message to the world community
is that we are committed to regulation,
transparency and effective exchange of
information,” said Rosaria.
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