NETHERLANDS ANTILLES: PERSONAL TAXATION

The main tax applied to individuals in the Netherlands Antilles is income tax, which is collected by employers under a 'PAYE'-style scheme along with social security contributions. Capital gains tax does not apply to individuals; but there are inheritance and gift taxes, and some relatively minor property taxes. Import duties are significant, and apply to many goods and commodities. There is a sales tax on most goods and services (5% at the time of writing).

Netherlands Antilles Residence and Liability for Taxation

• Income from a business or profession;
• Income from employment;
• Income from property (real estate);
• Income from capital;
• Certain periodic receipts.

Fringe benefits are mostly taxable, including housing allowances and reimbursement of taxes. Capital gains are not taxed unless the gain results from business activity, or unless it results from the sale of shares of a company of which the individual concerned, together with certain specified types of relative, owns or has owned 25% or more in the last 5 years.

Non-residents are taxed on certain specified types of income arising in the Netherlands Antilles, including the following:

• Income from a business or profession carried on within the islands personally or through a representative or agent (activity lasting less than three months may be exempted);
• Income from employment (if such lasts less than three months, there is the possibility of an exemption, but this is seldom granted);
• Income derived from a position as manager or director of a Netherlands Antilles comnany;
• Income derived from property (real estate) in the Netherlands Antilles, or from a mortgage on such property.Note however that there is no withholding tax in the Netherlands Antilles.

All individuals are entitled to various deductions, up to specified limits, including:

• business expenses, such as moving and travel expenses, entertainment expenses, and automobile expenses;
• medical expenses;
• life insurance and pension plan payments;
• charitable contributions;
• interest;
• social security contributions; and
• alimony.

Tax credits on foreign income are not accepted unless they are covered by a specific tax treaty. Foreign taxes actually paid as such are however deductible.

There are some fairly minor allowances for children.

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Netherlands Antilles The 'Penshonado' Tax Regime

Since 1987 (with amendments in 1997) the Netherlands Antilles has offered a favourable personal tax regime for retired people. The regime is available on the following conditions:

• The "penshonado" should be at least 50 years old on the date that he registers himself as a resident;
• The pensioner should not have lived in the Netherlands Antilles in the five years before making the application for 'penshanado' status;
• The pensioner must own a house in the Netherlands Antilles with a value of at least US$253,000 for his personal use and available to him within 18 months after his registration as a resident;
• The application for favourable tax treatment must be filed within two months after registration as a resident;
• The "penshonado" has to provide employment to at least one employee for not less than 30 hours per week.

A "penshonado" may choose between two tax regimes:

Foreign income is considered to be all income from a foreign source, including non-resident (so called "offshore") companies established in the Netherlands Antilles, all income from savings at local banks; and the rental-value of the house owned by the penshonado.

"Local" income is all income that the penshonado receives from employment in a company established in the Netherlands Antilles in which he owns 40% or more of the capital stock and/or income obtained as a director or officer of a company and/or income received from bonds issued by a local company. Local income is taxed at the normal tax-rate for local citizens. The penshonado may not enter into employment with a company in which he does not own at least 40% of the capital-stock.

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Netherlands Antilles Inheritance and Gift Taxes

Inheritance and Gift taxes are levied on residents of the Netherlands Antilles at rates up to 24% (at the time of writing).

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Netherlands Antilles Real Estate Taxes

There are real estate taxes on the islands of Curacao and Bonaire: 0.5% per annum is currently charged annually on the value of unimproved properties, and 0.6% annually on the value of improved properties. On Curacao, there is a 15% municipal surcharge on the amount due. There is also an annual occupancy tax of 5% of rental value.

N.B In 2007, the legislature approved a proposal to formally abolish the real property use tax ('gebruiksbelasting'), which had not been levied for several years.

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Netherlands Antilles Import Duties

Import duties cover a range of goods and commodities with rates up to 28% (at the time of writing) on the c.i.f. value. Some sample rates are as follows:

• Tourist items and certain foodstuffs, including fresh chicken, sardines, milk, cheese, pearls, watches, gold coins, perfumes, confectionery, cameras: up to 3%;
• General goods, including clothing and some food staples: 11.5%;
• Semi-luxury goods, including flowers, playing cards, washing machines: 18%;
• Luxury goods, including mirrors, pianos and air conditioners: 28%.

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