Curacao & St. Maarten, new jurisdictions.
As per October 10, 2010, the Netherlands Antilles as a jurisdiction within the Kingdom of the Netherlands will be dissolved.
Consequently in its place, two new jurisdictions Curacao and St. Maarten will come into existence.
Curacao and St. Maarten will be the legal successors of the Netherlands Antilles once the Netherlands Antilles, ceases to exist as a jurisdiction.
The other three Islands, Bonaire, Saba and St. Eustatius will become Overseas Municipally of the Netherlands (OMON).
Will this affect our existing clients?
There will be no change for our clients, who legally or beneficially own Netherlands Antilles entities (NV, BV and Private Foundations).
The Private Foundation with statutory seat in Curacao will remain tax exempt.
As is currently the case Curacao will not levy withholding tax on dividends, interest and royalties.
Interesting new tax regime:
Based on the bill which has been submitted to the Dutch parliament (formal ratification pending), provided certain conditions are met, companies established in the OMON would not be subjected to corporate income tax.
In practice the OMON entities would only be subjected to a Distribution Tax and Property Tax.
The Distribution Tax will have a rate of 5% and will be levied on distributions done by legal entities (NV, BV, Private Foundations etc.) domiciled in the OMON.
The Property Tax will have an effective rate of 0.8% and will levied on Properties with a value of $50,000 or higher.
To qualify for the Distribution & Property tax, the following requirements must be met:
1. Entity must be active (maximum of 50%) passive income.
2. In case more than 50% of its income is passive, the entity must employ three OMON residents and have an office (real-estate) valued $50,000 or higher.
Dutch tax residency.
Although, entities located in OMON are by operation of law deemed to be resident of the Netherlands, we do not foresee these OMON entities to be subjected to the Dutch corporate income and dividend tax.
In case the OMON are subjected to the Dutch corporate income and dividend tax, than these OMON entities should also be able to qualify for the benefits of the extensive Dutch Tax Treaty Network.
It depends on the wording and interpretation of each Treaty, but we assume that, the Netherlands would have to renegotiate (all) its tax treaties to include a protocol and accommodate the OMON entities.