Taxation of international executives
When tax returns due? That is, what is the tax return due date?
The deadline for the filing the tax return is 2 months after receiving the tax return form. This term can be extended by the tax inspector for a maximum period of 18 months.
What is the tax year-end?
The calendar year applies, although a taxpayer may request a different tax year.
What are the compliance requirements for tax returns in the Caribbean Netherlands?
Resident taxpayers have to file an income tax return based on their worldwide income.
Non-resident taxpayers have to file an income tax return if they have domestic (within the Caribbean Netherlands) sources of income.
What are the current income tax rates for residents and non-residents in the Caribbean Netherlands?
Income tax table for 2017
|Taxable income bracket||Total tax income below bracket||Tax rate on income in bracket|
|From USD||To USD||USD
Note: the first bracket constitutes the tax free sum. Some exceptions apply. Some sources of income, such as income derived from a substantial shareholding, are taxed at a fixed rate of 5%.
The rates for resident taxpayers also apply to non-resident taxpayers.
For the purposes of taxation, how is an individual defined as a resident of the Caribbean Netherlands?
Generally, whether or not a person is deemed to be a resident of the Caribbean Netherlands is judged by the relevant facts and circumstances. Relevant facts and circumstances include, but are not limited to:
Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
What if the assignee enters the country before their assignment begins?
The assignee might be regaded as a resident of the Caribbean Netherlands as of the date of entry.
Are there any tax compliance requirements when entering or leaving the country?
When entering the country the taxpayer needs to register himself with the Tax Authorities in order to obtain a tax identification number. As of that moment the normal tax compliance rules are applicable to the taxpayer.
Before leaving the country an exit tax return has to be filed and all pending tax matters and taxes due should be settled. Thereafter the taxpayer could be deregistered from the database of the Tax Authorities.
What if the assignee comes back for a trip after residency has terminated?
The normal rules apply. If they are not deemed a resident taxpayer based on the relevant facts and circumstances, they will be not liable to income tax in the Caribbean Netherlands.
Do the immigration authorities in the Caribbean Netherlands provide information to the local taxation authorities regarding when a person enters or leaves the Caribbean Netherlands?
This is generally the case.
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
If the taxpayer has settled all taxes due and has been deregistered in the Caribbean Netherlands, he will not be subject a filing requirement.
Do the taxation authorities in The Caribbean Netherlands adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in The Caribbean Netherlands considering the adoption of this interpretation of economic employer in the future?
The Dutch Supreme Court has adopted an economic employer approach for the interpretation of the term employer. The Supreme Court has ruled that the host entity is considered as the employer for treaty purposes if the following conditions are met:
By virtue of the fact that the Caribbean Netherlands are part of the Kingdom of the Netherlands and the Dutch Supreme Court is the highest court of appeal Dutch case law generally also applies in the Caribbean Netherlands thereby, however, taking into account differences in laws, regulations and (tax) practice.
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
What categories are subject to income tax in general situations?
Are there any areas of income that are exempt from taxation in your country? If so, please provide a general definition of these areas.
Are there any concessions made for expatriates in your country?
The Caribbean Netherlands has regulations in place for expatriate income taxes. Expatriates in the Caribbean Netherlands are those employees who, prior to the employment, resided for a period of at least five years in a foreign country and are staying in the Caribbean Netherlands on a temporary basis. Under certain conditions, the provisions can be applied for two periods of five years.
In addition, the employee must:
Aside from these exempt elements, in case the employee enjoys a net wage, the tax due does not have to be grossed up.
Is salary earned from working abroad taxed in The Caribbean Netherlands? If so, how?
Yes. If you are deemed a resident taxpayer in the Caribbean Netherlands, you are in principle taxable for your world income
Are investment income and capital gains taxed in your country? If so, how?
Capital gains and losses arising from the sale or exchange of private assets are exempt from taxation. If private assets are employed as capital of a business, the capital gains and losses form part of personal taxable income. Also, capital gains realised on the sale of shares are taxed if the seller has a 'substantial interest' (i.e. at least a 5% shareholding) in the company. Shares held by the spouse will be taken into consideration in determining whether the 5% shareholding criterion has been met. If the seller does not have a 'substantial interest' but one of their (grand) children or the (grand) parents have a 'substantial interest', the shares of the seller are considered to be a 'substantial interest'. The gain is subject to a reduced rate of tax applicable to non-recurring items of income. Liquidating dividends are taxable to the extent that they exceed paid-in capital.
If a person has a 'substantial interest' or is considered to have one, then a receivable on the company is also considered a substantial interest.
Dividends and interest are subject to tax as income from movable property. Rent income is not taxed if the renting out of property does not constitute a company.
The difference between the option price and the value of the shares at the moment the moment the option is exercised is subject to tax.
There is no gift tax in the Caribbean Netherlands.
What are the general deductions from income allowed in your country?
With regard to employees, deductions of expenses are limited. If expenses are business-related and reimbursed by the employer, however, the reimbursement remains tax free.
Subject to limitations, a resident taxpayer can deduct charitable contributions, medical expenses, life insurance premiums, and savings plan payments. In addition, a resident taxpayer can deduct interest (with certain limits), pension plan contributions, social security premiums, and alimony.
Personal allowances exist in the following amounts for the year 2016:
|Basic allowance for every taxpayer||11,908|
|For aged 60 years and over||1,347|
As of 2016, the former allowance for children no longer applies. Instead, residents are entitled to child support of USD 38 per month per child.
To the extent they are business-related and not reimbursed, an individual can deduct such items as moving expenses, travel expenses, entertainment expenses, and automobile expenses.
What are the tax reimbursement methods generally used by employers in your country?
Current year gross-up
How are estimates/prepayments/withholding of tax handled in your country? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Caribbean Netherlands employs the pay-as-you-earn (PAYE) system, so taxes, as well as social security premiums, are withheld from salaries. Payroll taxes
Employers must withhold wage tax from the wages of their employees and pay the wage tax to the Tax Department within 15 days after the end of the month
Is there any Relief for Foreign Taxes in your country? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
Foreign tax relief
Based on a decree, a reduction will be allowed for foreign-source tax. The allowance is a proportionate reduction. Foreign-source tax on dividends, interest, and royalties may be deducted. The deduction shall not, however, exceed that part of the income tax as computed before the deduction that is attributable to that foreign-source income in the Caribbean Netherlands.
Although part of the Netherlands, the Dutch tax treaties do not apply to the Caribbean Netherlands. Instead, the tax treaties apply that the former Netherlands Antilles have negotiated. As a result, the Caribbean Netherlands currently has a tax treaty in effect with Norway. A double tax agreement (DTA) has been negotiated with Jamaica, but this has not entered into force yet.
Furthermore, tax information exchange agreements (TIEAs) have been signed with several countries, including Australia, Canada, Denmark, Mexico, New Zealand, Spain, Sweden, and the United States.
Tax Arrangement for the Kingdom of the Netherlands (TAK)
As part of the Kingdom of the Netherlands, the Caribbean Netherlands is party to a multilateral tax agreement with Aruba, Curaçao, and St. Maarten (TAK). Subject to this treaty, income from capital is, in general, taxed in the country of residence.
The Caribbean Netherlands is also party to the Tax Agreement for the Netherlands (TAN). Dividend paid by a Dutch company to an individual residing in the Caribbean Netherlands is subject to 15% withholding tax (WHT) in the Netherlands.
If an individual has emigrated from the Netherlands to the Caribbean Netherlands, the Netherlands may, up to a period of ten years after emigration, tax the dividend with Dutch individual income tax at a rate of currently 25%.
What are the general tax credits that may be claimed in your country? Please list below.
There are no other significant tax credits or incentives for individuals in the Caribbean Netherlands.