Most important changes in Governmental taxes for the Caribbean Netherlands
Since the 10th of October 2010, the islands Bonaire, Sint Eustatius and Saba are known as the Caribbean Netherlands and are public entities of the Netherlands. Since this new constitutional status, the Dutch government is responsible for the taxation and fiscal policy. Therefore, a new tax system was introduced in 2011, which differs from both the previous Netherlands Antillean system and the European Dutch system. In the outline below, we will summarize the most important changes per January 1st, 2024.
The Dutch government is responsible for the income tax, payroll tax and social security contributions, revenue distribution tax, ABB, real estate tax, real estate transfer tax and gambling tax and excise duties. The public entities may also impose local taxes, which can differ per island.
Like the European Netherlands, every year the tax free allowances, thresholds and the start of the second tax band for income tax purposes are adjusted for inflation. The Caribbean Netherlands have their own compounded inflation correction. For 2024, this compounded inflation correction amounts to 7.3%, meaning all relevant amounts will be increased by 7.3%.
Amended ABB rates on Motor vehicles
Pick-ups (with a single closed cabin) and vans designed for the transportation of goods will no longer be subject to the regular ABB rate but to a higher rate per January 1st. The regular ABB rate on Bonaire is 8% and the higher rate is 25%. The regular ABB rate on the Windward Islands is 6% and the higher (progressive) rate is determined by the value of the car. The progressive rate comprises of the following percentages: 10%, 18%, 22% and 30%.
Abolishment Integration levy
This levy is the equivalent to the rule in the VAT and was abolished in the Netherlands in 2014. This levy is will still be abolished in the Caribbean Netherlands despite its adverse impact on the housing market. The elimination of this levy is expected to alleviate the existing bottlenecks. For example, it will become easier for entrepreneurs to rent-out self-constructed homes.
Small Businesses Scheme (KOR)
The annual turnover threshold is being increased from USD 20,000 to USD 30,000. Users of Small Businesses scheme will not have to pay ABB.
Revenue withholding tax.
The requirements for obtaining and maintaining a residence ruling (‘vestigingsplaatsbeschikking’) related to revenue distribution tax are amended. On the one hand, they are becoming more lenient, while on the other hand, they are being restricted to prevent potential abuse of the leniency. This only concerns holding companies with a qualifying stake in an operational company situated in the Caribbean Netherlands that also holds an residence ruling (‘vestigingsplaatsbeschikking’).
Mandatory reporting real estate tax.
It is mandatory for new home- and business property owners to report their new ownership of their property. In addition, if home- and business property owners do not automatically receive a tax assessment for real estate tax and should receive one, this should be reported by the home- and business property owner. Failing to do so could eventually result in an administrative fine.
Increase of annual tax free allowance (income tax) to minimum wage.
The income tax threshold will be increased from USD 17,352 to USD 20,424. Income up to the threshold will be exempt from income tax and social security contributions.
Notional wage scheme (Income and Wage tax)
The notional wage scheme mandates that an individual holding at least 5% of the shares in a company and also performing services for that company is deemed to receive a salary that is normal for the level and duration of their work. The standard amount will be replaced by an amount that is twice as high as the income tax threshold. In 2024 this amounts to USD 40,848.
Abolition dividend exemption (income tax)
The dividend exemption up to USD 5,000 in the income tax act will be abolished. When determining the taxable income in a year, income tax must be paid on all received dividends that are higher than the tax-free sum (and seniority support).
Minimum taxation for Mne’s
The Caribbean Netherlands does not levy profit tax for companies. However, due to international agreements a minimum tax rate of 15% of net profits is being introduced and the system will comply with the model in the Netherlands as well as the European Directive concerning a minimum rate of taxation for internationally operating companies. The measure therefore only relates to multinational groups with a worldwide turnover of € 750 million or more, and with operational activities in the Caribbean Netherlands through a subsidiary or a local branch.