The Second Chamber of the Dutch Parliament on Thursday approved the Netherlands St. Maarten Tax Regulation to avoid double taxation and to prevent the evasion of income tax between the two countries. The new law will become effective early 2016.
The taxes to which the tax regulation, arranged by Kingdom Law, will apply are the income and wage tax in the Netherlands, the Caribbean Netherlands and St. Maarten, dividend tax in the Netherlands and St. Maarten, profi t tax in St. Maarten, corporate income tax in the Netherlands, and real estate tax and revenue tax in the Caribbean Netherlands.
Besides double taxation and (income) tax evasion, the Tax Regulation also addresses the issue of residency regarding inheritance tax. The law, which was approved by the Second Chamber as a formality without voting will go in effect on the fi rst day of the second month following the publication in the National Gazette.
An important aspect of the new Tax Regulation is the exchange of information between the Tax Offi ces of the Netherlands and St. Maarten. Both countries want to be part of international developments regarding the exchange of information and the combating of tax fraud. St. Maarten has indicated the willingness to automatically exchange information with the Netherlands, as well as other countries based on the Common Reporting Standard.
The Tax Regulation will replace the current Kingdom Tax Regulation (“Belastingregeling voor het Koninkrijk” BRK) between the Netherlands and St. Maarten, which dates back to 1965. The other Dutch Caribbean countries were also part of the BRK arrangement with the Netherlands.
The BRK has been adapted several times in the 50 years that it has been in effect, but it didn’t comply with international standards for example in the Organisation for Economic Cooperation and Development OECD and the Dutch treaties policy. The BRK also didn’t fi t in the new constitutional structure per October 10, 2010, which resulted in having fi ve different fi scal structures within the Kingdom.
Talks to establish a replacement for the BRK between government representatives of the Netherlands, Aruba, Curaçao and St. Maarten started late 2009. At that time, the countries indicated the preference for bilateral agreements to avoid double taxation instead of having one multilateral arrangement such as the BRK.
Negotiations were then started to come to three bilateral arrangements between the Netherlands and the three Dutch Caribbean countries. The Netherlands Curaçao Tax Regulation The Second Chamber of the Dutch Parliament in session (fi le photo). has already been approved by the Second and First Chamber and will go into effect on January 1, 2016. The process for a Netherlands Aruba Tax Regulation has started.
The Netherlands and St. Maarten reached an agreement on the text of the Tax Regulation in July 2014. The contours of the Netherlands Curaçao Tax Regulation were used for the tax arrangement between the Netherlands and St. Maarten.
The Netherlands St. Maarten Tax Regulation will also be applicable to the Caribbean Netherlands (Bonaire, St. Eustatius and Saba) since these islands are part of the Netherlands. The three islands have not been involved in the talks to come to a tax treaty.
The Daily Herald.