Here is an overview of the most notable measures – for civilians and companies located in the Caribbean Netherlands – within the Tax Plan 2024 proposal for a new law. This proposal was sent to the House of Representatives on Prinsjesdag. If the proposal is approved by the House of Representatives and the Senate, the measures will come into effect on the 1st of January 2024.
In 2010, Bonaire, St. Eustatius, and Saba became part of the Netherlands as special municipalities. Since then, part of the tax system on the islands has primarily remained the same. The government would now like to update and improve this system over the coming years. This proposal for a new law represents the first step in this process. The measures in this proposal are mainly relevant to entrepreneurs and have less impact on civilians.
To update the existing system, whereby execution in practice is improved and, wherever possible, simplified. In addition, the government aims to use several provisions to improve the financial capacity of people with low income.
The proposal for a new law contains a variety of measures relating to a number of topics. The most important of these relate to a minimum rate of taxation for entrepreneurs, the integratieheffing (integration levy), opbrengstbelasting (revenue tax), the customary wage agreement and the Small Businesses Scheme (KOR).
Furthermore, in relation to vastgoedbelasting, a notification requirement will be introduced when buying a home.
What do these measures mean for you?
A general overview of the main changes for civilians and companies can be found below. For a complete overview, please refer to the Prinsjesdag documents Prinsjesdag: Miljoenennota en Rijksbegroting | Rijksoverheid.nl
Pick-ups (with a single cab) and vans will no longer be subject to the regular ABB rate but to a higher rate. 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.
This will not apply to vans with a specific function, such as hearses, ambulances, police vans, and vans used by the fire department.
Notification requirement vastgoedbelasting:
If you are the new owner of a home (which is not your main place of residence) or business premises, and you do not automatically receive a tax assessment for vastgoedbelasting, you are now required to report this yourself. You will run the risk of a fine if you fail to do so.
Abolition dividend exemption:
The dividend exemption in the income tax, whereby dividends up to a maximum of 5000 dollars per year were exempt, will lapse. As of 2024, 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).
Opbrengstbelasting (Revenue tax):
Conditions to obtain an establishment order (vestigingsplaatsbeschikking) relating to Opbrengstbelasting are, on the one hand, becoming easier but, on the other hand, are also being tightened in order to prevent abuse. This relates to holding companies that possess a qualified percentage in an operating company (in the Caribbean Netherlands) which has an establishment order (vestigingsplaatsbeschikking).
Customary wage agreement:
The customary wage agreement will apply to substantial interest holders who work for the company. According to the customary wage agreement, substantial interest holders are deemed to receive a wage that is normal for the level and duration of their labor. This agreement is now being modified and expanded in several areas:
- Instead of a wage from similar employment, a wage from the most comparable employment will now be used as the benchmark.
- The customary wage agreement also applies to the partner of the employee who possesses a substantial interest in the company.
- For so-called sole traders, the turnover of the company will be used as a benchmark.
- In addition, the standard amount will be replaced by an amount that is twice as high as the tax-free sum.
Integratieheffing (Integration levy):
This levy is equivalent to VAT and was abolished in the Netherlands in 2014. This levy is now also being abolished in the Caribbean Netherlands because it causes bottlenecks in the housing market. Abolition of this levy will help to alleviate these bottlenecks. For example, it will become easier for entrepreneurs to let self-constructed homes.
Small Businesses Scheme (KOR):
The annual turnover threshold is being increased from 20,000 dollars to 30,000 dollars, which means more small businesses will not have to pay ABB.
Minimum tax rate:
The current system in the Caribbean Netherlands does not feature profit tax for companies. This is in exceptional situations undesirable because it fosters a climate for abuse and evasion in international situations. Due to this measure, a minimum tax rate is introduced and the system will comply with the model in the Netherlands as well as the European guideline concerning a minimum rate of taxation for internationally operating companies. Moreover, this measure will make the tax system simpler and more future-proof. The measure only relates to multi-national groups with a worldwide turnover of 750 million euros or more, and with an office in the Caribbean Netherlands.