OLD AND NEW CORPORATE TAX REGIMES IN THE NETHERLANDS ANTILLES
The new regime is attractive too
If a Netherlands Antilles based company (NV or BV) is used for foreign business activities one has to realize that such company is in principle subject to the Netherlands Antilles profit tax for income generated wherever in the world because the company has been incorporated under Netherlands Antilles law.
The old “offshore regime“, that has been abolished in 2001, granted a low profit tax rate of 2.4 – 3% to companies with foreign investment activities such as financing, investing in portfolio activities or holding shares in foreign companies. If the Netherlands Antilles company will itself, and not through a foreign legal entity, be active in the foreign business (e.g. operating a factory), the old offshore regime will most likely not be applicable, because that regime did not apply to that type of business activities.
Since the offshore regime has been abolished the government has also provided strict grand-fathering rules to avoid the “trade” in existing “offshore” companies.
The present regime grants an exemption for 95% of the profit generated through a permanent establishment. The remaining 5% is subject to the standard tax rate of 34.5%. Thus effective 1.725% will be due on the profit generated through the permanent establishment. So the new regime might in fact be more attractive than the old one.
Karel Frielink
Attorney (lawyer) / Partner
