THE TAX-EXEMPT LIMITED LIABILITY COMPANY IN THE DUTCH CARIBBEAN
Certain criteria will have to be met
A limited liability company (‘besloten vennootschap’; ‘BV’) is subject to Netherlands Antilles corporate income tax as any other taxable entity against the normal statutory corporate income tax rates (30%, including 15% Island Surcharges a total of 34.5% on Curaçao) and can obtain certain tax rulings. However, under certain conditions it is possible to obtain a tax-exempt status for a BV. As a consequence of this status, a BV will not be subject to Netherlands Antilles corporate income tax. To obtain such status the following criteria will have to be met:
- A request for the tax-exempt status should be filed with the tax inspector.
- The Board of Managing Directors of the BV should maintain a register with the names and addresses of all ultimate beneficiaries, who hold an interest of more than 10% in the BV.
- The Board of Managing Directors may consist only of individuals residing in the Netherlands Antilles or certified trust companies residing in the Netherlands Antilles or their directors and employees.
- The Board of Managing Directors shall annually prepare financial statements which are audited and approved by an independent expert within 12 months after the end of the book year.
- The purpose of the BV and its actual activities consist exclusively or nearly exclusively of:
a. providing credit and/or
b. investment in securities and deposits. - The BV is not a bank or other financial institution subjected to the supervision of the Bank of the Netherlands Antilles.
Since the exempt BV is not subject to tax by reason of domicile, residence, place of management or any other criteria of similar nature, the company is not a resident as defined in the OECD model double taxation convention. Therefore, the company will not be entitled to protection from source country tax for income from other countries under tax treaties.
Karel Frielink
Curacao-based Attorney (lawyer) / Partner
