TAXATION OF PENSHONADOS IN THE DUTCH CARIBBEAN
Two systems available
For years the Netherlands Antilles have an attractive fiscal arrangement for people who want to settle on the Netherlands Antilles after their (early) retirement, the so-called Penshonados. The arrangement entails a relatively low tax rate, in which depending on the circumstances one can make a choice between two different taxation systems. In order to benefit from the Penshonado Regulation, certain conditions will have to be met.
Two systems of taxation are available to a Penshonado. Unless the income from foreign source is higher than Antillean Guilder or ANG 2,267,000 (around USD 1,260,000) usually the first method of taxation is more advantageous.
System 1: The Penshonado, like any other resident, is subject to regular Netherlands Antilles taxation on his world-wide income. However, to the extent the income qualifies as foreign source income, it is taxed at a rate of 10%.
System 2: The Penshonado can opt for a fictitious regulation for the income from foreign sources. This can be advantageous if the foreign source income is more than ANG 2,267,000. The foreign source income is, if so elected, set at ANG 500,000. This amount is subject to the progressive tax rate, which will amount to approximately ANG 227,000 (2006 rate). This fictitious income of ANG 500,000 is unrelated to the actual income of the Penshonado. The remaining domestic income is taxed by means of the progressive rate, just as in system 1. Adding up the foreign income and the domestic income will not take place.
Karel Frielink
Curacao-based Attorney (lawyer) / Partner
