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Please find below the editorial KPMG has written for us explaining the new tax system on Bonaire
New tax regime on Bonaire
As of October 10, 2010, the Netherlands Antilles ceased to exist as a separate jurisdiction within the Kingdom of the Netherlands. As a result of recent constitutional amendments, Bonaire became an overseas public body of the Netherlands. On October 7th the long-awaited tax regime for the BES islands (Bonaire, Saba and St Eustatius) was approved by the Dutch House of Representatives. If the Dutch Senate also approves of the BES bill, a unique tax regime will be introduced as from 2011 on the BES islands. In this editorial we will highlight some aspects of the new BES tax regime for real estate companies (NV's, BV's) established on Bonaire.
The transition period
During the transition period from 10-10-10 through 12-31-2010, the tax regime of the former Netherlands Antilles will remain in effect on Bonaire.
New BES regime as of 2011
1. Dutch corporate income tax and dividend withholding tax (“vennootschapsbelasting en dividendbelasting”)
According to the Tax Act BES the basic rule is that all companies established in the BES islands are deemed to be established in the part of the Netherlands that is situated in Europe and therefore subject to Dutch corporate income tax and dividend withholding tax.
2. BES taxes on profits and distributions
According to the BES bill, qualifying companies can file a request before July 2011 to be subject to a BES islands’ property tax and distribution tax instead of being subject to Dutch corporate income tax and Dutch dividend withholding tax. Approval depends on specific requirements and conditions regarding among others a company’s assets and activities.
2.1. Real property tax (“vastgoedbelasting”)
Real property tax will be levied on an annual basis on the value of real estate located on the BES islands. Limited exceptions apply. The real property tax will not be levied in case of real estate owned by a company which is deemed to be established for tax purposes in the part of the Netherlands that is situated in Europe.
The tax base of the real property tax will be 4% of the value of the property and the tax rate will be 25%. This results in an effective tax rate of 1% of the value of the property.
2.2. Distribution tax (“opbrengsbelasting”)
Distribution tax will be levied on the proceeds derived from shares in companies established in the BES islands.
The rate of the distribution tax will be 6%. Foreign companies with real estate on Bonaire will not be subject to distribution tax.
3. Land tax (“grondbelasting”)
In addition to the abovementioned real property tax, one can also be subject to land tax by way of a surcharge on the real property tax.
Companies that are deemed to be established in the part of the Netherlands that is situated in Europe (and thus not subject to real property tax) may also be subject to land tax. In this scenario the tax base will be the value of the real estate located on the BES islands. The land tax due will be a percentage of the tax base.
4. Transfer tax (“overdrachtsbelasting”)
Transfer tax will be, among others, levied on the acquisition of real estate located within the BES islands. The tax rate will be 5%. A mitigation of transfer tax is introduced for subsequent transfers of the same piece of real property within 6 months after a previous transfer. In such situations the taxable basis is lowered with the taxable amount over which transfer tax has been paid in connection with the previous transaction(s).
Under the Tax Act BES an exemption may apply for newly constructed buildings inclusive subsoil in case sales tax will be due. Neither under the current legislation nor under the new legislation transfer tax is due if only the economic ownership of a real property is transferred. This is also the case if shares of a real estate company are transferred.
The information provided above contains a short description of some aspects of the new BES tax regime. This information is not meant as a personal advice. Please feel free to contact us for any information regarding fiscal aspects on real property or other tax issues about investments or transactions concerning real property in the BES islands or Bonaire in particular.
KPMG Tax & Legal Services
For more information, please contact these tax advisors on Bonaire:
KPMG Tax & Legal Services
Kaya Gobernador N. Debrot 58
Kaya Isla Riba 1
Tel. 717-4790 Fax. 717-6592
Bonaire Accounting Office
Kaya Sabana 2
Tel. 717-6530 Fax. 717-4199
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