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Exempt limited liability company (NABV)
Old regime limited liability company (offshore)
New Fiscal Framework limited liability company
E-zone limited liability companies
Private Foundation
Contact details
Netherlands
Antilles Exempt NABV
The NABV, which was introduced alongside the New Fiscal
Framework, which has been introduced in 2001, has the
following characteristics:
Unlike the NV, no ministerial Declaration of No Objection
is required - incorporation is quick and relatively
informal;
No minimum capital requirements;
The Deed of Incorporation can be in any language, although
a Dutch or English translation must be
attached;
Shares may or may not have a par value, voting rights or
participation rights;
Shares must be registered; bearer shares are not permitted
and the BV must keep a share register;
The company should prepare annual accounts and have them
audited by an independent expert;
The NABV can be exempt from profits tax and withholding tax
when it conforms to the following conditions:
The purposes and activities of the BV should consist
entirely or nearly so of lending and investment,
financial services, or other activities connected with these, as
well as, the licensing of intellectual and
industrial properties and similar assets in accordance with the
laws of the Netherlands Antilles or the laws
of other jurisdictions;
The BV should not be a bank or other body subject to the
supervision of the Bank of the Netherlands
Antilles
An application for a 0% tax rate needs to be filed with
the tax inspector;
The Board of Directors must consist of resident
individuals or resident certified trust companies
Old regime limited liability company (offshore)
In the Netherlands Antilles, the expression 'offshore
company' has historically referred to a NV as described with
the following characteristics:
The company is resident in the Netherlands Antilles
(achieved simply by maintaining the registered office
there);
All of the company's shares are held by non-resident
individuals or companies;
The company's income and profits are derived from outside
the jurisdiction.
However, with the introduction of the new Fiscal Framework
in 2001 the offshore companies have been abolished.
Nevertheless, offshore companies incorporated before the
introduction can still enjoy the privileges of the offshore
company legislation and apply the following rates and are
still available for use:
Investment and Holding companies Income is taxed at
2.4% on the first ANG100,000 of net income and 3% on
the balance. Municipal surtax is not applied. Capital gains are not
taxed; but capital losses are not
deductible.
Mutual Funds These are exempt from profits tax if
they have either minimum net assets of USD 50M, at least
fifty shareholders, and four local employees, or if they have
minimum net assets of USD300m and two local
employees; otherwise the fund will be taxed on its net assets,
giving a minimum charge to tax of USD1,000
rising to a maximum charge of USD10,000.
Trading companies The normal applicable rates of
tax are 24% on the first ANG100,000 of net income and
30% thereafter; however it is usually possible to obtain a ruling
from the Inspector of Taxes exempting 90%
of income, which has the effect of reducing the rates to the usual
offshore levels of 2.4% and 3%.
Banks Investment and interest income (which
qualifies under Article 14) is taxed on the usual offshore
basis
at 2.4% and 3%; commission and fee income will suffer 24% and 30%
unless a tax ruling can be obtained
(normally possible).
Intellectual Property Holding companies If a tax
ruling can be obtained, the effective tax rate for income
from royalties, licenses, patents, copyrights, trademarks etc will
be 1%.
Insurance companies Foreign-owned captive and
reinsurance companies not in receipt of treaty-related
income benefit from a concession that deems their income to be
ANG100,000, giving them a fixed tax rate
of NAf 2,400 annually.
Real Estate Holding companies These companies are
not taxed on income derived from real estate (or
subsidiaries wholly or predominantly engaged in owning real estate)
outside the Netherlands Antilles.
Ocean Shipping and Aviation companies These
companies are taxed at 7.73% on the first NAf 100,000 of net
income, and 9.66% thereafter (including the 15% municipal
surcharge). They have the option of paying tax at
the rate of NAf 0.40 per gross registered tonne (minimum tax
ANG1,000 per vessel).
New Fiscal Framework limited liability company
December 1999 the Netherlands Antilles adopted new
legislation under the heading of The New Fiscal Framework (NFF).
This legislation was intended to avert inclusion on the
OECD's threatened 'black-list' of errant offshore
jurisdictions in 2000.
Characteristics:
A minimum of one shareholder is required, who may be an
individual or a corporate entity;
A General Meeting of the shareholders must be held within
9 months of the end of a fiscal period to
approve the annual statement, to discharge the management from its
responsibility for the period
concerned.
There must be at least one managing director resident in
the jurisdiction. Other managing directors not be
resident (except one of them). Managing directors can be
individuals or corporate entities.
Shares can be registered or bearer; but the latter must
always be fully paid-up.
A registered office must always be maintained at the
address of a licensed management company.
There is no requirement to audit or file annual
statements.
Tax treatment:
34.5% general profit tax
For Netherlands Antilles corporations incorporated before
June 30, 1999, subject to profit tax and having a
book year which ends before 1st January 2002, the grandfathering
rules with respect to the offshore
regime will remain applicable until 2019 as long as the company
continues to have substantial business (see
offshore companies)
No withholdings taxes on interest, dividends or royalty
payments
Advanced rulings can be obtained to confirm taxation on a
cost-plus basis and to confirm that the finance
and/or licensing expenses are not included in the taxable base.
Participation exemption:
A full exemption applies towards income realized on
qualifying foreign and local subsidiaries. However,
additional requirements such as an activity test, for
non-portfolio investments, and a subject-to-tax test may
apply. Qualifying subsidiaries are required to maintain a
profit tax rate of at least 10%, if this is not met then the
gross income of the subsidiary must consist of less than 50%
out of royalties, interest or dividend income received other
than out of the enterprise of the subsidiary. When a
situation arises where both of these conditions can not be
met, the participation exemption is reduced to 70% towards
dividends received. However, capital gains realized will
remain fully exempt. In the case of qualifying subsidiaries
that either exclusively or almost exclusively invest in real
estate, these additional requirements do not apply. In order
to gauge whether the activity test and the subject-to-tax
test have been met, one is allowed to use consolidated
financial statements, as well as, the average of the
relevant financial year and the 2 preceding financial years.
E-zone limited liability companies
As of April 1, 2001, special tax legislation for
international Internet companies on Curacao came into force
to create a favorable environment for e-commerce activities
based in The Netherlands Antilles.
Only companies with capital divided into shares, such as the Netherland Antilles N.V. may perform activities in the
e-zones including trading or providing services to companies
located outside the Netherlands Antilles. In order to comply
with the legislation, the e-commerce companies must meet
certain requirements, and file for the official
e zone status.
The profit of companies within the e-zones will be taxed at
2% until January 1, 2026. In addition there is no import
duty or turnover tax charged on goods entering the e-zones.
Private Foundation
General
On 1 November 1998 the Private Foundation was introduced in
the Netherlands Antilles. Three important characteristics of
the foundation are that:
Payments may be made to the founders or third parties;
Payments are not required to have an idealistic or
social purpose;
The Private Foundation is not allowed to carry on a
business or enterprise. However, holding shares is for
example not considered to carry on a business.
A Private Foundation is established by means of a notarial
deed in the Netherlands Antilles. The deed of formation
should include the articles of association, which state the
name and purpose of the foundation and the method of
appointing directors. The Private Foundation should then be
registered at Chamber of Commerce and Industry in Curacao.
Taxation
In principle, a Private Foundation established for all
intents and purposes in the Netherlands Antilles is not
subject to profit tax and gift tax in the Netherlands
Antilles, and thus need not to report to the tax
authorities.
Donations made to Private Foundations by non-residents are
not subject to gift tax in the Netherlands Antilles.
Donations made by Private Foundations are explicitly exempt
from gift tax in the Netherlands Antilles.
Donations of assets to a Private Foundation are usually
subject to the highest rate of gift tax (donations to third
parties) in the country of the donor. The rates of gift tax
and inheritance tax and the way in which tax is levied
differ greatly from country to country.
Comparison with the Anglo-American trust
General
The Private Foundation will particularly be used to separate
private or family capital.
Until now, this was not possible under Netherlands Antilles
law. The only qualifying legal entity would be the
foundation. Contributing capital into a foundation however,
would imply that the capital could only be used for
charitable purposes. In actual practice therefore it was
chosen to use the Anglo-American trust in this respect. The
Private Foundation is an interesting alternative for the
trust, especially in the so-called civil law jurisdictions.
Civil law jurisdiction
In the Western-European continental legal systems, the trust
is still an unknown phenomenon. This also counts for
jurisdictions based upon these legal systems, such as most
of the Latin American countries. The trust is a typical
product of the so-called common law legal systems, with
England/UK and most of the states of the USA as the best
known exponents.
The legal systems that are based upon the Code Civil do not
know the distinction between legal ownership and beneficial
ownership that is so typical for the trust. Therefore, in
actual practice, effects of surprise can be caused if an
Anglo-American trust participates in legal matters in
jurisdictions that are not related to the Anglo- American
legal system. It is furthermore often hard to explain the
concept of the trust to clients in such jurisdictions.
Complicating factor is the extensive documentation that will
have to be prepared upon incorporation.
The possibilities of application of a trust and a Private
Foundation are almost the same and also the fiscal aspects
hardly differ. The advantage for civil law jurisdictions is
however that for the user foundation, contrary to the trust,
is a well-known and reliable legal form.
Possible Applications
Estate Planning
The Private Foundation can be used in situations in which it
is desired to separate private or family capital in an
entity that is subject to a favorable tax regime. The
Private Foundation for example can play an essential part in
estate planning. As such, it is an instrument, according to
the wishes of the founder, to have the capital transferred
to next generations or other legal successors without them
directly having the power of disposal of property. Under
certain circumstances the use of a Private Foundation can
prevent the multiple levy of gift and inheritance tax. In
this respect one can think of a Private Foundation as owner
of the shares in a family company. The Private Foundation
can also be a more flexible alternative for the foundation
pseudo trustee. Moreover, applications regarding donations
or gifts to a Private Foundation are interesting.
Asset Protection
Furthermore a Private Foundation can be used as instrument
of asset protection when protecting family and company
capital against political risks (expropriation), criminal
risks (kidnapping), economical risks ( excessive
professional and product liability) and other risks (family
spend thrift). Another conceivable application is the
so-called art foundation.
Passive Investment company
The Private Foundation can also very well be used as passive
Investment Company. Used as such, the Private Foundation is
an interesting alternative for the Netherlands Antilles
limited liability company.
(Top) Holding company
The Private Foundation can be used for passive top-holding
of the shares in the underlying active participations. The
holding of the shares is considered not to be passive if the
Board members of the Private Foundation are the same as for
the underlying participations.
Holding of Real Property
The Private Foundation can be used for holding real property
as a passive investment, as long as the Private Foundation
does not engage in exploitation activities such as
maintenance of the building, active collection of the rent
etc.
Expected capital gains
The Private Foundation can be used if you expect that in the
future considerable capital gains could be realized on the
sale of certain assets. These promising assets could be
contributed to the Private Foundation. Upon sale of the
asset the capital gains are allocated to the Private
Foundation. An alternative would be that the Private
Foundation will purchase a long term call option (at fair
market value), which gives the
Private Foundation the right to purchase the asset at a
fixed price in the future. If and when the asset has
substantially increased (as expected) in value the Private
Foundation will exercise its option and realizes a non
taxable capital gain.
Basic private foundation schematic structure overview
The general structure of a private foundation looks as
follows:
Contact details
Corporate Agents N.V.
Bon Bini Business Center Unit A1K
Schottegatweg Oost 10
P.O. Box 3914
Curaηao
Tel: +599 9 736 4500
Fax: +599 9 736 4503
Email:
curacao@corpag.com |
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