Tax treaty with the Netherlands

General

The Netherlands Tax Treaty (BRK) and local tax legislation

The Netherlands Tax Treaty (Belastingregeling voor het Koninkrijk, or BRK or TAK) applies to the three constituent parts of the Kingdom of the Netherlands, being The Netherlands, the Netherlands Antilles and Aruba.

A revised fiscal legislation for The Netherlands Antilles, the New Fiscal Framework (NFF), came into force alongside a further revision of the BRK on January 1, 2002.

Dividends and capital gains derived from shareholdings in a Netherlands corporation are fully exempted from profit tax in the Netherlands Antilles provided that the shareholding amounts to at least 25% and that the dividend is subject to the Netherlands Antilles tax of at least 8.3% on the gross amount of dividends received. Effectively this 8,3% is withheld in the Netherlands. In view of recent negotiations concerning new amendments to the BRK, there are high expectations that withholding tax on qualifying dividends from the Netherlands to the Netherlands Antilles will go back to 0% as of 2006.

Dividends paid by Dutch corporations to Netherlands Antilles corporations which don't qualify under the participation exemption are subject to 15% Dutch dividend withholding tax. Netherlands Antilles offshore corporations may elect for the new dividend article.

Other International Agreements

In April, 2003, the Netherland Antilles authorities signed a tax information exchange agreement with the United States, allowing the US Internal Revenue Service to more easily detect tax evasion and money laundering activity conducted by American taxpayers in the Caribbean jurisdiction.

The agreement is similar in structure to those reached by the United States with other offshore havens in the region, including Antigua, the Bahamas, the British Virgin Islands, and the Cayman Islands.

The Dutch territory also came in for praise from the OECD, following the release of the multilateral group's updated 'blacklist' of uncooperative countries. Gabriel Makhlouf, the Chair of the OECD's Committee on Fiscal Affairs, cited the tax information exchange agreement reached with the jurisdiction's authorities as a 'success'.