Disclaimer: 

This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-

This overview is only for information and if wish to obtain more, please, consult directly to each Local Authority and/or Experts.-

At December 29th, 1999, the Parliament of the Netherlands Antilles passed new tax legislation known as The New Fiscal Framework intended to improve the jurisdiction's image as an Offshore Financial Centre and to revitalise its financial services industry.

Alongside the tax legislation, a new corporate form was introduced to allow offshore operations on a tax-exempt basis: this is the NABV (Netherlands Antilles Besloten Vennootschap), and it is expected to supplant the offshore NV for many purposes

The New Fiscal Framework went into effect from 1st January 2002.

This is the form (NV = Naamloze Vennootschap) historically taken by almost all limited companies in the Netherlands Antilles, whether for domestic trading or for offshore purposes.

The legislation governing corporate operations is Articles 33 to 155 of the Netherlands Antilles Commercial Code, and is quite precise and prescriptive, as is usual in 'Civil Law' jurisdictions.

These are some of the main characteristics and requirements attaching to NV companies:

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, to vote on dividends, etc. Such meetings must be held in the Netherlands Antilles, but shareholders can be represented by proxies.

There must be at least one director; more importantly, there must be at least one managing director resident in the jurisdiction. There can be multiple managing directors, and they have the statutory responsibility for management of the company, which is clearly defined, as usual in Civil Code jurisdictions.

Managing directors can be individuals or corporate entities, and need not be resident (except one of them). The managing directors exercise wide powers, including those of the anglo-saxon company secretary.

The authorised capital of the NV must be at least NAF50,000, of which 20% must be paid-up on incorporation and must remain so (this can be a mixture of fully and partly paid-up shares). 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, or firm of lawyers or accountants in the jurisdiction. There is no requirement to audit or file annual statements. An small annual fee is payable to the Chamber of Commerce.

The incorporation process is somewhat cumbersome, involving an investigation of prospective shareholders by the Ministry of Justice (who issue a statement of 'No Objection' after several weeks), permission for the chosen name from the Chamber of Commerce (some restrictions), and other administrative procedures inluding the submission of the Statutes in Dutch (an English translation is often attached). A quicker process is sometimes available.

A Netherlands Antilles NV cannot solicit funds from the public, sell its own shares publicly, or engage in banking, insurance, fund management etc without appropriate licenses and permissions from the Central Bank. A business license (not always given automatically) and a managing director's license need to be obtained annually from the Bureau for Social and Economic Planning, before business can actually commence.

In the Netherlands Antilles, the expression 'offshore company' has historically referred to a standard NV as described above which conforms to some additional conditions allowing it to receive privileged tax treatment

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.

In practical terms, the seemingly cumbersome statutory management arrangements are usually overcome for offshore companies by appointing a local firm as 'attorneys' with delegated management power.

The NABV, which was introduced alongside the New Fiscal Framework, has the following characteristics

Unlike the NV, no ministerial Declaration of No Objection is required - incorporation is quick and relatively informal;

There are 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; the BV must keep a share register;

The management arrangements are more similar to common law models than to the usual civil code structure;

The BV can be converted into an NV and vice versa, or the two may merge.

NABV can be exempt from profits tax and withholding tax when it conforms to the following conditions:

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 (the Ministry of Finance has yet to publish the regulations governing certification of trust companies);

The purposes and activities of the BV should consist entirely or nearly so of lending and investment, or financial services, or other activities connected with these; but

The BV should not be a bank or other body subject to the supervision of the Bank of the Netherlands Antilles.

Due to the newness and lack of definition of the legislation setting up the NABV, professional guidance is crucial before considering any involvement with this type of company.

Partnerships are recognised under the Netherlands Antilles Commercial Code. In the General Partnership (vennootschap onder firma) each partner is liable for all the debts of the partnership, as in common law partnerships.

There are no filing requirements, and no auditing requirements.

Partnerships are fiscally transparent.

Details of partnerships and of the partners must be entered in the Commercial Register at the Chamber of Commerce.

The limited partnership (commanditaire vennootschap) is similar to the general partnership except that it has one or more general partners with unlimited liability, who manage the partnership, and one or more limited partners each of whose liability is limited to the amount of his contribution.

The identity of the limited partners does not have to be disclosed or entered in the Commercial Register.

The stichting (or foundation) is the equivalent in this civil law jurisdiction of the trust in a common law jurisdiction, although unlike the trust, the stichting has legal personality.

It was originally created for welfare purposes, but is now often used to act as a trustee or manager of assets for a third party, or to control shares in companies.

Shareholders receive certificates of participation in return for shares transferred to the stichting, and can be paid dividends. The certificates can be either registered or bearer and are freely transferable.

A stichting is constituted under the Civil Code; the main characteristics of the stichting are as follows:

A stichting must be entered in the commercial register of the Chamber of Commerce.

There is no minimum capital requirement (but in practice it is usual to have US$100 as capital).

A stichting does not have members or shareholders

A stichting is managed by one or more directors who do not share in the profits or assets and who can be individuals or corporations; at least one director must be resident in the Netherlands Antilles.

Books of accounts must be kept but do not require auditing.

The identity of beneficiaries or holders of certificates of participation need not be disclosed.

A stichting may transfer its seat into and out of the Netherlands Antilles provided that the other jurisdiction concerned has suitable legislation (in practice this means that the other jurisdiction is a civil code jurisdiction, which is somewhat limiting since the bulk of offshore jurisdictions apply common law).

Under the National Ordinance on Profit Tax 1940, the profits of a stichting created for other than charitable purposes are treated in the same way as those of an NV,

The Netherlands Antilles originated as an offshore financial centre in the Second World War, when it provided a good destination for emigration for Dutch comnanies during the German occupation of the Netherlands.

Since the war the Netherlands Antilles government has followed a consistent policy of encouragement towards international holding, finance, property and licensing companies, mutual funds and offshore banking. 

Review we examine some of the main offshore business sectors in the Netherlands Antilles.

On December 29th, 1999, the Parliament of the Netherlands Antilles passed new tax legislation known as The New Fiscal Framework intended to improve the jurisdiction's image as an Offshore Financial Centre and to revitalise its financial services industry. The legislation, which came into force on 1st January 2002, removes the distinction between 'onshore' and 'offshore' companies, simplifies tax rates, and introduces a withholding tax. Alongside the tax legislation, a new corporate form is being introduced to allow offshore operations on a tax-exempt basis: this is the NABV (Netherlands Antilles Besloten Vennootschap), and it is expected to supplant the offshore NV for many purposes

As of April 1, 2001, special tax legislation for international Internet companies on Curacao came into force to act as an incentive to persuade e-commerce companies to relocate their activities to the Island. The new law replaces the old Free Zone law and governs 'E-Zones' which are areas within the Netherlands Antilles where international trade and supporting services may be carried out by electronic communication and electronic commerce.

Offshore holding or investment companies are defined in the National Ordinance on Profit Tax 1940 as companies that have the 'exclusive or almost exclusive purpose of investing their assets in securities, including shares and other certificates of participation and bonds, as well as other claims for interest-bearing debts however nominated and in whatever form'.

Netherlands Antilles holding companies are often used to hold the shares of Dutch corporations which are themselves the holding companies for investments or group operating subsidiaries in third countries, thus making use of the very wide network of Dutch Double Tax Treaties, and the permissive Dutch rules on withholding tax.

Netherlands Antilles companies which provide financing for other companies need a license from the central bank; but such a company established as part of a group financing structure can qualify as a 'Concern-Financing Corporation' which does not require a license if:

it receives at least 90% of its funding from the group, and any bearer bonds it issues are limited to institutional investors

its loans are only to group companies, and the parent company of the group has provided a guarantee to the central bank to cover its external borrowing.

Offshore Licensing Companies are defined by the National Ordinance on Profit Tax 1940 as corporations that corporations that exclusively or almost exclusively receive externally-generated revenues under the following headings:

the sale, transfer or lease of copyrights, patents, designs, proprietary processes or formulas, trademarks, and other analogous properties;

royalties or rentals from motion picture films, the use of industrial, commercial or scientific equipment, the operation of mines or quarries, or any other extraction of natural resources, and other immovable properties; or technical assistance.

Banks and other financial institutions in the Netherlands Antilles are licensed under the National Ordinance on the Supervision of Banking and Credit Institutions of 1994. Licenses are issued by the Bank of the Netherlands Antilles (the central bank).

The central bank distinguishes between 'Consolidated International Banks' which are normally owned or controlled by world Top 1,000 banks and which are subject to adequate consolidated supervision through their parent company, and 'Non-Consolidated International Banks' which are normally owned or controlled by a non-banking organisation, and for which the central bank acts as the primary supervisor.

The central bank further distinguishes between onshore banks, which are licensed to do business with both local and foreign parties, and offshore banks, which are licensed for external business only. Offshore banks are known as International Credit Institutions and are exempt from foreign exchange controls. An offshore bank can operate either as a Netherlands Antilles limited comnany (NV) or as a branch. Currently in the Netherlands Antilles there are about 20 onshore banks and about 60 offshore banks.

Due to its proximity to South and Central America, the Netherlands Antilles have inevitably been used both for physical drug-running and for money-laundering. The Government is working with Dutch officials to establish legislation that will improve the ability of law enforcement officials to investigate drug-related financial transactions and accounts, and to require (local, but not offshore) financial institutions to investigate the origins of large cash deposits; although the Government of the Netherlands Antilles co-operates well with investigations into drug-related crime, these legislative controls are not yet in place at the time of writing. Parallel legislation to give the Dutch authorities command and control over a newly-established Antillean-Aruban Coast Guard (which they had asked for) has been defeated twice in the Antillean parliament.

Under the legislation which applied until 1999, in order to qualify for offshore status a Netherlands Antilles entity had to be wholly owned by non-residents, and its income had to arise outside the jurisdiction. However, various business sectors have specially favourable taxation regimes which reflect their international nature. These special regimes are described in this section along with the tax treatment of offshore corporations as such.

In 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. The NFF involves the abolition of the distinction between offshore and onshore companies, at least for new formations, the introduction of a new company form named NABV (Nederlands Antilliaanse Besloten Vennootschap) which can be tax-exempt but which does not benefit from tax treaties, the introduction of a 10% withholding tax on dividends (not in fact being put into effect), and the reduction of the profits tax rate to 30%.

Provisions under the NFF and a revised 'BRK' (tax treaty with the Netherlands) came into effect from January 1, 2002. They include:

for an intial period the proposed Netherlands Antilles dividend withholding tax of 10% will not enter into force
dividends from a Dutch corporation to Netherlands Antilles corporate shareholders, who own at least 25% of the shares in the Dutch corporation, will be exempted from Dutch dividend withholding tax, provided that the dividend is subject to Netherlands Antilles tax at a rate of at least 8.3%.
the Dutch corporation will have to withhold 8.3% dividend withholding tax from the gross dividend. The 8.3% which has been withheld upon the dividend distribution in the Netherlands can be credited against tax in the Netherlands Antilles
dividends and capital gains derived from shareholdings in a Netherlands corporation will be exempted from additional profit tax in the Netherlands Antilles provided that the shareholding amounts to at least 25% and that 8.3% Netherlands Antilles tax is paid on the gross amount of dividends received
dividends paid by Dutch corporations to Netherlands Antilles corporations unable to take advantage of the participation exemption will be subject to 15% Dutch dividend withholding tax. Existing Netherlands Antilles offshore corporations may elect for the new dividend treatment.
the activities of an exempted company (NABV) will be restricted to investments in debt instruments, securities and deposits
for Netherlands Antilles coporations 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.
In December 2000 the OECD announced the Netherlands Antilles' commitment to eliminate harmful tax practices by 31 December 2005 which has secured the jurisdiction's deletion from the OECD list of countries deemed to possess "harmful" tax practices.

Most offshore operations in the Netherlands Antilles have hitherto taken the form of a limited liability company (Naamloze Venootschap, or NV).

The formation process for an offshore NV follows the normal pattern. Beneficial ownership does not have to be disclosed, but the professional firms involved apply a 'know-your-customer' rule. Opening a bank account will require references of some type. A registered office must be maintained in the jurisdiction.

Offshore companies do not have to be audited, other than financial institutions, which are regulated by the central bank

The taxation of Netherlands Antilles companies is governed by the National Ordinance on Profit Tax 1940; special taxation regimes have been introduced for companies falling under articles 8A, 8B, 14 and 14A of the Ordinance, as follows (NB the special regimes normally apply only to non-treaty-related income - also note that these articles have been repealed under the New Fiscal Framework and will only continue to apply to existing companies under the grandfathering provisions of the NFF - see above):

Investment and Holding companies Income is taxed at 2.4% on the first NAf 100,000 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 $50m, at least fifty shareholders, and four local employees, or if they have minimum net assets of $300m and two local employees; otherwise the fund will be taxed on its net assets, giving a minimum charge to tax of $1,000 rising to a maximum charge of $10,000.

Trading companies The normal applicable rates of tax are 24% on the first NAf 100,000 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 NAf 100,000, 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 NAf 1,000 per vessel).

Businesses organised as Stichtings (Foundations) will be treated as if they are companies from a tax point of view. Partnerships are treated as fiscally transparent, so that the individual partners pay taxes, not the partnership.-

Netherlands Antilles companies owned by non-residents that do not carry on business on the islands may obtain a license from the Bank of Netherlands Antilles (the central bank) which exempts them from all exchange control regulations.

Many transactions involving foreign exchange in the Netherlands Antilles attract a 1% 'license' tax which is payable by the bank concerned to the central bank. The rules are complex, and professional advice is needed if this tax is likely to be a significant factor.

The repatriation of income or capital from the Netherlands Antilles requires a license, but these are granted automatically on application.