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Business Taxation in St Maarten
 
 
 

General

For tax purposes, corporations are classified as either resident or non-resident. No distinction is made between foreign and domestic ownership. A corporation is considered resident if it is incorporated in St Maarten (N.V. or B.V.) or if its place of principal management and control is in St Maarten.

Resident corporations are taxed on worldwide income. Non-resident companies are taxed on the following St Maarten-source income:

        • income attributable to a permanent establishment;
        • income from real property situated in St Maarten;
        • interest on loans secured by a mortgage on property situated in St Maarten.

Dividends received by a resident company from other resident companies are not taxed. There are no withholding taxes on dividends paid to (offshore) shareholders.

The Netherlands Antilles have concluded double tax treaties and tax information exchange treaties. It is to be expected that the treaties that were applicable to the former Netherlands Antilles will remain applicable to St Maarten. Dutch tax treaties will not be applicable to St Maarten.

Taxable Income

Except for dividends, all sources of income are subject to normal corporate income tax rates. As noted above, dividends received from other resident corporations are not taxed.

Capital gains are tax exempt in case of a participation. The minimum limit of a participation is 5% of the shares or voting rights or a cost price of at least $500,000.

Dividends derived from an active participation or a participation that is subject to tax are also exempt. A participation is deemed to be active if the gross income of that participation consists for not more than 50% of dividends, interest or royalties received other than from an enterprise of that participation (non-portfolio investment clause). A participation is deemed subject to tax in case it is subject to a tax rate of at least 10% (subject to tax clause).

In case at least one of these clauses has been met, the participation exemption applies for 100%. If none of these clauses are met, the participation exemption will be limited to 70% on dividends. Consequently, the dividends will then be subject to an effective tax rate of 10.35% (30% * 34.5% regular tax rate).

These clauses do not apply to dividends from a participation that (almost) exclusively (directly or indirectly) holds immovable property, so that the 100% participation exemption applies to these dividends. The 100% exemption also applies to income other than dividends, such as capital gains derived from qualifying participations.

Dividends received from Dutch companies are subject to Dutch withholding taxes of 8.3%. If the St Maarten company’s interest is less than 25%, Dutch withholding tax will be 15%.


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