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Personal Taxation in St Maarten
 
 
 

General

An individual’s specific circumstances determine residence for tax purposes. These circumstances include permanent home, habitual stay and centre of economic and social interests. Residents are taxed on worldwide income, while non-residents are taxed only on income generated in St Maarten. Individuals are taxed from their date of arrival. Accordingly, the timing of arrival makes no difference.

As part of the Kingdom of the Netherlands, St Maarten is party to a federal tax agreement with the Netherlands and Aruba. Subject to this treaty, dividends, interest, and royalties paid out to a St Maarten recipient may qualify for reduced rates of withholding taxes in the subject countries. For an individual recipient, the Dutch withholding tax amounts to 15%.

Gross Income

Gross income of residents includes gains, profits, and income derived from the sources below:

        • a business or profession;
        • employment;
        • proceeds from immovable property;
        • net income from capital;
        • certain periodic receipts.

Capital Gains

Residents are not taxed on capital gains unless the gain results from a business activity or the shareholder has owned 5% or more of the capital stock of the company at any time during the five years preceding the sale of shares. Liquidating dividends are taxable to the extent that they exceed paid-in capital.

Deemed Income

For the individual income tax purposes, a resident taxpayer can be taxed on deemed annual income from capital if he owns shares in a St Maarten Exempt Company, or shares, memberships rights or an interest in a non resident company, the activities of which, on a consolidated basis, mainly consist of lending, portfolio investments, and similar activities. Resident taxpayers are obliged to include the fair market value of such Exempt Company or foreign investment company in their annual taxable income. An amount equal to 4% of the fair market value of the shares, membership rights or interest at the beginning of the year will be considered as taxable income each year. In case the actual income received exceeds the deemed amount, this income actually received does not have to be included in the taxable income rather than the amount of the deemed income. The deemed income provision will also apply to the value of receivables on, profit sharing certificates in, and rights in an Exempt Company or in a foreign investment company.

Dividends

Dividends received are included in the individual’s taxable income. A special reduced rate of tax applies to dividends from or capital gains on the sale of ‘substantial share interests’ at 19.5%.

Foreign shareholders are subject to taxes on dividends only if they hold a substantial interest in a St Maarten company and if they have been resident in St Maarten within the last 10 years. A substantial interest is defined as a holding of 5% or more held by the taxpayer together with his spouse. In that case, the same tax rates apply as for domestic shareholders.


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