The most important proposed change is the introduction of a fiscal unity for General Expenditure Tax (“ABB”) purposes. A fiscal unity means that all companies included in the group that is allowed to request for a fiscal unity will be considered to be one entrepreneur or producer for ABB purposes. Which means that intercompany transactions within this group will be disregarded for ABB purposes.

Any entrepreneur in the BES who owns all shares (the legal title and economic title) in another entity in the BES is allowed to request for the fiscal unity to be applied. The legislation specifically states that the fiscal unity can consist of multiple subsidiaries (in Dutch: “meer dan één dochtervennootschap”). We assume the legislation also includes subsidiaries of these subsidiaries.

Please note that all subsidiaries of the fiscal unity will be held responsible for all ABB levied on the level of the holding company based on this regime, which means that each subsidiary can be held liable for payment of all ABB, including ABB from the holding or other subsidiaries.

The general tax rate for Real Estate Tax purposes is 17.5% of the deemed return on investment of any real property and will remain unchanged. The special tax rate for hotels owned by entities is proposed to be further increased from 11% to 12%.

Farming exemptions
Goods and machinery used for farming that were already exempted upon import of these goods, are now also proposed to be exempted from ABB upon production of these goods in the BES.

Furthermore, the sale and purchase of agricultural land will be proposed to be exempted from Real Estate Transfer Tax under the condition that the land is being farmed for at least the next 10 years. If the use of land changes within these 10 years, the calculated tax will become payable. However, the exemption remains applicable if the change of the use of land is caused by changes in policy of the government with respect to these properties.

Income Tax
The proposed legislation includes some minor changes to the Income Tax. The first would be to disallow the option to allocate income components to married partners in the year of divorce upon request, which means the mandatory allocation of certain income and costs would apply in the year of divorce.

Secondly, the proposed legislation allows for wording to clarify the fact that the tax-free amount for Income Tax is determined on the basis of the minimum wage.

Wage Tax
The proposed Wage Tax changes are to index the market value wages for director-shareholders with the standard correction factor for tax purposes and to include the possibility of introducing a final levy at the employers level for the private use of company cars.

Formal tax legislation
The proposed legislation includes clarification on the penalties for not providing specific information and some formal conditions to these penalties.

Furthermore, the proposed legislation includes the possibility to serve a writ of execution (in Dutch: “betekening van een dwangschrift”) by means of postal services and this does no longer have to be presented in person.

Lastly, the proposal includes legislation that would allow the employees of the Tax Authorities o stop cars upon recognition of the car being owned by a person or entity that has outstanding unpaid debts and to impound the car on the spot.

Contact
If you wish to receive further information or discuss your tax position, kindly contact one of our advisors.