Publication of preliminary plans for 2025 Tax Plan relevant for the BES

Publication of preliminary plans for 2025 Tax Plan relevant for the BES

April 21, 2024

On April 16, 2024 the Ministry of Finance published a letter regarding the general tax policies for the year 2025.

The main purpose of the changes in the tax legislation over the period 2023 until 2025 are to focus on a more structured and broader tax system in the Caribbean part of the Netherlands, including changes to repair some technical omissions, changes to some formal requirements in the legislation, to solve some practical issues and to ensure a broader taxable base.

The current letter included a list of suggested changes in the tax legislation as per January 1, 2025. We have summarized a few of the most important suggested changes in this Tax Instant Newsflash. These are as follows:

  • Increase in the tax rate for the Revenue Distribution Withholding Tax (in Dutch: opbrengstbelasting) and Personal Income Tax on major shareholdings from 5% to 7.5% (increase of 2.5%).
  • Decrease in the first bracket of the progressive personal income tax rate from USD 322,769 to USD 50,000, above which taxable income will be taxed against a rate of 35.4%.
  • Tax free amount in the Personal Income Tax will be linked to the legal minimum wages.
  • Increase in the tax rate for real estate tax for hotels from 10% to 11% (increase of 1%).
  • Change of the period for the investment exemption in the real estate tax from 10 years to 5 years after investment in the property.
  • New conditions for the main residence (in Dutch: eigen woning) interest deduction rules in the Personal Income Tax.
  • Distribution Withholding Tax imposed upon migration of an entity from the BES to another country is no longer deemed to be deductible for Personal Income Tax purposes for the major shareholder. The definition of wages for Personal Income Tax purposes will be linked to the definition in the Wage Tax.
  • The 90% rule for market value wages not to apply if due to this rule the wage will fall below the threshold of the tax-free amount.
  • The tax rate for anonymous employees to also apply to employees refusing to provide their Tax Identification Number (CRIB-number) to the employer or employees that have not been identified correctly and whose ID has not been saved on file by the employer.

HBN Law & Tax will inform about these and other proposed changes once the Ministry of Finance has provided some more clarification.