Netherlands Antilles The Norway Double Tax Treaty

The Netherlands Double Tax Treaty with Norway has been effective since 1990 and is based on the OECD model treaty. Withholding tax on dividends from a Norwegian company is reduced from 25% to 15%; there is anyway no Norwegian withholding tax on interest, and there are no Antillean withholding taxes at all. (However, the New Fiscal Framework applying from 2002 includes provision for a 10% withholding tax on profit distributions by Antillean companies, although it is not being put into effect for now).

There are some exceptions to the treaty withholding tax regime, with relief being unavailable to:

    * Companies that do not have a genuine business purpose in the Netherlands Antilles and less than 50% of whose shares are held in the two countries;
    * Companies claiming 'offshore' status under Articles 14 and 14A of the National Ordinance on Profit Tax 1940.

Articles 14 and 14A are being repealed for new formations, and companies incorporated as NABVs under the New Fiscal Framework will not have access to double taxation treaties.

The Netherlands Tax Treaty (BRK)

The Netherlands Tax Treaty (Belastingregeling voor het Koninkrijk, or BRK or TAK) applies to the three constituent parts of the Kingdom of the Netherlands, being Holland itself, Aruba and the Netherlands Antilles.

Prior to 2002 the BRK was last amended in 1997 and included the following provisions:

    *
      there is no withholding tax on interest and royalty payments by Netherlands companies;
    *
      the Dutch withholding tax on dividends paid to Antillean companies is 15%; but if the Antillean company owns 25% or more of the Dutch paying company, the rate is reduced to 7.5% (5% if the Antillean company accepts some local taxation).

The New Fiscal Framework (NFF) came into force alongside a further revision of the BRK on January 1, 2002. Under the amendments and for the time being, the proposed Netherlands Antilles dividend withholding tax of 10% will not enter into force.

Futhermore, the dividend article in the current BRK has been amended so that dividends from a Dutch corporation to Netherlands Antilles corporate shareholders, owning at least 25% of the shares in the Dutch corporation, are exempted from dividend withholding tax provided that the dividend is subject to Netherlands Antilles tax at a rate of at least 8.3%.

The Dutch corporation has 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 are fully exempted from profit tax in the Netherlands Antilles provided that the shareholding amounts to at least 25% and that the dividend is subject to the Netherlands Antilles tax of at least 8.3% on the gross amount of dividends received.

Dividends paid by Dutch corporations to Netherlands Antilles corporations which don't qualify under the participation exemption are subject to 15% Dutch dividend withholding tax. Netherlands Antilles offshore corporations may elect for the new dividend article.

Netherlands Antilles Other International Agreements

It April, 2003, the Netherland Antilles authorities signed a tax information exchange agreement with the United States, allowing the US Internal Revenue Service to more easily detect tax evasion and money laundering activity conducted by American taxpayers in the Caribbean jurisdiction.

The agreement is similar in structure to those reached by the United States with other offshore havens in the region, including Antigua, the Bahamas, the British Virgin Islands, and the Cayman Islands.

The Dutch territory also came in for praise from the OECD, following the release of the multilateral group's updated 'blacklist' of uncooperative countries. Gabriel Makhlouf, the Chair of the OECD's Committee on Fiscal Affairs, cited the tax information exchange agreement reached with the jurisdiction's authorities as a 'success'.