On Budget Day (September 17, 2024), the Dutch government presented the 2025 Tax Package, including the BES Tax Plan 2025. This package includes important proposed legislative changes for the tax system in the Caribbean Netherlands (Bonaire, Saba and Sint Eustatius), which are set to be effective as of January 1, 2025. Rootz Tax Lawyers has selected the most notable changes that are relevant for both (high-worth) individuals and entrepreneurs. Disclaimer: the Tax Package includes proposed legislative changes that must first be approved by both the House of Representatives and the Senate before being enacted and transposed into law.
Revenue Tax
- As of 2025, the revenue tax rate and the personal income tax rate on income from substantial interests will increase from 5% to 7.5%. No compartmentalization scheme is proposed for profits derived before 2025.
Real Estate Tax
- The period of the investment scheme will be reduced from ten to five years. Transitional law shall apply to existing cases.
- The real estate tax rate for hotels will increase from 10% to 11%. The regular rate remains 17.5%. It is being considered to gradually align the hotel real estate tax rate with the regular rate in the upcoming years.
Minimum Tax BES
- For the application of the minimum tax, a separate transition rule will be introduced that sets specific formal deadlines for situations wherein the fiscal year ends before March 31, 2025.
Personal Income Tax
- The threshold to the second bracket will be significantly lowered from a taxable income of USD 322,769 to USD 50,000. The rates for the first and second brackets are 30.4% and 35.4%, respectively.
- The tax-free allowance (2024: USD 20,424) will be linked to the statutory minimum wage.
- The revenue tax withheld on a notional benefit from a substantial interest (fictious distribution) will no longer be regarded as an advance levy on personal income tax.
- The definition of a primary residence will be tightened.
- The exemption for annuity rights will be abolished.
Wage Tax
- The 10% rule for market value wages for determining the customary wage is not applicable to the extent that its application would bring the wage below the standard amount. Thus, the 10% rule cannot be used to reduce the customary wage below the set minimum of USD 40,848.
- The employment relationship of the partner of the substantial interest holder, who performs work for an entity in which the partner holds a substantial interest, shall be considered a deemed employment relationship
September 2024
