Sint Maarten / Saint Martin is the smallest island divided in half between two nations. The southern half, Sint Maarten, is part of the Kingdom of The Netherlands. The French occupy the northern half of the island. Sint Maarten is part of the former Netherlands Antilles and is located approximately 300 km southeast of Puerto Rico. Sint Maarten is politically very stable and enjoys the highest per capita income in the Caribbean.
Corporate income tax is levied on resident and nonresident entities (including trusts as of April 2014). Resident entities are those incorporated under former Netherlands Antilles or current Sint Maarten law, even if their management is located abroad, as well as entities incorporated under foreign law, but effectively managed in Sint Maarten. For resident entities, corporate income tax is, in principle, levied on the aggregate amount of net profits earned from all sources during the entity’s accounting period. Nonresident entities are subject to tax on specific Sint Maarten income items, such as profits earned through a permanent establishment and income related to real estate property in Sint Maarten, including interest derived from a mortgage on such real estate property.
The net profits earned by resident and nonresident entities, including branches of foreign entities, are taxed at a standard rate of 34.5%. However, other rates may apply to companies qualifying for tax holidays, E-zone companies, offshore companies, tax-exempt companies, and taxed private foundations and trusts.
The offshore tax regime was abolished in 2001. However, under grandfathering rules, special incentives are available for qualifying offshore companies in existence before 1 January 2002. Offshore companies are resident companies owned by nonresidents that perform their business activities abroad; that is, they earn mostly foreign-source income. Income derived by offshore companies (for example, royalty, financing, holding, portfolio investment, mutual fund, real estate and service activities) is taxed at corporate income tax rates of 2.4% to 3%.
Tax-exempt companies (TECs) are exempt from Sint Maarten corporate income tax. Only private limited liability companies incorporated under former Netherlands Antilles or current Sint Maarten law may qualify as TECs. TECs are allowed to solely or practically solely (more than 90%) engage in the extending of loans, investing in securities and deposits and licensing of intellectual and industrial property rights and similar property rights.
As of April 2014, the corporate income tax law provides an option for private foundations and trusts to be subject to a reduced effective corporate income tax rate of 10% (including surtax). In principle, Sint Maarten private foundations and trusts are fully exempt from corporate income tax if they do not conduct an enterprise. After the option is exercised, the reduced effective rate of 10% applies for a period of at least three full fiscal years. After this three-year period, the private foundation can request that it no longer be subject to the reduced effective rate of 10%.
Sint Maarten has an extensive advance tax ruling practice. These rulings include the following:
These rulings are usually valid for a three-year period, with an option for extension.
Withholding taxes are not imposed on remittances of profits by branches to their foreign head offices and Sint Maarten does not levy dividend withholding tax on dividend distributions.
Sint Maarten currently has a tax treaty with Norway and the Tax Regulation for the Kingdom of the Netherlands (consisting of Aruba, Curaçao, The Netherlands, and Sint Maarten)is in force. Under a measure in the Tax Regulation for the Kingdom of The Netherlands, dividend distributions by a qualifying Dutch subsidiary to its Sint Maarten parent company are effectively subject to an 8.3% Dutch dividend withholding tax. Sint Maarten does not impose withholding tax on payments from Sint Maarten to residents of other countries.
HBM Sint Maarten N.V.
CTB, Suite #01
St. Martin - Dutch Caribbean