Doing Business in Bonaire

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1 Doing Business in

2 Preface This guide has been prepared by Baker Tilly, an independent member of Baker Tilly International. It is designed to provide information on a number of subjects important to those considering investing or doing business in. Baker Tilly International is the world s 8th largest network of independent accounting and business advisory firms by combined fee income, and is represented by 156 firms in 131 countries and 26,000 people worldwide. Its members provide high quality accounting, assurance, tax and specialist business advice to privately held businesses and public interest entities. This guide is one of a series of country profiles compiled for use by Baker Tilly International member firms clients and professional staff. Copies may be downloaded from Doing Business in has been designed for the information of readers. Whilst every effort has been made to ensure accuracy, information contained in this guide may not be comprehensive and recipients should not act upon it without seeking professional advice. Facts and figures as presented are correct at the time of writing. Up-to-date advice and general assistance on matters can be obtained from Baker Tilly ; contact details can be found at the end of this guide. April 2013

3 Doing Business in 1 Contents 1 Fact Sheet 2 2 Business Entities and Accounting Business Entities Accounting Requirements Filing Requirements 7 3 Finance and Investment Exchange Control and Other Restrictions Banking 8 4 Employment Regulations and Social Security Residence and Work Permits Employment Social Security 11 5 Taxation Personal Tax Business Taxes International Tax Provisions 15

4 2 1 Fact sheet Geography Location is an island south of the Caribbean Sea Area 294km 2 Land boundaries None Coastline Surrounded by the Caribbean Sea Climate Tropical Terrain Rocky, mixed volcanic and coral origin Time zone GMT -4 People Nationality Dutch Population Approximately 16,500 (2012) Religion Predominantly Christians (80%) Language Dutch, Papiamentu Government Country name Government type Capital Administrative divisions Political situation The Kingdom of the Netherlands The Kingdom of the Netherlands (the Kingdom) includes four countries: the Netherlands (including, Saba and St. Eustatius), Aruba, Curaçao and St. Maarten. The Kingdom is a constitutional hereditary monarchy governed under a parliamentary system. Amsterdam Local Executive Council (Bestuurscollege) On 10 October 2010, the former country the Netherlands Antilles ceased to exist and the islands of Curaçao and St. Maarten became separate countries within the Kingdom., St. Eustatius and Saba (together the so-called BES Islands) acquired the status of extraordinary municipalities within the Netherlands

5 Doing Business in 3 Economy (year 2011) GDP per capita US$42,700 (the Netherlands) GDP real growth rate 1.3% (the Netherlands) Labour force 7,570 Unemployment 500 Currency (code) United States Dollar (US$)

6 4 2 Business Entities and Accounting 2.1 Business Entities The most popular types of business entities in are the public or limited liability companies Legal business entities corporate law is based on Dutch corporate law and basically recognises two types of legal business entities: The public liability company (naamloze vennootschap or NV) The limited liability company (besloten vennootschap met beperkte aansprakelijkheid or BV). The BV and NV share many characteristics. A legal business entity may be established and owned by one or more shareholders, which may either be legal entities or individuals, residents or non-residents. Incorporation is achieved by a notary deed; amendment of the articles of association also requires such a deed. For non-residents it is possible to incorporate a company by proxy. A company must be registered with the Chamber of Commerce. Under corporate law, the management and supervision functions may be separated between the executive board and the supervisory board the two-tier system or be merged to form a single board the one-tier system. A legal business entity must have at least one managing director, which can be another entity or a private person. At least one managing director must be domiciled in. Under certain circumstances it suffices to have a local representative. The power and authority of the managing director(s) are determined by law and the articles of association. Supervisory directors must be private persons. The capital of the legal business entity consists of at least one share with any nominal value and voting power. Shares may be either bearer or registered shares (under some circumstances restrictions regarding bearer shares apply) and may vary in class, voting rights, participation in profit distributions and rights to liquidation proceeds. A large NV must publish audited financial statements in order to facilitate inspection by third parties, such as creditors, employees or business partners. A NV is classified as large based on the number of employees, the total balance sheet value of assets and net turnover.

7 Doing Business in 5 The relevant differences between the NV and BV are: The BV, irrespective of its size, is subject to less strict audit and publication requirements The BV can, under certain conditions, obtain an exempt status for profit tax purposes A BV may only issue registered shares Non-legal business entities Doing business in is also possible through several types of entities that are not legal entities, such as: A sole proprietorship (eenmanszaak): this business entity is owned by one individual. This individual is fully liable for all debts and no distinction is made between the individual s private and business debts. The individual is subject to personal income tax on the profits of the sole proprietorship A private partnership (maatschap): this is a business entity commonly used by a combination of two or more individuals or legal entities having the same profession (eg doctors, lawyers, or accountants) and wishing to operate under one business name. All individual partners are equally liable. The partnership s profit is allocated to each partner and subject to personal income tax if the partner is an individual and subject to profit tax if the partner is a legal entity A general partnership (vennootschap onder firma or VOF): this entity is set up by a combination of two or more individuals or legal entities conducting the same trade as blue-collar entrepreneurs (eg painters, carpenters, or bakers) operating under one business name. All partners are jointly and severally responsible and liable to other parties for the partnership s debts. The partnership s profit is allocated to each partner and subject to personal income tax if the partner is an individual and subject to profit tax if the partner is a legal entity A limited partnership (commanditaire vennootschap or CV): this entity is similar to a general partnership; however a distinction is made between general (managing) partners and limited (dormant) partners. Provided limited partners do not take part in the day-to-day business, their liability is limited to their capital contribution. General partners are jointly and severally liable for the partnership s debts. The partnership s profit is allocated to each partner and subject to personal income tax if the partner is an individual and subject to profit tax if the partner is a legal entity. A CV with capital divided into shares is, however, subject to profit tax.

8 6 2.2 Accounting Requirements The accounting requirements as stipulated in Book 2 of Civil Code are compulsory for all legal entities General provisions on annual accounts Legal entities are required to prepare financial statements that consist of at least a balance sheet, a profit and loss statement and explanatory notes. The financial statements should contain sufficient information in order to enable a reader to form a reasonable opinion about a company s financial position and results and, within limits, its liquidity and solvency. The law generally stipulates that financial statements must be prepared within eight months of the financial year-end. The financial statements must comply with generally accepted accounting principles. The law does not state which principles are considered generally acceptable, but Dutch General Accepted Accounting Principles are commonly used. In the case of an ordinary NV or BV the general meeting of shareholders may extend the period to prepare the financial statements by up to six months after the end of the preceding financial year, in specified circumstances. For large NVs the financial statements should be prepared within six months of the financial year-end and must be prepared in accordance with International Financial Reporting Standards (IFRS). Other international generally accepted accounting principles may be permissible with valid reasons. The financial statements should include a balanced and complete analysis, corresponding to the size and complexity of the legal entity and its group companies, of the situation at the balance sheet date, the developments during the financial year and the results. If necessary for a proper understanding of the developments, results or position of the legal entity and its group companies, the analysis should comprise both financial and non-financial performance indicators, including environmental and personnel issues Report of the directors A large NV is required to include a report of the directors in the annual accounts. This report must provide a true and fair view of the financial position at the balance sheet date and the performance during the financial year. Any stakeholder may demand that the company fulfils this obligation. The Civil Code stipulates that the report of the directors should provide information on any event of material significance that occurs after the end of the financial year. In addition, it must provide information on the expected future performance and should not contradict the financial statements.

9 Doing Business in Audit requirements Large NVs are required by law to have their financial statements certified by an external expert. For other entities the articles will establish whether the financial statements must be audited. Generally speaking the general meeting is authorised but not obliged to appoint an external expert. The law clearly defines who is considered to be an external expert in the case of a large NV, namely a registered accountant (RA), an accounting consultant (AA), a certified public accountant (CPA), or an expert admitted by the Minister of Economic Affairs based on their professional competence. 2.3 Filing Requirements For NVs which are not classified as large and for BVs the individual shareholders are entitled to inspect the financial statements during a period of two years after preparation or adoption. Large NVs are obliged to deposit a complete copy of the financial statements at the registered office, within eight days of adoption by the shareholders in general meeting, for inspection by stakeholders. If the financial statements have not been adopted and approved within two months of the maximum period as approved by the general meeting, the financial statements must be deposited immediately after preparation for inspection by stakeholders. The trade register of the Chamber of Commerce must be notified of the deposit of the financial statements for inspection, if applicable, together with a statement stating that the financial statements have not yet been adopted or approved.

10 8 3 Finance and Investment 3.1 Exchange Control and Other Restrictions On 1 January 2011 the US dollar became legal tender in. Banks in dispense dollars through their ATMs and over the counter. 3.2 Banking s banking system falls under the supervision of the Dutch Central Bank (De Nederlandse Bank).

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12 10 4 Employment Regulations and Social Security 4.1 Residence and Work Permits Every foreigner (excluding Dutch nationals) wishing to become a resident of requires a residence permit. A foreigner wishing to work in requires a work permit. In general a work permit is only granted when no suitable qualified person is available on the Island. In other cases, if the employer is willing to provide a guarantee in respect of related expenses and responsibilities, a request for a work permit will be considered. Holders of a Dutch passport do not require a work permit. 4.2 Employment Employment contracts may be concluded for an indefinite term, a definite term, or for a specific project. Consecutive temporary contracts (the maximum duration of each contract is one year) are permitted for three periods. Contracts are considered to be consecutive if interruptions between contracts do not exceed three months. If the total period of consecutive temporary contracts exceeds three years, the contract is, by law, converted into a contract for an indefinite term. An indefinite term contract may only be terminated, without penalty, for material breach. The dismissed employee is often entitled to severance pay.

13 Doing Business in Social Security A number of institutions in are responsible for the application of several social security laws. In general, social security premiums are withheld and paid over by the employer. Contributions may be due in respect of: Old age pension (AOV): a compulsory insurance against the financial consequences of old age for the entire population, on account of which the insured person receives an old age pension on reaching 65 years of age Widow s, widower s and orphan s pension (AWW): a general insurance guaranteeing financial support to the widow or widower after the passing away of a spouse and to children generally up to the age of 15, upon the death of an insured mother or father General healthcare (zorgverzekering): all residents of are by law insured for healthcare Sickness insurance (ZV): insures employees with an income under a certain threshold for the costs of medical care and loss of income as a consequence of sickness Accident insurance (OV): obliges employers to insure their employees for the costs of medical care and loss of income as a consequence of an accident at work Cessantia: a severance payment that insures employees against the costs of unemployment through no fault of their own. It grants the employee the right to a lump sum payment dependent on the duration of the employment and the most recently received wage.

14 12 5 Taxation 5.1 Personal Tax Residents of are subject to income tax on their worldwide income. Non-residents are subject to income tax on certain income, such as income from an enterprise carried on in. Resident taxpayers are taxed on their taxable income, defined as income less deductible costs, minus losses brought forward. Income is defined as the results derived from capital (not real estate) employed, entrepreneurship and labour and entitlements to periodic payments. Deductible costs are divided into personal burdens and extraordinary burdens. Non-resident taxpayers are, in principle, taxed in the same way as resident taxpayers, however certain restrictions apply. The income tax rate (including employee s social security premiums) is progressive with a rising scale with two brackets ranging from 30.4% %. For 2013 these figures are as follows. Income from (US$) Not more than (US$) % 0 263, ,250 Unlimited 35.4 Income tax returns should be filed within 60 days after the date stipulated on the income tax return-form. It is possible to request an extension, which is limited to 18 months after the end of the tax year concerned. Wage tax Wage tax is a pre-levy of income tax and withheld by the entity that paying the income arising from current or former employment, generally the employer or a pension insurer. Quarterly wage tax returns should be filed and the wage tax paid to the tax authorities on or before the 15th day of the month following the quarter in which the wages were paid. The employer is also obliged to file a summary wage tax card (for the calendar year) with the tax authorities before 1 February of the following calendar year.

15 Doing Business in 13 Expatriate facility Under the expatriate facility, an employee may enter into a net salary arrangement with their employer whereby the gross salary is paid as net salary and the employer accounts for the wage tax. In general, the term wages includes all benefits received from employment such as salary, allowances, remuneration in kind such as a car or living accommodation. For the purposes of the expatriate scheme, the following fees are not treated as wages: Benefits in kind (for example, car or living accommodation) to a maximum of US$8,380 per year Fees for child education (conditions apply if the child is educated abroad), per child for up to US$13,967 per year Compensation to cover the travel expenses associated with the arrival and repatriation of the employee and their family up to US$2,235 (single), US$4,470 (couple without children), or US$6,704 (couple with children) Compensation for hotel expenses in for up to two months, with a maximum of US$5,587 (single), US$8,380 (couple without children), or US$11,732 (couple with children) Refurbishment allowance of up to two months salary but with a maximum of US$6,704 Reimbursement of car rental expenses during the first two months, with a maximum of US$1,509 per month. An individual is eligible for the expatriate regime if they lived abroad for an uninterrupted period of five years or more prior to employment in. Furthermore, they must possess specific expertise which is either not available or is scarce in the local labour market. Specific expertise is demonstrated as follows: The employee has an academic or higher vocational training The employee has at least five years relevant work experience The employee receives a remuneration of at least US$83,500 per year. The expatriate status is only available on request. The request must be made by the employer, countersigned by the employee and be submitted to the tax authorities of. The expatriate status will, in principle, be granted for a maximum period of five years, however, subject to conditions, this period may be extended for a further period of up to five years.

16 Business Tax companies are subject to regular Dutch corporate income tax (vennootschapsbelasting; please see the Doing Business in the Netherlands guide for details) unless they have a so-called declaration of establishment in (vestigingsplaatsbeschikking). For such a declaration to apply, the company should meet the activity test. The activity test is met if a company is an active company, ie a company for which that total of investments, participations, liquid assets, or other assets the use of which are transferred to a person outside accounts for less than 50% of total assets. If the company does not comply with the activity test it may still qualify for the declaration and become subject to tax if, in summary, (i) the amount of turnover is not more than US$80,000 and the value of assets is not more than US$200,000, or (ii) the number of fulltime employees of the company is at least three and it has access to local real estate with a value of US$50,000 for a period of at least 24 months. does not levy a regular corporate income tax. Instead has a so called revenue tax (opbrengstbelasting) Revenue tax For revenue tax purposes, revenues are payments made by legal entities and foundations. Revenue includes dividend distributions. The revenue tax rate is 5%. The recipient of the revenue is subject to revenue tax, however the payer must withhold and pay the tax. For each payment of revenue the payer must issue a note, containing the name and address information of both the payer of the revenue and the recipient. The withholding entity (payer) must declare the revenue tax due on a quarterly basis and must pay the revenue tax within 15 days of the end of the quarter. Although there is no corporate income tax in, legal entities must send a copy of their annual financial statements to the tax authorities within nine months of the end of the financial year. The financial statements should consist of a balance sheet, profit and loss account and explanatory notes.

17 Doing Business in Turnover tax Turnover tax is levied on entrepreneurs in. Any person who exploits an asset (such as real estate or intellectual property rights) will under conditions also be considered an entrepreneur for turnover tax purposes. Turnover tax is levied on the sale of goods, the rendering of services and the import of goods. The applicable tax rate varies from 4% 1 up to 30%. Quarterly turnover tax returns should be filed and the tax due should be paid on or before the 15th day of the month following the quarter to which the turnover relates Withholding taxes does not levy a withholding tax on dividends or royalty payments. Although is not part of the European Union (EU), it has committed itself to the enactment of the EU Savings Directive. Interest payments to residents of EU member states are subject to withholding tax, unless the EU recipient requests to be exempted; in that case an exchange of information will occur and no taxes will be withheld. For non-eu residents, no interest withholding tax applies. 5.3 International Tax Provisions Tax treaties has double taxation agreements with Norway, the Netherlands, Curaçao Aruba and St. Maarten. has tax information exchange agreements with Antigua and Barbuda, Australia, British Virgin Islands, Bermuda, Canada, Cayman Islands, Denmark, Faroe Islands, Finland, France, Greenland, Iceland, Mexico, New Zealand, Spain, St. Lucia, St. Kitts and Nevis, San Marino, Sweden, United Kingdom and the United States. 1 0% for certain goods exported or clean cars imported.

18 16 Member Firm Contact Details Baker Tilly Bulevar Gob. N. Debrot 31 Kralendijk T: Contacts: Eric Vesseur audit Arthur van Aalst tax Danny Bol business support

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