THE HAGUE – With the vote on December 19, 2023, in the Senate, the Tax Plan for the Caribbean Netherlands (BES islands) 2024 was adopted, but not without difficulties. As of January 1, 2024, rules for various taxes in the Caribbean Netherlands will change. Earlier, the House of Representatives had already approved the plan after an intensive prelude.
There was an unprecedented strong island-wide lobby. Independent member of the Bonaire electoral college (list 4) Mr. Drs. Jaap R. Kos, also a tax specialist & economist, is satisfied with the results: “By making one voice heard from Bonaire, The Hague listened better to us. In May 2023, the State Secretary intended to double the tax on profit distributions of entrepreneurs with a B.V. or N.V. from 5% to 10%. This did not end up in the final legislative proposal due to political pressure from Bonaire. The increase in property tax for hotels is also temporarily off the table.”
Successes were also achieved during the parliamentary deliberations in both Houses thanks to the active involvement of dedicated Members of Parliament. Through a motion from the Christian Union and D66 in the House of Representatives, the tax-free allowance will increase to USD 20.424 per year as of January 1, 2024. In 2023, this was USD 17,352. This mainly benefits middle-income purchasing power.
Most entrepreneurs with a B.V. or N.V. will face higher income tax on their own salary in 2024. The taxed ‘usual income’ must be increased by over 28% in many cases. For some small entrepreneurs with a B.V. or N.V., this increase is so drastic that the favorable effect of the increase in the tax-free allowance is nullified or even results in a net income decrease, as there is less room for low-taxed profit distributions.
Kos continues: “I am particularly concerned about the purchasing power decline for small entrepreneurs with a B.V. or N.V. due to the usual income measure. I fought hard to convey this signal. Fortunately, this has been picked up by GroenLinks/PvdA and the Christian Union. Yesterday, the Senate adopted a motion from the Christian Union instructing the government to conduct a study on the purchasing power effects. For now, this tax increase will still proceed, so we have to see in the new year whether it actually yields anything.”
With the Tax Plan for the BES islands 2024, a sort of reporting obligation is introduced for property tax. Entrepreneurs with a holding structure will face stricter conditions and sometimes an unwanted, taxed transition to the European Dutch tax system. Kos explains: “The new rules for holdings affect more ‘ordinary’ entrepreneurs than you might think. Although we have managed to obtain some easing in the implementation, it remains a tough measure.”
The new law also includes various changes in the formal tax law that regulates the rights and obligations of taxpayers and the Tax Administration/Caribbean Netherlands.