Starting an enterprise – what taxes are involved?
Are you thinking about starting your own business? There are a lot details to consider! Before you start it is important to be well informed about the business environment. What are the market opportunities? Who are my competitors? What is the best legal status for my company? How will I finance my business? And what about housing? All these choices also have a big impact for the applicable taxes.
In general terms, you are liable to withhold wage tax (Dutch: loonbelasting) as an employer if you employ workers in your business. Employment is one of the possible relationships between the party contracting work and the party carrying out the work.
Any person performing work for an entity domiciled on Bonaire in the capacity of director has a fictitious employment. This includes directors of public limited liability companies (NVs) and private limited liability companies (BVs), as well as of foundations, private foundations, associations, cooperatives and mutual insurance association.
Any person performing work while at the same time holding a substantial interest (>5%) is subject to the customary wage scheme (USD 14,000). Some are also deemed to receive fictitious wages.
For purposes of algemene bestedingsbelasting (‘ABB’), it is important to distinguish between ABB on imports and ABB in domestic situations. As a rule, ABB on imports applies to everybody, both enterprises and individuals.
ABB in domestic situations applies only to enterprises that are manufacturers or service providers, as well as in a number of specific situations, for example if the ABB levy is reverse-charged to you.
You are an entrepreneur for the purposes of the ABB if you independently run a business or practice a profession on Bonaire, but also if you operate an asset (for example, an immovable property) to generate sustainable revenue.
You can, for example, practice your activities in the form of a sole proprietorship, a partnership, a company or another (foreign) legal form. The legal form you choose to run your company or practice your profession is not of relevance to the ABB. A foundation (fundashon) or association can also be an entrepreneur for the purposes of the ABB, because whether you do or do not aim to make a profit on your activities is not relevant to the ABB.
Enterprises can be conducted in various forms. One possibility is the sole proprietorship. Sometimes partnerships are formed. In those situations, as an entrepreneur you are liable to pay income tax.
If you run a sole proprietorship, you conduct your enterprise on your own. This is the case if you are in a self-employed profession (for example a civil-law notary or general practitioner or if you are the sole owner of your enterprise). This means that you might also have a sole proprietorship if you have employees. If you fulfil the requirements for entrepreneurship, you are now an entrepreneur for income tax purposes. This means that you are eligible for the special facilities for entrepreneurs.
A sole proprietorship is not a legal entity. This means that if you are running a sole proprietorship you are still liable for the debts of your enterprise.
Opbrengstbelasting is a new tax that has been introduced for Bonaire. Together with vastgoedbelasting, it replaces the profit tax regime that was in place until 31 December 2010. Profit tax was abolished on 1 January 2011.
Opbrengstbelasting is a tax on payments made by entities to title holders, such as dividends that are distributed to shareholders in a N.V. or B.V. The person receiving the revenues is the taxpayer. However, the tax is levied at the level of the entity making the revenue available. This means that, as with wage tax, the entity has a withholding obligation.
The withholding agent withholds the tax and remits it to the Belastingdienst.
As already explained in connection with opbrengstbelasting, vastgoedbelasting combines with opbrengstbelasting to replace the profit tax regime that was abolished on 1 January 2011.
As an entrepreneur, you might encounter vastgoedbelasting if:
- You are liable to pay opbrengstbelasting;
- You are domiciled outside the BES islands and the entity’s capital includes one or more
immovable property objects situation on the BES islands.
Although a sole proprietorship might also possess immovable property, immovable property that is part of the business capital of a sole
proprietorship is exempt from vastgoedbelasting. It is included in the income tax levy.
For the sake of completeness, we state that this article is based on current BES tax legislation
at the time this article was written.
Source: Tax Office / Caribbean Netherlands
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