Tax on Sint Maarten: the BRNSM, the 15% withholding tax and the island's own penshonado

Whoever searches online for "tax Sint Maarten" finds two kinds of mistakes: sites that still cite the old Tax Arrangement for the Kingdom (BRK), and sites that present the penshonado scheme as if your pension is then taxed nowhere else. Both wrong, and the difference runs into thousands of euros a year. This article reads the arrangement that really applies.

Not the BRK but the BRNSM

Since 1 March 2016 the Tax Arrangement Netherlands Sint Maarten (BRNSM) applies between the Netherlands and Sint Maarten — a bilateral Kingdom act, just as Curaçao has its BRNC. The old BRK now applies only between the Netherlands and Aruba and among the Caribbean countries themselves. Three sister islands, three arrangements; whoever copies Curaçao articles to Sint Maarten gets the details wrong — even though the two Kingdom acts strongly resemble each other.

There is transitional law, but it protects virtually nobody who leaves now: only whoever already lived on Sint Maarten before the Kingdom act was submitted (2015) with a pension that had already commenced keeps the old BRK regime. Every new emigrant falls fully under the articles below.

Who taxes what

Company pension and annuity — article 17: the main rule places the levy with your country of residence, Sint Maarten, but the third paragraph gives the Netherlands a withholding tax of at most 15% on periodic payments. And mind the exception underneath it: on a surrender (lump-sum commutation) the payment is not periodic and the Netherlands may tax without limit.

AOW (the Dutch state pension) — article 17, second paragraph: benefits under the social security system may be taxed by the source country, without a ceiling. So the wage tax on your AOW simply continues.

Government pension — article 18: a pension for services to the Dutch government stays with the Netherlands. This affects civil servants, teachers in state education, police and defence; a mixed pension is treated part by part.

Dividend from a Dutch company — article 10: as the source country the Netherlands may withhold at most 15%. Dutch property remains fully taxed in the Netherlands under the situs principle.

The Sint Maarten system: brackets with surcharges

Sint Maarten levies income tax in brackets from 10% to 38% — but 25% island surcharges (opcenten) come on top, so that the effective rate runs from 12.5% to 47.5%. Below a taxable income of around XCG 27,000 nothing is due. There is no turnover tax like the Dutch VAT; businesses pay a turnover tax of 5% on their revenue.

The penshonado: 10%, with the conditions from the law

Sint Maarten has — like Curaçao — a penshonado scheme, in articles 23B to 23D of the national ordinance on income tax: on request the income from foreign sources is taxed at 10%, with as an alternative a levy on a notional income of XCG 500,000 at the ordinary rates.

The conditions are in article 23D, and they are more precise than what commercial sites make of them: you are fifty years or older on registration in the population register, you lived the sixty months before that continuously abroad, you have an owner-occupied, unlet home of at least XCG 450,000 at your disposal, and you receive no wages from employment on Sint Maarten. A minimum income is not in the law; you make the request with your tax return.

The penshonado regulates what Sint Maarten levies — it does not remove the Dutch withholding tax. Your AOW remains fully taxed in the Netherlands and your periodic pension keeps the 15% withholding. "Ten per cent and nothing more" does not exist on this island; the real sum is Dutch levy plus Sint Maarten levy minus relief, and that is the work of a tax adviser who knows both systems.

The AOW travels along in full

Within the Kingdom the law makes an explicit exception to the export reductions: on Sint Maarten you keep your full AOW, including the single person's rate of 70%. The accrual does stop on the day of departure — every missed year before your AOW age costs 2%, unless you apply to the SVB for voluntary continuation within a year of leaving.

Inheritance and gifts: five years instead of ten

A detail that appears almost nowhere: the Inheritance Tax Act pretends that an emigrated Dutch citizen still lives in the Netherlands for ten years, so that the Netherlands can levy inheritance and gift tax all that time. Article 28 of the BRNSM shortens that fiction towards Sint Maarten to five years — for death and gifts. Whoever wants to pass on assets to the children therefore plans with a shorter clock there than elsewhere outside the EU.

The year of departure itself goes with an M return, and an annuity or substantial shareholding travels with a protective assessment — outside the EU without automatic deferral. Take this list to the tax-adviser meeting from the step-by-step plan: then you know exactly which questions to ask.