December 31, 2012
Sint Maarten Property Tax
With its change in Country status on Ocotber 10,2012, Sint Maarten endorsed larger financial responsibility.
The Sint Maarten tax department has started a project , which is focused on identifying all the property owners on Sint Maarten in order to collect taxes due on rental income derived from Sint Maarten Properties.
Based on local law property rental income is subject to income tax (for individuals / natural persons) and profit tax (for companies and other legal entities). The place of residence and/or establishment of the property owner is not relevant.
Also learn more about Mortgages and Financing information & Real Estate agencies , Notaries, Architect, and Engineers
Until now Sint Maarten Tax Department has not yet enforced these laws, however after the changes to the constitution on October 10,2010. Sint Maarten has taken financial obligations that have forced her to become more pro-active when it comes to its public finance.
For individuals the Tax department can go back 5 years if all tractions are done locally, but if (part of) he transactions are international the laws gives a period of 15 years. For entities subject to profit tax, the , period is 5 years and 10 years respectively.
Through government is currently studying the ripple effects such decision could have on it economy and influence as an offshore real estate investment , current fiscal regime goes along the following guidelines;
The real estate is owned by an individual;
- The real estate is owned by an individual and used for residential purposes only.
a. In this scenario the possession of a real estate has no fiscal implications .
- The real estate is owned by an individual and used partially for residential purposes and rented out .
- The real estate is owned by an individual and is rent out
In the scenario 2&3 the fiscal implications are as follows:
National Ordinance on income Tax 1943:
Article 1 section 3 of the national Ordinance on income Tax 1943 states. Person Not residing on Sint Maarten having a domestic source of income as referred in Article 17 shall be liable to pay income tax.
Revenues generated from immovable properties located on Sint Maarten is mentioned in Article 17 of said ordinance as the domestic source of income for non-resident taxpayers.
Based on Article 4 section 3 only 65% of the net proceeds from immovable are taxable. It is further stated in the article that with the exception of interest and costs of the loan and premiums life insurance related to the loan, no other costs will be taken into account.
The income tax rate is progressive and ranges between 12.5 – 47.5%
Article 24 section 1 of the income tax ordinance
Room Tax Ordinance 1975
Persons or company providing residence to non-resident person(s) on short term basis are subject to room tax based on article 1 of the room tax ordnance.
The room tax rate is 5% of the rental price – article 6 of the room tax ordinance.
National Ordinance of Federal Taxes 2001
In article 6 section 4 of the general Ordinance on Federal taxes it is stated that the income tax return has to be filled in clearly, truthfully and without reservations. The form has to be signed and supported with all relevant documentations, such as the rental contracts receipts etc….
The real estate owned by a company
National real estate is owned by a company
National Ordinance on profit tax 1940
Article 1 section 1 and letter C of the national Ordiance on profit ta 1940 state: That profit tax shall be levied in the profit of the company or association NOT sestablished on Sint Maarten, form business operations to the extent and in so far as conducted by means of a permanent establishment, from immovable property situated on St. Maarten.
The profit tax rate is fixed at 34.5%
National Ordinance on turnover Tax 1997
Article 2 letter B states that turn over tax is levied from entrepreneurs established outside of the levy area on the turn over generated from business operations for the delivery of goods and services rendered in Sint Maarten.
Based on article 8 section 16 exemption from turn over tax can be granted if taxpayer had paid room tax on all income derived from rent of real estate.
As of febuary 2011 rental income derived from the renting of real estate persons residing on Sint Maarten for the sole purpose of permanent living quarters are no longer, subject to turn over tax.