The Expatriate Regime: Know Your Taxes

The Expatriate Regime: Know Your Taxes

By Nicole Echobardo 

Dear Weekender,

With great pleasure, I hereby introduce myself to you as the newest contributor to The Weekender. I am excited to have this opportunity and will do my very best to help you know your taxes!

Now, here’s a little about me: As you may already guess, I am a tax specialist on your beloved Dutch island of St. Maarten, which I recently moved to with my family. Curaçao is where I was born and raised, and where I continue to call home; but my love for this little paradise called St. Maarten is big. So, basically, I am considered a foreigner. About foreigners, let’s start with a little knowledge of a tax incentive designed to attract knowledgeable foreigners to St. Maarten – the so-called expatriate regime.

Given the fact that some talents are hard to find on the island, many are recruited from abroad. In those cases, the expatriate regime should be considered. One of the main benefits of the expatriate tax regime is that the employer can offer the employee a net salary, which leads to less employer expenses. This tax saving could be applied to increase the remuneration package of the expat with additional fringe benefits at favourable rates.

This tax incentive includes the possibility to offer tax-free allowances for expenses that expats would usually have when working in another country, such as a reimbursement of education costs for children, up to NAf. 25,000 (US $14,045) per child per year, and travel allowances of up to NAf. 12,000 (US $6,742) depending on the family situation of the expat. Also for expats, there is a general tax-free allowance that covers benefits in kind and reimbursements (or contributions in costs) to the extent that the combined amount does not exceed NAf. 25,000 (US $14,045) per year.

Now let’s break down the criteria to qualify for the expatriate regime. First and foremost, the employee should have been hired from abroad and should possess a combination of specific knowledge, expertise (relevant work experience of at least three years) and education (in principle, a Master’s or Bachelor’s degree would suffice) that is rarely available on the local labour market. A minimum income requirement of NAf. 100,000 (US $56,180) and five years of relevant work experience also apply to expats without a Master’s or Bachelor’s degree.

The scarcity on the local labour market of the knowledgeable foreigner is of key importance. Therefore, it is of utmost importance to document all efforts made to prove that the employer did not succeed in finding a local employee to fulfil the position in question. Examples would include a vacancy ad in the local newspaper and social media, attendance to local job fairs, and engaging a local (third party) recruitment agency.

The expat status is granted on request by the Inspectorate of Taxes in first instance for a maximum of five years, with the possibility for extension with an additional five-year term after the first term has lapsed. Last, perhaps a little bummer is that the expatriate regime is no longer applicable to public servants. Apart from the latter, I trust that you enjoyed what you read, and I look forward to sharing more knowledge on tax matters with you next month.



Nicole Echobardo

HBN Law & Tax

The Daily Herald

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