Netherlands Antilles

An Attractive Vehicle for Intellectual Property (IP) Rights

Private Foundations Under the Laws of The Netherlands Antilles

The Establishment and Use of The Netherlands Antilles “Stichting Particulier Fonds” ( Private Foundation )

Introduction

In 1998 the Netherlands Antilles introduced a new type of legal entity, the Private Foundation (“Stichting Particulier Fonds”). The “Stichting” or foundation is a legal entity incorporated by notarial deed. A Stichting is registered in the Curacao Chamber of Commerce’s Foundation Register. A Stichting has traditionally been utilized almost exclusively for holding funds for charitable contributions to third parties.

introduction

Private Foundation The Stichting Particulier Fonds

The difference between a traditional “Stichting” (Foundation) and the “Stichting Particulier Fonds” (Private Foundation) is that the Stichting Particulier Fonds is allowed to make distributions to beneficiaries, without the requirement that such distributions have to be of a charitable nature.

A private foundation has no shareholders, members or the like. It keeps its assets and liabilities in its own name. The transfer of assets from non-residents into a “Stichting Particulier Fonds” are exempt from Netherlands Antilles gift taxes. A “Stichting Particulier Fonds” does not pay any profit taxes over its income. There is no succession duty.

A private foundation is not allowed to conduct business or enterprise with profit motive. Asset management (except for third parties) or acting as a holding or investment company is not considered as a business activity.

There is no minimum capital requirement and the capital does not have to be mentioned in the Articles of the Foundation. The private foundation may employ its funds to make all possible kinds of investments.

These characteristics make the “Stichting Particulier Fonds” more than a regular civil law foundation, attractive for the useful control over family assets. In addition, a “Stichting Particulier Fonds” can be seen as a civil law alternative for the Anglo-Saxon Trust. It should be taken into account that in some cases the contributor shall have to pay gift tax in his/hers country of residence.

Founders and Directors

A Curacao Private Foundation must have at least one resident Director which is in the possession of a valid license from the Netherlands Antillean Supervisory Board of Fiduciary Business. In most of the cases an Antillean Trust Company will act as a founder and as resident managing director. The trust company also provides the local registered address and office.

Uses of a Private Foundation

The essence of a Private Foundation is the separation of control from ownership. The person who transfers his/hers assets to the Stichting (and who becomes the beneficiary of the Stichting’s assets), no longer thereafter owns the assets which he/she has put into the Stichting.

The name of the beneficiary does not appear in the Stichting’s Articles. His/hers nomination is rules in a separated amendment based on art. 11 of the Articles of Incorporation. The resident managing director guards the foundation’s assets and is personally liable for his actions. He has to obey to the instructions given by the beneficiary.

An Attractive Vehicle for Private Investment Purposes

In many cases the Stichting Particulier Fonds may be an attractive vehicle for private investment purposes.

At the beneficiary’s decease the Stichting Particulier Fonds will distribute the assets in accordance with the beneficiary’s wishes, but distribution may also be postponed till a future date. If requires properly structured full confidentiality of the beneficiary’s identity under Netherlands Antilles law is ensured.

  • Control vehicle for assets during lifetime
  • Investment vehicle
  • Limited liability
  • Minimal taxation on income and estate
  • Minimis taxes on deposit’s in counties where’s no source tax
  • Possession of shares
  • Possession of real estate
  • Protection of family assets against for instance economical risks
  • Possibility of changing the beneficiary of the Stichting (heir questions)
  • Absence of the duty to publish the financial status of the Stichting
  • Confidentiality in respect of the identity of the beneficiary for instance in competition questions
  • Possession of copyright, patents etc. and licence the rights and powers to third parties

Tax Features

Profit Tax

A stichting PF that operates in conformity with the Ordinance on Private Foundations is exempt from Netherlands Antilles profit tax and, in principle, from filing a profit tax return. However, the tax authorities can ask a stichting PF to submit its financial statements in order to verify that it is not carrying out business operations.A stichting PF must file a tax return for the year in which it is incorporated and every five years thereafter.

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A stichting PF can be used as a holding company, provided that the holding of shares in its subsidiaries qualifies as a passive investment. Care must be taken to ensure that a stichting PF does not interfere with its subsidiaries’ business. For example, loan agreements between the stichting PF and its subsidiaries should be drafted so that the financing activities cannot be considered business activities.

It is exempt from profit tax;

  • Contributions and donations made by non-residents are exempt from Netherlands Antilles gift and inheritance tax;
  • Contributions and donations made by residents are subject to 25% Netherlands Antilles gift and inheritance tax;
  • Contributions and donations by a stichting PF to residents and non-residents are exempt from Netherlands Antilles gift and inheritance tax;
  • No capital taxes are due on contributions or gifts to the stichting PF;
  • Unlike a normal foundation, a stichting PF is allowed to make contributions to its founder; and
  • No Netherlands Antilles withholding tax is due on distributions made by a stichting PF.

Income Tax

Contributions and donations to a stichting PF are not liable to Netherlands Antilles income tax. However, such tax may be due if contributions by a stichting PF to a resident of the Netherlands Antilles are made frequently. Such income will be liable to income tax only if it:

  • Is periodical;
  • Is due by the payer, which is obliged to make such payments;
  • Is connected to employment; and
  • Must end with demise of the beneficiary or a third party;

Periodical payments to non-residents are not liable to Netherlands Antilles income tax.

Gift and Inheritance Tax

The articles of association can be organized in such a way that a stichting PF has all characteristics of an Anglo-Saxon trust. A stichting PF can be revocable or irrevocable. If it is revocable, the settlor can revoke the assets contributed so that the assets of the stichting PF return to the founder; otherwise, the settlor is deemed to have parted with the assets in favour of the beneficiaries.

If the stichting PF is organized in such a way that it can be considered irrevocable and discretionary, neither the settlor nor the beneficiaries can take possession of its assets. Contributions and donations made by non-residents are not subject to Netherlands Antilles gift and inheritance tax. Distributions from the stichting PF to residents and non-residents are also exempt from such tax. However, donations and contributions made by residents to the stichting PF are subject to 25% Netherlands Antilles gift and inheritance tax.

Confidentiality

Founder’s Identity Kept Private Foundation Opened and Registered in Curacao Attorney’s Name, Not Founder’s Name Curacao Attorney Doesn’t Even Know Founder’s Name Founder May List Self as Beneficiary – But List of Beneficiaries Not Public Founder’s Name Separated From Ownership of Assets Are Owned by the Foundation, Not by the Founder.

What Information is Made Public?

  • Curacao Foundations Register
  • Name of Foundation
  • Date Foundation Established and
    Registered Management Company’s Address in Curacao
    Management Company’s Name Listed as Director

Withholding Taxes

The Netherlands Antilles has no withholding tax on interest or royalties. The National Ordinance on Dividend Withholding Tax was enacted on January 1 2001, but is not yet effective. A stichting PF is not subject to the provisions of the ordinance.According to the existing provisions of the ordinance, a stichting PF may file a request for remittance of dividend withholding tax, provided that such an amount exceeds NAG50, if the stichting PF is a shareholder of a Netherlands Antilles legal entity for which dividend payments are liable to dividend withholding tax after the ordinance comes into force. Such a request must be filed within two years of the calendar year in which the dividend payments were made. A request for remittance of Netherlands Antilles dividend withholding tax will be refused if the stichting PF sold its shares in a Netherlands Antilles entity within three months of obtaining such shares.

What Can a Private Foundation Do?

  • Ensure Founder’s Confidentiality
  • Minimize Taxes on Assets and Investments
  • Protect Assets and Investments From Creditors
  • Manage Assets and Investments
  • Defer Income
  • Make Distributions to Beneficiaries Like a Trust
  • Orderly and Quick Distribution of Assets to Beneficiaries Upon Founder’s Passing

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COI strongly recommends that each potential user of its services seek tax and legal advice before deciding on implementing a solution employing international financial structures. COI will not be liable for any damages, costs and expenses resulting from or incurred as a result of any action taken or omitted based upon any such information provided by COI.