Aruba Personal Income Tax

Territoriality. An individual who is considered a resident of Aruba is subject to income tax in Aruba on his or her worldwide income. Specific categories of a nonresident’s income generated in Aruba are subject to income tax in Aruba. In principle, Aruba can grant unilateral or bilateral tax relief.

Definition of resident. To determine whether an individual should be considered a resident of Aruba, the relevant circumstances should be taken into account. A resident of Aruba who leaves Aruba for a period of less than a year should be considered a resident of Aruba in the aforementioned period, unless it is proven that the individual has lived in another country during this period.

Income subject to tax

Employment income. Taxable employment income consists of income derived from (current or past) employment, including directors’ fees, less a fixed deduction and less pension and social security contributions paid or withheld, if applicable.

A nonresident individual is subject to income tax on income derived from (current or past) employment actually carried on in Aruba. In addition, a nonresident who is employed by an Aruban public entity is subject to tax on income, even if the employment is not carried on in Aruba.

Self-employment and business income. Annual profit derived from a business must be calculated in accordance with sound business practice that must be applied consistently.

A nonresident individual generating income out of an enterprise carried on in Aruba personally or through a permanent represen­tative is subject to Aruban income tax.

The fair market value of items received in kind for professional and entrepreneurial activities performed is also included in tax­able income.

Directors’fees. Income received by a nonresident managing direc­tor or nonresident member of a supervisory board of a company resident in Aruba for current or past services is subject to Aruban income tax.

Investment income. Dividends, interest, royalties and rental income, less deductions, are generally taxed as ordinary income. Interest received from savings accounts at acknowledged local and for­eign banks is exempt from Aruba income tax.

A 10% dividend withholding tax is imposed on dividends distributed by companies resident for tax purposes in Aruba to individuals. The rate may be reduced to 0% or 5% if certain con­ditions are satisfied.

Capital gains. No separate capital gains tax is levied. Capital gains are generally tax-free, but the following capital gains derived by residents or nonresidents may be subject to income tax at normal or special tax rates.

Type of gain Rate (%)
Capital gains realized on the disposal of business assets and on the disposal of other assets if the gains qualify as income from independently performed activities Up to 58.95
Capital gains realized on the liquidation of a company or the repurchase of shares by the company in excess of the paid-up capital 25
Capital gains derived from the sale of shares in a domestic corporation qualifying as a substantial interest (equity interest of 25% or more) 25

Deductions

Deductible expenses. A deduction of 3% of employment income is allowed for expenses related to an employment relationship, up to a maximum of AWG1,500 per year.

A resident taxpayer is entitled to more deductions than a non­resident taxpayer. Resident individuals may deduct the following:

  • Interest and costs paid with respect to mortgage loans for home ownership, up to a maximum of AWG50,000 per year
  • Interest paid on all types of personal loans, up to a maximum of AWG5,000 per year
  • Life insurance premiums that entitle individuals to annuity pay­ments, up to a maximum of AWG10,000 per year
  • Donations to charities, churches and sports institutions, up to a maximum of AWG50,000
  • Extraordinary expenses (for example, medical expenses, expenses for the support of relatives and education expenses) and qualifying gifts in excess of a certain threshold amount

Personal deductions and allowances. Tax-free allowances may be claimed, based on personal circumstances. In general, the follow­ing child deductions are available.

Deduction Amount (AWG)
Fixed tax credit 20,455
Each child under 18 years of age 750
Each child from 16 to 27 years of age 1,200
Additional deduction for each child from 16 to 27 years of age studying abroad 3,800
Each disabled child 16 to 27 years of age who is not able to earn at least 50% of the salary of “healthy” children 1,200

The maximum amount of the old-age deduction equals AWG2,443 (for a married couple if at least one of the spouses is at least 60 years old).

An additional deduction of AWG3,500 is allowed for the elderly who only receive the general old age pension and have total income that does not exceed AWG35,000.

Saving funds. Employees may claim an annual tax-free allowance of AWG3,360 with respect to employee saving funds and provision funds (covering special events, such as weddings and burials).

Business deductions. Business expenses are fully deductible. In addition, self-employed persons may claim an entrepreneur’s deduction of AWG2,400.

Rates. Residents and nonresidents are subject to income tax at the same progressive rates, which range from 7% to 58.95%.

Relief for losses. Taxpayers may carry losses forward for five years. B. Other taxes

Property tax. Property tax is levied annually in principle on at least the fair market value of immovable property in Aruba. The applicable tax rate is 0.4%, with an exemption in the amount of AWG60,000 (USD33,520). In principle, the owner or possessor of the immovable property is liable for the property tax at the beginning of the calendar year.

Inheritance and gift taxes. Inheritance and gift taxes are levied on all property bequeathed or donated by an individual who is a resident (or a deemed resident) of Aruba at the time of death or at the time the gift is made. Tax is levied on the heir or the recipient of the gift, regardless of his or her place of residence.

Inheritance and gift taxes are levied on the value of a taxable estate or donation after deductions at rates ranging from 2% to 24%. The rates vary depending on the amount inherited or received and on the relationship of the recipient to the deceased or the donor. In general, the following rates apply.

Relationship of recipient Rate (%)
Spouse or child  2 to 6
Brother or sister 4 to 12
Parent or grandparent 3 to 9
Nephew, niece or grandchild 6 to 18
Other  8 to 24

Social security

Coverage. All resident individuals are subject to social security contributions.

Contributions. The contributions cover the General Old Age Pension Act and the General Widows and Orphans Act (AOV/AWW). Both the employer and the employee pay contributions on the employee’s salary, up to a maximum annual salary of AWG85,000. The employer makes contributions at a rate of 10.5%, and the employee makes contributions at a rate of 5%.

General medical insurance (AZV) provides coverage for hospi­tals, physician consults (for example, visits to the family doctor) and treatments. Premiums are paid on employees’ salaries at a rate of 8.9% by the employer and at a rate of 1.6% by the employee, up to a maximum annual salary of AWG85,000.

The above-mentioned social security contributions, AOV/AWW and AZV, are only levied if the individual is registered at the Aruba registry office. Consequently, nonresident individuals are not subject to these social security contributions if they are not registered at the registry office.

The General Disablement Insurance Act (OV) and the General Sickness Insurance Act (ZV) offer coverage for employees. The OV premiums are paid on employees’ salaries by the employer at rates ranging from 0.25% to 2.5%. The ZV premiums are paid by the employer at a rate of 2.65% of the annual salary of the employees, but only for employees earning a salary up to and including AWG4,550 per month. The employer is not insured for sickness risks if the employee is earning more than AWG4,550 per month.

Totalization agreements. Individuals who are temporarily employed in Aruba and are registered at the registry office are subject to social security contributions. As a result, they may be subject to social security taxes both in their home country and in Aruba. These individuals may obtain relief from double taxation under social security agreements.

Tax filing and payment procedures

Because the wage tax is a pre-levy to the income tax, employers must file wage tax returns on a monthly basis. These returns are due by the 15th day of the following month.

The required wage tax and social premiums withholdings are made for each salary payment period. They are included in a monthly payment. Wage tax is an advance levy with respect to the income tax.

The income tax return for the preceding calendar year must be filed within two months after issuance of the income tax return form by the Aruba tax administration, unless a filing extension is obtained. Any income tax owed in addition to prior withholdings is due within two months after receipt of the assessment. Married couples are taxed separately on their employment income unless they request combined taxation.

Social security contributions are withheld by the employer. Self-employed persons must pay social security contributions within two months after receipt of an assessment.

An inheritance tax return normally must be filed within six months after the date of death. A gift tax return must be filed within three months after a gift is made. Tax must be paid within one month after receipt of an assessment.

Double tax relief and tax treaties

The Tax Arrangement for the Kingdom of the Netherlands, which regulates relations between the countries of the Kingdom of the Netherlands for fiscal purposes, contains provisions for exchange of information and avoidance of double taxation between Aruba and Curaçao, Sint Maarten and the Netherlands (including the extraordinary overseas municipalities, which are Bonaire, St. Eustatius and Saba). It applies to, among other items, income tax, inheritance tax and gift tax.

If the regulation does not apply, foreign taxes paid may be deducted as expenses for purposes of calculating taxable income in Aruba (unilateral tax relief).

Aruba has entered into tax information exchange agreements with the following countries.

Antigua and              Cayman Islands               Norway

Barbuda                    Denmark                         St. Kitts and Nevis

Argentina                  Faroe Islands                   St. Lucia

Australia                   Finland                            St. Vincent and

Bahamas                   France                             the Grenadines

Belgium*                  Greenland                        Spain

Bermuda                   Grenada*                         Sweden

British Virgin            Iceland                             United Kingdom

Islands                      Mexico*                          United States

Canada

* This agreement has not yet entered into force.

Aruba has not entered into any treaties providing double tax relief.

Temporary visas

In principle, nationals of the following jurisdictions need a visa to travel to Aruba.

Afghanistan              Ghana                              Palestinian

Albania                     Guinea                             Authority

Algeria                      Guinea-Bissau                 Papua New

Angola                      Haiti                                Guinea

Armenia                    India                                Peru

Azerbaijan                 Indonesia                         Philippines

Bahrain                     Iran                                  Qatar

Bangladesh               Iraq                                  Rwanda

Belarus                      Jamaica                            Russian

Benin                        Jordan                             Federation

Bhutan                      Kazakhstan                      Samoa

Bolivia                      Kenya                              São Tomé and

Bosnia and                Kiribati                            Príncipe

Herzegovina              Korea (North)                  Saudi Arabia

Botswana                   Kuwait                           Senegal

Burkina Faso              Kyrgyzstan                     Serbia

Burundi                      Laos                               Sierra Leone

Cambodia                   Lebanon                         Solomon Islands

Cameroon                   Lesotho                          Somalia

Cape Verde                Liberia                            South Africa

Central Africa             Libya                              Sri Lanka

Republic                     Macedonia                     Sudan

Chad                           Madagascar                    Swaziland

China                          Malawi                           Syria

Colombia                    Maldives                        Tajikistan

Comoros Islands        Mali                               Tanzania

Congo                        Marshall Islands            Thailand

(Democratic                Mauritania                      Timor-Leste

Republic of)               Micronesia                     Togo

Congo                        Moldova                        Tonga

(Republic of)              Mongolia                       Turkmenistan

Côte d’Ivoire              Montenegro                   Tunisia

Djibouti                      Mozambique                  Turkey

Dominican                  Myanmar                       Tuvalu

Republic                     Namibia                         Uganda

Egypt                          Nauru                             Ukraine

Equatorial                   Nepal                             United Arab

Guinea                        Niger                              Emirates

Eritrea                         Nigeria                           Uzbekistan

Ethiopia                      Northern Mariana          Vanuatu

Fiji                              Islands                           Vietnam

Gabon                        Oman                             Yemen

Gambia                       Pakistan                         Zambia

Georgia                      Palau                              Zimbabwe

 

Work permits

Foreigners who want to exercise a profession in Aruba must have a work permit. The work permit is normally granted only if no qualified persons are locally available. In general, requests for work permits are taken into consideration only if they are filed through a local employer who has to accept full responsibility for any possible expenses incurred by the government relative to the employees.

Residence permits

To request a residence permit without a work permit, an indi­vidual must provide the following:

  • Bank references indicating that the applicant is financially self-supporting or any other proof that he or she will not become a financial burden to the local government or community
  • Home and business addresses for the last 10 years
  • Reasons for wanting to reside in Aruba
  • Police clearance (good-conduct paper, not older than two months)

Persons desiring a permanent residence permit must be in posses­sion of the following:

  • A passport valid for Aruba
  • Three passport photographs of true likeness
  • A valid vaccination certificate for smallpox, not more than three years old
  • A medical declaration that the holder is not suffering from any contagious disease or mental sickness, issued within 30 days before the trip began
  • Proof of payment of the required legal fee

Family and personal considerations

Work permits for family members. The rules regarding work per­mits for foreigners discussed in Section G also apply to family members.

Marital property regime. Under Aruba civil law, all property acquired by either spouse during the course of a marriage is con­sidered marital property unless agreed otherwise.

Forced heirship. Under Aruba civil law, an heir has in principle the option not to accept an inheritance.

Driver’s permits. In Aruba, an individual may drive with a foreign or international driver’s license issued by a member country of the Geneva Convention.