The Aruba Exempt Company ("AEC")

General
The Aruba exempt company was introduced on July 1, 1988. Its main characteristics were complete exemption from any taxation as well as limited liability for its shareholders to the amount of any issued, but unpaid, share capital.

Effective January 1, 2006, the Aruba Government introduced a revised tax regime for the AEC companies, abandoning the tax exempt status for all AEC companies. These changes have been implemented in order to comply with OECD en EUY regulations.

For companies already existing as per January 1, 2006, a grandfathering regime has been introduced.

Grandfathering Regime
To accommodate existing AEC's, 2 alternatives have been introduced:

• The AEC performs certain activities exempt from domestic profit- and/or dividend withholding tax, or
• The AEC is considered transparent for Aruba tax purposes.

Ad 1:
The following activities are considered exempt from any taxation:

• financing activities (other than as a supervised credit institution).
• holding activities, receiving dividends that have been taxed abroad with
  at least 17.5 %.
• investment activities (other than in real estate situated in Aruba).
• intellectual property (IP) licensing activities.

Ad 2:
When considered transparent for tax purposes, the AEC needs to file an exemption request with the Aruba authorities. Premier Management Partners N.V. can assist in applying for such a ruling. In all other cases a flat profit tax rate of 35% will be due.

Contact PMP
If you are interested in establishing an Aruba Exempt Company, or if you have any questions with respect to the change of the tax regime in Aruba for AEC’s, please contact our offices via email (info@premier-mp.com) or call us at (+599) 9 737 0754.

Disclaimer:
The information contained in this memorandum is of a general nature only and should not be construed as legal or tax advice. Readers should obtain appropriate professional advice before setting up any structure. If required, PMP can refer readers to a panel of reputable tax- and legal advisory firms.