D-Day

Today is a special day as we celebrate D-Day. 75 years ago the allied forces stormed the five designated beaches in Normandy thus commencing the liberation of Europe from German occupation. I just saw on the BBC that veterans of that mementos day are still around us.
35 years ago I had just finished school and before going tot University to become a tax lawyer I was hired by a UK company to represent them in Meursault in the Burgundy in France. Meursault's nickname is the capital of the white wines. Meursault was also the place where a Louis de Funes movie was partly filmed many years ago.
During my two month stint in the Burgundy I actually met a lot of British veterans who had 40 years earlier stormed those Normandy beaches. These were very courteous men who were not interested in discussing their mind shattering experiences. They left it at just mentioning that they had participated.
In hindsight these were very special encounters and should not be left unmentioned. Being 19 of age at that time I do not think that at time I realized how privileged I was meeting those men.
25 years later on that same June 6th my baby sister was born. An other reason for celebrating that day.

Zweite Wohnung auf Curacao

Wenn Sie eine Wohnung auf Curacao gekauft haben und Sie moechten die vermieten dann wirden Sie dafuer bezeuert auf Curacao.

Als erste die Einkommenssteuer. 65 prozent der Mieteinnahmen werden in die Einkommensbesteuerung bezogen. Die Besteuerung ist progressiv. Das bedeutet je hoeher die Mieteinnahmen je hoeher die Einkommmensteuer. Wennfuer  Sie die Ankauf oder die Verbesserung des Hauses Geld geliehen haben koennen Sie die Gebuhren wie Zinsen abziehen von das besteuerte Einkommen. Aber nur bis auf null. Verluste koennen abgesetzt werden gegen die Einnahmen in den 5 zukuenftige Jahren.

Die Einnahmen werden dazu mit 5 prozent Umsatzsteuer getroffen. Davon kann nichts abgezogen (auch nicht die Umsatzsteuer die Sie selber bezahlen.

Un dann noch Immobiliensteuer auf der Wert des Hauses. Die ist einiger Massen progressiv und damit abhaenig von der Wert des Hauses.

Wir stehen zu Ihrer Verfuegung.

Shall I compare thee to an onion

When I was in university we were taught the intricacies of the 1964 Dutch Income Tax. This tax was preceded by the 1941 Income Tax which was introduced during the second world war by the occupying Germans. It remains somewhat stupefying that it took the Dutch government so long to abolish this income tax. The 1941 Income tax was preceded by the 1914 Income Tax on which the current Curacao Income is based.

It is probably better to say that originally our income was a legal transplant of the 1914 Dutch Income Tax. Legal transplants are very much a field of study of my Alma Mater (State University Groningen) but until a few years I had no idea what a legal transplant was. In 2018 however I published an article in our Dutch Caribbean Law Review on the introduction of the Antilles profit tax which is a legal transplant from Dutch East Indies corporate income tax. I am a bit more in the loop now.

With the change of the century the Dutch introduced a complete new income tax which differs quite sttrongly from all the previous income tax legislation. We shall compare both hereunder.

One of the things we were taught is that you could  compare the income tax to an onion (hence the title of this blog).  The idea is to peel of layers of taxable types of income in an obligatory order. In the peeling of you of course see the comparison with an onion.

In the Curacao income tax this order is:

1 income from real estate;

2 income from capital;

3 income from labour and entrepreneurial income;

4 periodical income.

Basically all the income is than put together and taxed against a progressive rate. (The higher the income the higher the tax bracket you will end up in). As all the income is basically taxes against the same rate this is called a synthetic income tax (versus an analytical income tax).  But it would of course not be a real law if there were no exceptions to this tax being synthetic. Income from a substantial interest in a company falls under the scope of income from capital but is not being taxed a progressive rate. Same goes for interest income and e.g. compensation for income one missed out on like when you receive your pension income in one installment and such. So the Curacao is a synthetic income tax with analytical elements.

With the current Dutch income tax it is the other way around. It is a analytical income tax with synthetic elements. The Dutch in 2001 introduced an income tax with what they call boxes.

Box 1 contains your income from labgour and such and also the deemed income of owning your own home. Box 2 contains your income from substantial interest and box 3 your income from capital. Each box has its own tax rate. Box 1 has a progressive tax rate; box 2 a fixed rate and box 3 taxes your capital for a deemed income.

The onion is still in play here as the Dutch income tax also requires to go from box 1 to box 3 in that order to find if you have taxable income and how you will be taxed. As certain types of income are also thrown together there is a synthetic element to this income tax and therefor this is an analytical income tax with synthetic elements.