Introduction

The revised tax regime for the Aruba Exempt Corporation (AEC) has turned the Aruba Exempt Corporation into a company that is fully subject to Aruba Taxation. These changes have been made to comply with OECD and EU regulations. However, if her activities can be considered ‘qualified’, the A.E.C. will remain fully tax exempt, and thus remain a very attractive tax planning vehicle.

The following activities are considered qualifying exempt activities:

A. Finance activities;

B. Holding activities;

C. Portfolio investment activities;

D. IP licensing activities.

A. Finance activities

Besides lending funds, finance activities also includes activities like: cash management, treasury, hedging and other capital market activities. Financial lease has explicitly been excluded. Given questions that have been raised, trust, accountancy, advisory and other traditional services are not considered financing activities.

B. Holding activities

This definition has been stipulated rather broad, as a consequence of which various operations can be covered by this activity. No restrictions have been proposed with regard to the size or type of shares held, nor with regard to the type of business conducted by the companies in which shares are held. Also call and put options are included. Furthermore, no ‘holding period’ is required. Stock trading should therefore be possible; although depending on the exact facts and circumstances this activity may also qualify as portfolio investment activities.

C. Portfolio investment activities

Portfolio investment activities can be defined as investments that are held for the purpose of generating a regular return on equity and the involvement is limited in conformance with the expected involvement of an unrelated party in relation to such investments.

D. IP Licensing activities

The rights that are included in this description include, amongst others, copyrights, neighboring rights, trade name rights, brand names (word rights, image rights, taste rights, smell rights, shape rights, sound rights), model rights, patent rights, image rights, rights regarding musical compositions and lyrics, photographs, pictures (including advertising), design, fashion design, software, recitals, including music recordings, inventions, plant species, chips, semi conductors, portraits, personal names,  etc.

In case you are contemplating one of the above-mentioned activities, please contact us in case you require in depth information on the requirements, timing and costs involved in your specific situation.

If the A.E.C. will be engaged in other activities then the four abovementioned qualified activities, it will remain tax exempt by opting for tax transparency.