KRALENDIJK - A tax case on Bonaire could have major implications for property taxation within the Kingdom. According to the Procurator General at the Supreme Court, tax may have been incorrectly levied on a property held in an American “trust,” a legal arrangement in which assets are managed by a separate entity.
The case concerns a property on Bonaire that was legally placed in what is known as a revocable discretionary trust from the US state of North Carolina. The occupant of the property was simultaneously the founder, trustee, and beneficiary of that trust.
The Tax Authority imposed a property tax of just over $2,700 for 2021 on the trust. According to the tax authorities, the trust was the owner of the property and therefore liable for tax. Both the Court of First Instance and the Joint Court of Justice concurred with this assessment.
The Procurator General now takes a different view. In his opinion, a trust does not constitute a legal entity under Dutch law, and such an arrangement may not be independently subject to taxation at all. As a result, the property should, from a legal standpoint, be attributed to the occupant personally.
This is significant because an exemption from property tax may apply to properties used as a primary residence. In that case, the tax assessment may have been imposed incorrectly.
The opinion could have implications for similar tax cases in the BES islands and potentially also for Dutch rules governing real estate tax.
