As a result of circulating messages in the society -especially regarding the obligation whether or not to file a Profit Tax return - about the Private Fund Foundation (in Dutch: Stichting Particulier Fonds) (hereinafter: PFF), the Tax Administration feels compelled to give some clarification.
A PFF is a special form of the ‘foundation’. There are some important differences that make the PFF interesting for a number of purposes, such as asset protection and investments, and in that respect the PFF is comparable to a trust. The PFF differs from the trust because it is a fully independent legal entity that must be established by notarial deed.
Characteristics of a PFF
The founder has great freedom in the way he or she sets up a PFF.
- Specific and binding instructions can be given to the board, by the founder, regarding the payments made from the assets of the PFF.
- The PFF has no limitations on distributing payments such as the foundation has.
- The PFF must be established by notarial deed made by a civil-law notary on Sint Maarten and must have a director or authorized representative on Sint Maarten.)
Obligation to file Profit Tax return
The PFF can be objectively exempted from Profit Tax. A condition for this exemption is that the PFF does not gain profits by ‘conducting a business’(in Dutch: ‘uitoefenen van een bedrijf’). Subjectively, the PFF is not exempted. This means that the PFF -contrary to what is circulating in society - is definitely required to file a Profit Tax return with the required financial statement/annual report attached to it! The Tax Inspectorate will then establish on the basis of the filed documents (annual accounts and annual report) whether or not the PFF conducts a business, which does not exclusively serve to promote a ‘general public interest’.
The Tax Administration hopes to have given some clarification regarding the PFF, especially regarding the obligation to file a Profit Tax return. However, if you have questions/comments about the content of this press release, please contact the Tax Department via firstname.lastname@example.org