NewLeaf Notary Aruba

1. Taxable Income for Non-Residents

If you live outside Aruba but own property here, you are subject to Aruban income tax on any income earned from that property.
This includes all net proceeds from Aruban real estate and any rights attached to the property.
In simple terms: if you earn rental income or profits from real estate in Aruba, that income is taxable in Aruba.

2 Registration Requirements

Non-resident property owners must register as foreign taxpayers with the Departamento di Impuesto (Aruban Tax Department).

If the property is rented out, you must also register for:

• BBO/BAVP/BAZV (Business Turnover Taxes)
• Tourist Levy (TH)
• Special Stay Levy (BBV)

Registration can be completed through the Bo Impuesto online tax portal, where you can also file returns and authorize a local advisor or property manager to handle payments on your behalf.

Entrepreneurial Status under BBO/BAVP/BAZV

If you rent out your property regularly to generate income, you are considered an entrepreneur under Aruban tax law.

• Short-term rentals (for example, Airbnb or vacation rentals) require registration for Tourist Levy (TH) and Special Stay Levy (BBV).
• Long-term rentals (to residents using the property as their main home) are exempt from these levies, but filing obligations remain.

4. Filing Tax Returns

If you become subject to tax but do not receive a tax return form within six months, you must request one from the Tax Inspector within 15 days after that period.
The responsibility to act rests with the taxpayer.

If the Tax Inspector independently determines that you have a tax obligation, they may issue a tax form or impose an assessment directly.

5. Short-Term and Long-Term Rentals

• Short-term rentals: Exempt from BBO/BAVP/BAZV when the Tourist Levy applies. However, the income must still be reported on the return.
• Long-term rentals: Also exempt from BBO/BAVP/BAZV when the tenant uses the property as their main residence — but the filing obligation remains.
• Rentals to companies: BBO/BAVP/BAZV does apply.

6. Deductible and Non-Deductible Expenses

For income tax purposes, taxable income = proceeds minus costs.
However, some expenses can’t be deducted immediately:

• Furniture and appliances (beds, sofas, TVs, washing machines, etc.) must be depreciated over several years.
• Real estate purchase price cannot be depreciated.
• Mortgage interest, property tax, and long-lease payments are deductible.
• If the property is also used for private purposes, only a portion of the expenses can be deducted.

Always retain all invoices and receipts related to income and expenses for verification.

7. Income Tax Exemption Threshold (2025)

As of 2025, no income tax is due if the taxable income is below AWG 63,904.00
(approximately sixty-three thousand nine hundred four Aruban florins).

8. Share Transfers by Non-Residents

If a non-resident sells shares in an Aruba-incorporated company, a 25% income tax applies on the gain realized.

Different rules may apply for residents of the Dutch Kingdom who have held the shares for more than five years.

If the company qualifies as a real estate company (meaning most of its assets are Aruban property), property transfer tax is due by the buyer.
If the transfer is not executed by notarial deed, the seller must notify the Tax Inspector within two weeks — failure to do so can result in fines.

9. Tax Obligations for Foreign Legal Entities

When a foreign legal entity (such as a company established outside Aruba) acquires real estate in Aruba, this automatically creates a tax obligation in Aruba.
The entity must register with the Departamento di Impuesto for the relevant taxes.

The same BBO/BAVP/BAZV, Tourist Levy, and BBV rules apply to foreign companies as to individual non-residents.

Depreciation and Capital Gains

Foreign legal entities may depreciate Aruban real estate under specific rules.
Any capital gain on the sale of Aruban real estate is taxable.
Foreign entities must also maintain proper accounting records and prepare annual financial statements.

10. Share Transfers Involving Foreign Legal Entities

(a) Shares in an Aruba-Incorporated Real Estate Company

If a foreign company sells shares in an Aruba-incorporated real estate company,

• Property transfer tax is due on the sales price,
• But no Aruban income tax applies to the seller’s capital gain.

(b) Shares in a Foreign Real Estate Company

If the shares are in a foreign real estate company (as defined in the Property Tax Ordinance), property transfer tax is also payable on the sale price.
Again, the capital gain realized is not subject to income tax in Aruba.

11. Economic Ownership and UBO Structures

Background

Before 2023, it was common for foreign companies to buy real estate in Aruba and then transfer economic ownership to the Ultimate Beneficial Owner (UBO) by private deed.
This practice often concealed the true ownership of the property. Following legal reforms in 2023, when such properties or shares are sold, it is now recommended to transfer both legal and economic ownership together to avoid double taxation.

12. Avoiding Double Property Transfer Tax

If the economic ownership is first transferred back to the foreign company and then the shares are sold, this can result in double property transfer tax.

To prevent this, both legal title and economic ownership should be transferred directly to the purchaser.

When both transfers occur within 12 months to the same buyer, the taxable base is reduced by the value on which property transfer tax has already been paid.

If the seller is an individual (not a company), typically no income tax is due on the gain.

In Summary

Owning property in Aruba as a non-resident or foreign company involves specific tax obligations, but with proper registration and planning, compliance is straightforward.

Disclaimer: NewLeaf Notary is not a tax advisor. This information was prepared with input from a local tax professional and is provided for general understanding only. We recommend consulting an Aruban tax advisor for personalized advice.

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