4. Individuals. — Regardless of their nationality, individuals are subject to the income tax on their total income if they reside in N.E.I. If non-resident, they are taxable only on income from specified sources (see paragraph 9). Individuals who are normally resident in N.E.I., but go abroad temporarily, remain taxable as residents unless they stay abroad more than one year, in which case their liability is restricted to that of non-residents.

5. An individual is generally regarded as being resident in N.E.I., for the purposes of the income tax, if he lives in the country, or intends to live there for an indefinite period, whether in a rented house, a hotel, or any other dwelling-place, the liability extending from the beginning of this period. If an individual enters N.E.I. temporarily, and remains taxable as a resident in his own country, he will not be taxable in N.E.I. as a resident unless his stay lasts for more than one year, the liability to taxation as a resident beginning with the second year. The term “non-resident” refers to a person who does not fulfil this requirement. A non-resident does not incur any liability in respect of income from a trade, profession or employment which is exercised in N.E.I. for less than three months; but, if he is engaged in such activities for more than three months, he is taxable on the income derived from the beginning of that period. The circumstances of the numerous individuals who make short trips to N.E.I. on behalf of foreign enterprises are so varied, that the application of the principles just stated depends largely on the facts of each particular case.

6. Partnerships. — If resident in N.E.I., a partnership is not ordinarily taxed itself, but its members are assessed on their respective shares of its income. Thus, if a member is an individual or another partnership, the distributive share will be included in the assessment to the income tax or, if a company, in the assessment to the company tax. However, if one or more of the members of a resident partnership are unknown, or if their distributive share of its income is uncertain, the authorities may tax the partnership instead of its members. A non-resident partnership is subject, as a partnership, to the income tax in respect of income from specified sources (see paragraph 9). The tax may be assessed, however, on each partner of the non-resident partnership if he chooses to declare his share of its income from the indicated sources.

7. For the purposes of this report, a partnership is regarded as being resident in the country where it is organised, or where it has its real centre of management, if the latter is in a different country. In fact, except for partnerships organised by citizens of the Netherlands, most partnerships composed of nationals of other countries are organised and registered in N.E.I., and therefore come within the term “resident partnerships”.


8. In general, income of resident individuals or partners includes the total net amount of what is derived in money, valuables or kind from the following sources, whether situated abroad or in N.E.I.:

9. The taxable income of non-resident individuals or partnerships includes income from one or more of the following categories derived from local sources — i.e., sources in the N.E.I.:

10. A non-resident is not taxable on foreign income. A non-resident partner is taxable only on his share of the income of the resident partnership which is derived in N.E.I., provided the partnership gives satisfactory information in regard to its partners, the sources of its income and the basis of its distribution.

11. The categories of income referred to in paragraphs 8 and 9 are defined more fully below:


(a) Computation of Taxable Income and Deductions

12. The tax is assessed on the basis of a return which includes income of all categories. All individual taxpayers whose gross income exceeds 1,200 florins must file, before April 1st of each year, either personally or, if they do not reside in N.E.I., through a representative, a return of their income. This return must be made whether or not a form has been received from the authorities. As a general rule, the tax-year, or year for which tax is paid, is the current calendar year, but the basis of assessment is the income derived during the preceding year from the sources existing on January 1st of the tax-year. By way of exception, salaries are assessed on an amount estimated on the basis of the salary received at the beginning of the tax-year; further, in the case of income from a profession or trade, the accounting year of the taxpayer, if it overlaps the calendar year by its first half or more, is taken instead of the calendar year.

13. Allowable Deductions. — The following are deductible: cost of repairs and of maintenance in their original state of property exclusively used in the taxpayer’s profession or trade, and also depreciation of those objects, so far as such depreciation is consistent with the efficient management of the business; expenses for wages, gratuities, etc., freights, insurance premiums, store rent, interest on mortgages, debts of whatever nature (including interest paid to bankers on money borrowed for the purchase of securities), and, in general, all disbursements required to obtain the income or to carry on the profession or trade. Foreign taxes paid abroad on foreign income, ground tax and other charges due by the taxpayer in accordance with legal ordinances and local custom are also deductible. A business loss for a fiscal year may be deducted from the profit made during the following two years, starting with the first of these years. Losses suffered in one category of income are deductible from income in all the other categories. Other deductions are: periodical payments, alimonies or other payments due under a legal obligation, premiums on life insurance not exceeding 5 per cent of income and subject to a maximum of 800 florins.

14. Non-allowable Deductions. — The following are not deductible: household expenses of the taxpayer and of his family, personal taxes of whatever kind, the part of the income invested as capital or laid up as reserves, disbursements for purchasing, founding or improving grounds, buildings, etc., disbursements for taking over, buying or extending a profession or trade (capital expenses), interest on the taxpayer’s capital invested in his trade or profession.

15. Abatements. — No allowances are given in respect of minimum of existence, marital status, or dependents, other than ascendants or descendants. An allowance is given for each of such dependents, the amount of which varies with the income of the taxpayer.

(b) Computation of Tax and Deductions

16. The tax is levied, on the whole of the net taxable income computed as described above, at progressive rates (see Annex).

17. Abatement of tax is granted to a resident if he dies or leaves N.E.I., and to a non-resident if he ceases to derive income from one of the sources mentioned in paragraph 9. Abatement is also granted to residents, but not to non-residents, in case of suspension of a trade or a profession, or discharge from an office, or other exceptional circumstances, if evidence is given that, through these circumstances, the taxed net income differs more than one-quarter from the amount the taxpayer really earned during the tax-year.

18. In order to prevent double taxation, a resident taxpayer who also pays tax in the Netherlands, Surinam or Curaçao, may deduct from his N.E.I. tax on total income the amount of tax which would be due on the part of his income derived from those countries. The Governor-General is authorised to issue ordinances in consonance with provisions in the legislation of other countries, effecting total or partial relief from double taxation, on condition of reciprocity (Netherlands Law of June 14th, 1930, Official Gazette, No. 244, published in N.E.I. Official Gazette 1930, No. 310). Non-resident individuals and partnerships are not taxable on profits derived from shipping between ports in N.E.I. and abroad (Income-Tax Ordinance, 1932, effective January 1st, 1933).


19. There is no withholding of tax at source, the only method of taxation being direct assessment against the taxpayer or his representative in N.E.I. A resident pays the tax, after receiving his notice of assessment in as many instalments as the number of months in the calendar year which have not yet elapsed; and in five instalments if the notice is received after July 31st. Non-residents pay tax before the 15th day of the third month after the month in which the notice has been received. The Treasury has, to a certain extent, a preferential claim on the property of a taxpayer.


20. The local inspector of finance examines the return of the taxpayer, computes the assessment, enters it in a register, and notifies the taxpayer. The latter can ask the inspector for a revision of the assessment, and, if necessary, he may carry his objections to the Court of Tax Appeals.

21. Penalties. — Failure to make a return, the filing of a false return and the refusal to supply requested information are subject to heavy penalties. If information obtained subsequently to the original assessment shows that it was too low, an additional assessment may be made within three years after the beginning of the tax-year to which the assessment relates, and the additional tax will be increased by 200 per cent.