Aruba Exempt Corporation
Key Features of Aruba Exempt Corporation (AEC)
- Aruba Exempt Companies are regulated under the Commercial Code of Aruba
- Over a period of time most offshore companies in Aruba became structured like the AEC.
- As an offshore company, the Aruba Exempt Company lost its tax exempt status and had to comply to the new tax regime of 2003 in many ways in accordance with the OECD’s policies.
- Despite the foregoing, the Aruba Exempt Company is an effective tool for tax planning and can maintain its tax free status if it engages in ‘qualified’ business activities.
- Qualifying exempt business activities for an exempt company are financing such as lending and cash management, intellectual property licensing for trade name, image, patent and copy rights, holding and portfolio investment activities.
- Only one subscriber needed to incorporate an AEC
- There must be at least one managing director to run the affairs of the AEC
- Third parties must at all times hold a minimum of one share with full voting rights
- A legal representative must be appointed in Aruba to act as agent. Only a company with a trust license may act a legal representative of an AEC
- Special licenses are required for carrying out certain types of businesses
- Liable to taxes based on the type of AEC chosen by the investor
- Exempt from tax for portfolio investment business, intellectual property licensing, financing and holding
- The shareholders of an exempt company are responsible for bearing the company’s tax burden if it is incorporated as a pass-through company (as explained in introductory paragraph)
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