Owners who rent new lodging license needed

[robin]

Today we received an email for the condo complex manager about needing a lodging license.

"Dear Owners
The Government of Aruba introduces lodging license as per July 1^st 2018. This license is mandatory and as soon as possible all the owners that rent their units needs this license that involve payment of taxes to the government. Attach I’m sending you a brochure received from the Accounting company CACT-HCC who can help you with this procedure but feel free to use any company of your preference."

I tried to upload the brochure but the PDF is too big and was not allowed. I can send it to you if you message me with your email.

[Aruba4ever]

I did not even think about taxes due to the government of Aruba if you rented your unit.

[robin]

It used to be that just hotel and resorts had to collect taxes, but now it is condos and homes, etc.

I did not even think about taxes due to the government of Aruba if you rented your unit.

[Andrea J.]

is it your responsibility to pay the tax robin or your management company?
do your renters currently pay a tax?

[robin]

Andrea, Up until now they(our management company) collected the tax and paid the taxes for all their properties in one lump payment. Now the government wants everything done individually and we will have to pay for the management company to handle this for us. It is an additional fee because of the paperwork involved. Here is the email hubby received earlier today-I guess they forgot to include me. I don't think the "pink highlights" came through in pink.

Dear Property Owner,

Your urgent attention is required in the matter below. As a result of my recent meetings held with our tax & accounting consultants of Grant Thornton (= ex PricewaterhouseCoopers in Aruba) and the Tax Department, I hereby would like to inform you concerning the recent enactment of an amendment to the law that governs the taxes associated with vacation rental properties.

Vacation rental properties such as those managed by us for property owners at PalmAruba, Le Vent, Oceania, Oasis, Gold Coast, Palma Real, Tierra del Sol, The Residences at Divi or – generally speaking – all individually owned condos and homes, are defined in the enacted amendment of the local law (in Dutch: ‘Vergunningsverordening’) as ‘Accommodaties’ or Accommodations, to distinguish those from hotels and timeshare locations.

The amendment to the tourist tax law (in Aruba: the ‘vergunningsverordening’ is also referred to as ‘toeristenheffing’) that was approved by Parliament in 2016, has recently been made effective (=enacted) as of July 1, 2018 by state decree. For your convenience, I send you attached a ‘newsflash’ from Grant Thornton, in which I have highlighted in pink color the paragraphs that are applicable for vacation rental property owners.

Conclusion:

1. As of July 1, 2018, each property owner must apply for a permit, whether it is a lodge permit or a hotel permit, in order to be able to rent the property out to tourists. Lodge permits are required for accommodations with a capacity of 1 to 9 persons; hotel permits are required for accommodations with a capacity of 10 or more persons. Note: as this is an amendment to an existing old law, the permit for hotel automatically includes a liquor license. This permit application must be directed to both the minister of Tourism AND the Minister of Public Health. Luckily, in the current government, both ministerial responsibilities are under the same person, namely Minister Mr. D. Oduber.
2. On Thursday, August 16, 2018, together with two consultants of Grant Thornton I held a meeting with a high official of the Tax Department (Mr. Ronald van Holland). During this meeting, Mr. van Holland explained to us the consequential owner obligations and the procedures for submission of forms and payments of retained taxes, resulting from the recent enactment of the amendment to the law.
3. The joint monthly submission of one form by Prestige Realty N.V for all property owners and payment to the government of all withheld rental-related taxes (lodge tax, environmental levy), under our own company’s tax ID number (‘persoonsnummer’) is no longer permitted as of the 1^st of July 2018 onward. For your information, until July 1, 2018, Prestige has been submitting and paying the withheld environmental levies to the government on a monthly basis jointly under the single tax ID number of Prestige.
4. Further, as of July 1, 2018, each property owner must also register him/herself at the Tax Department as a provider of accommodation to tourists. Only then the Tax Department will generate and send to that owner on a yearly basis, the 12 monthly preprinted submission forms for the environmental levy and tourist tax, on that owner’s local tax ID number. Note: Please know that once you own a property in Aruba, you automatically obtain a local tax ID number. If you do not know your tax ID number, you can ask for it at the Tax Department.
5. The environmental levy ($ 3 per night) and tourist tax (9.5%) are always charged to the guest besides the rental rate and as such are not an extra cost to the owner. However, the monthly submission of the forms and payment of the withheld tax amounts are now an obligation of each owner. As per indication of Mr. van Holland at the Tax Department, Prestige under its own tax ID may not or should not assume the tax obligations and responsibilities pertaining to the property owners, as by doing so it will complicate the tax inspection/control and may cause confusion or legal conflicts in case of any non-compliance or in case of a change of rental agency.

Based on the above:

1. Prestige hereby informs you, as you are an owner who has his/her rental property listed with us, that we will assist you (free of charge) with the obtaining of your required lodge or hotel permit and with the registering of your accommodation at the Tax Department. Our tax consultants have already been in contact with the Minister on our behalf, and are awaiting a response from the office of the Minister so that we can start the process of requesting the lodge or hotel permit on your behalf.
2. As an owner, if you so choose, you can grant Prestige a Power of Attorney that has been specifically compiled for this purpose, so that we can submit your monthly environmental levy and tourist tax forms and make ALL thereto related payments to the Tax Department on a monthly basis on your behalf. Note: this monthly payment must then include the taxes charged and withheld on bookings made by you as the owner too, if any. If you choose for this option, please know that a small monthly processing fee of $15 will be assessed to each owner who wants this extra service to be executed by Prestige.
3. As an owner, you may also choose to do the monthly submission of the forms and make the payments to the Tax Department (by the 15^th of each month) yourself. If you choose for this option, Prestige will simply transfer on a monthly basis the levies and taxes charged and withheld by us on your bookings, to the bank account indicated in your listing agreement with us.

As this new strict procedure has been made applicable as per July 1, 2018, please let our executive administrator Ms. Maria Henriquez (maria@prestigerealtyaruba.com) know which of the above options (b or c) you would prefer. We will then proceed accordingly with the disbursements of your bookings to you, retroactively from July 2018 onward. In case you would like to choose option b, attached we send you the drafted Power of Attorney in English or Spanish for your review and approval signature, which we need to receive the latest by September 12, 2018. Note: If by this date we do not receive any response or the signed Power of Attorney from you, we will assume that you have chosen for the above option c.

For all withheld taxes of the past, thus for reservations of guests who stayed in your unit before July 1, 2018, we are awaiting a ruling or confirmation from the Tax Department so that we can maintain the (already submitted) forms and payments under the single tax ID number of Prestige. The Tax Department has indicated that even if they do approve to keep the forms and payments of the past as is, we may still have to send an addendum for each of the previously submitted forms and paid amounts, that would specify the corresponding unit numbers, owner’s tax ID numbers and rental amounts associated with each submitted form and payment.

I trust to have informed you accordingly. Please let me know if you have any questions on the above. Feel free to contact me by phone or email; I remain at your service as I await your reply with choice of option at your earliest convenience.

[Andrea J.]

a while back.......maybe a year or 2, one of our forum members was taking about the "inconveniences and other issues" about having to pay taxes to the gvmt.
this forum member owns 2 places that are rented out lots.

at least your management company is handling the whole thing (or so it seems)
is the bottom line is it hits your bottom line more?

[robin]

a while back.......maybe a year or 2, one of our forum members was taking about the "inconveniences and other issues" about having to pay taxes to the gvmt.
this forum member owns 2 places that are rented out lots.

at least your management company is handling the whole thing (or so it seems)
is the bottom line is it hits your bottom line more?

I think they are charging $15.00 a month to handle it for us. It would cost more to have an account and do it ourselves.

[CK1]

This reminds me of Rona's article from February 2016: "Investigating the Alternative Accommodations" ... and the loss of taxes for the government. It seems the government has caught up with it.

Here is the link where we discussed it back then:

Rona's thoughts "Alternative Accommodations"

[schexc]

Our management company collects the appropriate taxes from out tenants and pays the government accordingly. There are different taxes colllected depended on the residency of the tenant. The fee is included in the commission percentage. We do not pay anything additional.

[robin]

Our management company collects the appropriate taxes from out tenants and pays the government accordingly. There are different taxes colllected depended on the residency of the tenant. The fee is included in the commission percentage. We do not pay anything additional.

Since the management company now has to submit the tax separately for each individual unit, they are charging everyone $15.00 a month do the additional paperwork.