How to Obtain Legal Residency in St. Maarten by Purchasing Real Estate

For most persons who have been smitten by the blue waters and white sands of the Caribbean, the opportunity to own property to enjoy a different pace of everyday life becomes a reality with the assistance of the team at BrightPath Caribbean and BrightFuture Realty.

Purchasing property abroad requires a high level of trust and a team of professionals that can address seamlessly and transparently questions regarding banking and mortgage options, ownership rights and structure, tax, and succession planning matters, as well as immigration topics for legal residency and citizenship in jurisdictions where the latter may be applicable.

Sint Maarten continues to have a high demand for real estate because the island offers real estate options with amazing views, modern construction, and amenities, at prices generally lower than United States, Europe, and Canada.  The gastronomy, nightlife, and access to European and North American products are widespread throughout the island, which is also exempt from duties on imports, making it an attractive destination to relocate.  Many real estate buyers are excited to learn that when they relocate to St. Maarten, they can import all their personal belongings such as furniture, clothing, equipment, and vehicles free of any import duties.

Banking and Mortgages

Clients of BrightPath Caribbean can enjoy direct access to banking services in St. Maarten.  Our firm maintains strong ties within the local banking and business community, allowing our clients who are purchasing real estate with our affiliate BrightFuture Realty, access to business and/or personal bank accounts (if qualified), as well as opportunities for financing of mortgages to purchase your property.  Sint Maarten banks, in general, offer mortgage financing to non-resident buyers for up to sixty-five percent (65%) of the purchase price or appraisal value, whichever is less.  A standard credit report from Experian is typically required, as well as proof of downpayment, and verification of continued income to confirm loan repayment and total debt-to-income ratio.  Legal residency is not a mandatory requirement for mortgage financing, however, obtaining residency may allow you access to mortgage financing with local banks with a smaller downpayment toward your purchase.

Interest rates remain competitive on the island and will vary contingent on economic factors such as the cost of funds.  In general, interest rates available remain accessible and without strong fluctuations due to a comparatively stable cost of funds on the island.  Also important to mention is that banking in United States currency is allowed for residents and businesses alike, which makes banking and mortgage options easier to fund and maintain for foreign nationals who want to invest in real estate in Sint Maarten or altogether relocate to the island.

Tax and succession planning

Our referral partners at Haven SXM specialize in taxation, accounting, and administrative services.

Penshonado regime

If you have reached the age of 50 and you have moved to, or are planning to move to Sint Maarten, you might qualify for the ‘Penshonado Regime’ which features an attractive Income Tax rate on certain qualifying foreign income. If the applicable requirements are met, an advantageous 10% Personal Income Tax rate could apply to most foreign income items.

The most important requirements are:
– the taxpayer must have lived outside of Sint Maarten for a consecutive period of at least 60 months before moving to Sint Maarten.
– the taxpayer has reached the age of 50 at the time of registration in the census registry. BrightPath can assist with the registration process.
– within two months after registration in the population register, the taxpayer has registered with the competent Tax Inspector as a taxpayer who wishes to qualify for the application of the Penshonado regime. Haven SXM can assist with this.
– the taxpayer is living in a home in Sint Maarten within 18 months after being registered in the census registry.
Especially when it comes to registering at the Census, it is important to rely on the integrated services that the team at BrightPath Caribbean offers, to make your transition into the island lifestyle a smooth one.

Private Fund Foundation (PFF)

The PFF is a useful instrument for investing and protecting your capital and/or assets as well as to facilitate estate planning. It may also be interesting to invest your capital in a tax-friendly manner by using a PFF. Investing through a PFF can be advantageous, because of the following reasons:

• Contrary to a regular Foundation, a Private Fund Foundation can make distributions to its founders and/or beneficiaries;
• Income derived by a PFF is in principle exempt from Profit Tax, except when the profit arises from conducting a business;
• The PFF is a safe instrument to keep the family wealth intact for future generations.
• Please note that a single distribution, as well as periodical distributions by a PFF to a Sint Maarten resident individual, shall be subject to Sint Maarten Personal Income Tax. However, if the beneficiaries are non-residents of Sint Maarten, they will not be liable for income tax in Sint Maarten on distributions received from the PFF. However, this income might be subject to taxation in the recipient’s country of residence.

Succession Tax

If assets are inherited, received by legacy, or gifted, a succession (inheritance) tax is in principle due on Sint Maarten according to the current legislation.

To this, we would like to underscore that the PFF is a suitable option for estate planning, as it significantly reduces succession tax. Assets owned by the PFF will not be subject to transfer of ownership in case of inheritance, legacy, or gift. When it comes to distributions to beneficiaries by the PFF, succession tax is due in Sint Maarten based on the current legislation. However, if the beneficiaries reside outside of Sint Maarten, the distributions received from a PFF will not be subject to taxation in Sint Maarten. As said before, please note that such distributions might be subject to tax in the recipient’s country of residence. If a tax resident of Sint Maarten transfers assets to a PFF through inheritance, legacy, or gift, the PFF is subject to a succession (inheritance) tax at a special rate of 25%. However, if assets are received from a non-resident through inheritance, legacy, or gift, the PFF is not subject to Sint Maarten succession (inheritance) tax.

Please note that the above is how it works in theory. Practically, even though the legislation is in place, Sint Maarten does not levy a succession tax.

Other than BrightPath Caribbean, no other firm in Sint Maarten offers such an integrated suite of services, essential to a relocation including immigration, tax, and real estate all in one.  As mentioned earlier, estate planning for foreign nationals who are looking to move to the Caribbean is also a critical factor in the decision-making process.

Immigration and residency permits

As Sint Maarten’s most established immigration services provider, choose BrightPath to provide you with the reliable immigration services you need to obtain legal residency through your real estate purchase.  We recommend that our clients in collaboration with our affiliate BrightFuture Realty, to ensure that matters regarding estate planning, ownership structure, and banking have been addressed beforehand and your real estate transaction is tailored from the onset to meet the goals you have in place toward legal residency and even retirement, estate, and tax planning if applicable.

Schedule your free consultation today to learn more about immigration requirements when purchasing real estate.  Important to consider is the fact that in St Maarten United States citizens and Dutch nationals do not require a real estate purchase on the island to qualify for legal residency.  Because of the Dutch-American Friendship Treaty, the United States and Dutch nationals alike, qualify for permanent residency in Sint Maarten once they can satisfy general criteria based primarily on the following factors conditional to the approval of the local immigration authorities:

• Acceptable health insurance
• Evidence of sufficient funds
• Acceptable certificate of good conduct

For the context of this article, to obtain legal residency through real estate in Sint Maarten, all other nationalities will be required to invest in real estate to apply for residency.  With BrightPath, retirees can apply for legal residency before making their real estate purchase.

All things considered, when making such an important decision as investing in real estate and obtaining legal residency in Sint Maarten, relying on a team or professionals all under one roof is available only with BrightPath Caribbean.

FAQ’s

1. Can I obtain a mortgage as a non-resident to purchase real estate in St. Maarten? Yes, non-resident buyers in St. Maarten can typically access mortgage financing for up to 65% of the property’s purchase price or appraisal value, whichever is lower. While legal residency is not mandatory for mortgage financing, obtaining residency may allow access to mortgages with a smaller downpayment.
2. What are the benefits associated with the ‘Penshonado Regime’ in St. Maarten? The ‘Penshonado Regime’ or Retiree Status offers an attractive 10% Personal Income Tax rate on qualifying foreign income for individuals aged 50 and above who meet specific criteria, including residing outside St. Maarten for at least 60 consecutive months before relocation. The regime requires registration with the Tax Inspector within two months of census registry registration and living in St. Maarten within 18 months thereafter.
3. How can a Private Fund Foundation (PFF) in St. Maarten benefit estate planning and asset protection? A Private Fund Foundation (PFF) provides avenues for capital investment and asset protection, facilitating estate planning in a tax-friendly manner. Benefits include exemption from Profit Tax on income (except business-related profits) and the ability to distribute funds to founders/beneficiaries. Moreover, assets owned by a PFF are not subject to transfer of ownership taxation upon inheritance, legacy, or gifting, potentially reducing succession tax liabilities.

Contact us today for a free consultation and let us guide you throughout the process!