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13.5. Other Anti-Avoidance Rules

Economic Substance Requirements

Effective 9 April 2019, Aruba has introduced the economic substance requirements to align with OECD and EU standards on transparent entities. The Regulation provides new conditions for a company to be treated as transparent, including that the real economic presence conditions, as prescribed, are required to be met if engaged in relevant activities.

The regulation provides that if a transparent entity is engaged in one or more of the following relevant activities, the related core revenue-generating activities must take place in or from Aruba:

  • Head office activities;
  • Distribution and other service activities;
  • Financing activities and leasing activities;
  • Asset management activities;
  • Banking activities;
  • Insurance activities;
  • Shipping activities;
  • Pure holding company activities; and
  • Intellectual property activities.

A transparent company is considered to have a real economic presence in Aruba if the company:

  • has adequate tangible assets in Aruba;
  • has an adequate number of full-time qualified employees directly or indirectly employed locally, which is appropriate to the nature and scope of the company's activities; and
  • has an adequate minimum amount of annually recurring local operating costs, which is appropriate to the nature and scope of the company's activities.

A transparent company may also be considered to meet the above requirements if the relevant activities are carried out by another body established in Aruba, provided that the transparent company actively manages and controls that body.

For newly incorporated companies in Aruba, the requirements are applicable as of 1 January 2019. For existing fiscally transparent entities, the economic substance requirements apply effective from 1 January 2022.