THE NETHERLANDS ANTILLES FREQUENTLY HAS BEEN USED AS THE COUNTRY OF INCORPORATION OF AN OFFSHORE FINANCE SUBSIDIARY. IN ADDITION TO THE ANTILLES CORPORATION'S AVOIDING THE REQUIREMENT OF WITHHOLDING UNDER THE UNITED STATES FEDERAL TAX LAWS, A TAX TREATY BETWEEN THE NETHERLANDS AND THE UNITED STATES.

 

The NETHERLANDS ANTILLES frequently has been used as the country of incorporation of an offshore finance subsidiary. In addition to THE ANTILLES CORPORATION'S avoiding the requirement of withholding under the United States federal tax laws, a TAX TREATY between the NETHERLANDS and the United States eliminates the 30% United States withholding tax on United States Corporate interest received by an ANTILLES CORPORATION, provided the interest income is not "effectively connected" with a United States "permanent establishment." Income Tax Convention, Apr. 29, 1948, United States-NETHERLANDS, art. VIII(1), (2), reprinted in 2 Tax Treaties (CCH) ¶ 5812. The United States corporation thus can pay interest to an ANTILLES CORPORATION on money loaned to it by the ANTILLES CORPORATION without withholding any federal income taxes. Moreover, the ANTILLES government does NOT impose any withholding tax on interest paid by AN ANTILLES CORPORATION to its foreign bondholders, and does not impose an estate or inheritance tax on nonresidents with respect to the debt obligations of an

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