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  • Special Flat Tax Rate of 15% on pension buy off until 12/31/2022

Special Flat Tax Rate of 15% on pension buy off until 12/31/2022

10 November 2022

The Minister of Finance, and Culture, Mrs. Xiomara Ruiz-Maduro, issued a Policy on November 7, 2022 announcing that a 15% special flat tax rate will apply on the buy off of the pension provision built up until December 31, 2022. Redemption of the pension provision as of January 1, 2023 will be subject to the progressive tax rates.


The government has announced having the intention to abolish the self-administered pension plans as per January 1, 2023. In anticipation thereof, and in order to facilitate that pension provisions that are self-administered “disappear” from the balance sheet, the government has approved that pensions, whether or not already taken effect, and pensions accrued with a professional insurer, can be bought off against a 15% special flat tax rate by a written request to the Departamento di Impuesto (DIMP) to apply this special flat tax rate.

The redemption is however only permitted if it is not prohibited by a National Ordinance or a contractual provision.


The conditions of the redemption of the pension provision are as follows:

1. Ultimately December 31, 2022, the lump sum payment must be enjoyed, or the lump sum payment must be at the disposal, of the pension beneficiary.

2. The wage tax (and social security premiums, if applicable) due must be paid to DIMP within 15 days after the month in which the pension buy-off occurred.

3. The pension provision must be calculated on the basis of fiscally acceptable principles (actuarial principles).

a. Salary increases not included in the last filed payroll tax return before November 7, 2022 will be disregarded.

b. Purchase of old years of service (for which no pension was initially accrued) is only allowed if this has already been taken into account in last corporate income tax return submitted at DIMP.

c. The pension provision per year-end 2021, increased with the whole or partial build-up of the pension provision per year-end 2022, can be bought off.

4. The buy off of the pension does not lead – at any moment preceding the buy off – to a release of (in whole or in part) the pension provision.

5. When filing the request for the special flat tax rate of 15% at DIMP, the request needs to be accompanied by the calculation of the pension provision per December 31, 2021, December 31, 2022 and the actuarial purchase value of the pension provision.

Considerations for self-administered pension plans

The decision to buy off a self-administered pension provision will have to be taken in a shareholder’s meeting that should be held prior to December 31, 2022.

The wage tax, and social security premiums if applicable, will have to be paid:

a. Ultimately December 15, 2022 assuming the shareholders decision to buy off the pension provision is taken in November 2022.

b. Ultimately January 15, 2023 assuming the shareholders decision to buy off the pension provision is taken in December 2022.


In the above we have highlighted the possibilities to buy off self-administered pension provisions against a special flat tax rate of 15% if the decision is taken ultimately December 31, 2022. Since a decision to buy off your pension has many aspects, we recommend that you consult with your tax advisor before taking an actual decision. The team of BDO Aruba is at your service to answer any questions you may have or assistance you may require to make the optimal decision for your situation. You can reach BDO Aruba at our office (L.G. Smith Boulevard 26), via telephone +297 5286336 or via e-mail:


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