In a landmark ruling, the court determined that civil servants employed in one part of Sint Maarten while residing in another are not eligible for local social insurance coverage.
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In a recent court case dated April 10th, 2024, the court ruled that a resident of the Dutch part of Sint Maarten who is employed as a civil servant in the French part of Sint Maarten is not considered insured for the General Old Age Insurance (in Dutch: ‘Algemene ouderdomsverzekering’, hereinafter referred to as: ‘AOV’), General Widow and Orphan insurance (in Dutch: ‘Algemene weduwen- en wezenverzekering’, hereinafter referred to as: ‘AWW’) and General Insurance for Special Medical Expenses (in Dutch: ‘Algemene verzekering bijzondere ziektekosten’, hereinafter referred to as: ‘AVBZ’), and therefore not subject to the related social insurance premium obligations.
Background
The appellant resides on the Dutch part of Sint Maarten (hereinafter: Sint Maarten) and worked as a civil servant for the ‘Collectivité de Saint-Martin’ on the French part of Sint Maarten (hereinafter referred to as: ‘Saint Martin’) in the calendar years 2017 and 2018. The premiums for the ‘Retraite complémentaire d’un fonctionnaire’ (‘RAFP’) and the ‘Caisse nationale de retraites des agents des collectivités locales’ (‘CNRACL’) have been deducted from his salary in Saint Martin. The taxpayer has been issued assessments for personal income tax and premiums AOV, AWW and AVBZ for the calendar years 2017 and 2018. The taxpayer has filed an objection against these assessments. The dispute revolves around whether these assessments have been correctly imposed and for the appropriate amounts.
The verdict
Premium AOV/AWW
According to the verdict, it needs to be assessed whether the taxpayer is excluded from the circle of insured individuals based on the relevant provisions embedded in the National Ordinance on AOV and the National Ordinance on AWW, and the pertaining National Decrees. A condition for “exclusion” in the provisions, is that the resident must engage in employment outside of Sint Maarten. Subsequently, the interpretation of the term “employment” was analyzed.
The Court clarified that the labor performed by the taxpayer as a government official should be considered equivalent to employment performed under an employment contract.
The National Decree on AOV states that for ‘exclusion’, individuals must be insured for old-age benefits under a legal scheme. The RAFP and CNRACL are such schemes providing old-age pensions to insured individuals, according to the Court. As the individual works in Saint Martin and pays premiums for RAFP and CNRACL, the individual is deemed insured under a relevant legal scheme for old-age benefits. Thus, the individual is not considered insured under the National Ordinance on AOV and is not liable for premiums, as ruled by the Court.
Similarly, the National Decree on AWW specifies that for ‘exclusion’, individuals must be insured under a similar legal scheme for survivor benefits for work done under employment. The Court considers RAFP to be similar to AWW as it also provides survivor benefits. Hence, the individual is not deemed insured under the National Ordinance on AWW and is not liable for premiums, according to the Court’s ruling.2.2 Premium AVBZ
Premium AVBZ
The same principles apply to AVBZ, albeit with slightly different provisions. Not insured under the National Decree on AVBZ is the resident who exclusively performs work outside of Sint Maarten. If the person performs work both in Sint Maarten and abroad, then this person is not insured under the National Decree if the person:
• works in employment outside of Sint Maarten; or
• is not a resident, unless the person is employed in Sint Maarten.
In this case, it was not established that the individual, besides their government job in Saint Martin, had any other employment. Therefore, the individual is not deemed insured for AVBZ purposes, according to the Court. Even if they had additional income from work, it would not necessarily mean that the individual is covered by AVBZ. The Inspector argued that AVBZ is broader than the individual’s health insurance and differs from AVBZ in Sint Maarten. However, the Court noted that the comparability of the individual’s health insurance in Saint Martin with AVBZ coverage is not relevant for determining their AVBZ premium obligation.
Our team of seasoned tax practitioners can assist you with the assessment of your social insurance premium obligations in Sint Maarten (Dutch part). Especially, in case you and/or your employees work on the French part and reside on the Dutch part of Sint Maarten.
Should you have any questions regarding this announcement, please do not hesitate to contact us. Our team would be more than happy to assist you with your questions.
Key Contact
Quincy Lont