Aspects concerning the real estate tax (opinion)

Aspects concerning the ‘vastgoedbelasting’ (real estate tax)     February 2013


The real estate tax, as the name itself implies, is the tax levied on a plot with a house built on it that is not being used as permanent residency by the owner. In the Netherlands the equivalent of this tax is the ‘onroerend zaak belasting’ (ozb).


Real estate tax and ozb are municipality taxes that cover the costs of certain matters in a municipality.


To define the real estate tax, one needs a valuation of the plot and the house. Two years ago pictures were taken (from a car) of all the houses on the island. The valuation has been defined based on these pictures, which is not a valid way of assessing a valuation. To define the real estate tax the valuation needs to be done based on the market value. The officials did not inform themselves about the prices that are being paid when property is sold.

Furthermore some contracts of sale contain restrictive conditions, for example a long lease agreement.


The risk of estimating the value in this manner is that it will be difficult to negotiate about the  valuation.

In the Netherlands there are small organizations that make such arrangements for costumers on the expenses of a municipality.


The average percentage of what has to be paid on the market value of a house in the Netherlands is estimated on 0.1 %.


On the island this was 1% and is reduced to 0.8%. That is still 8x as much as in the Netherlands.


For example, the levy on a plot in the Netherlands that is 200 euro per year, will cost about 1200 USD per year on the island.

(Not 1600 USD due to an exemption of 50,000 USD on the praised value)


To explain this difference, the officials say that one can not compare the real estate tax on the BES-islands with the ozb in the Netherlands due to added components to the tax in the BES.


Because the profit tax has been eliminated something else needed to replace it and more means are needed to cover the largely increased costs of health care.


Before explaining why these items can not be added to the real estate tax one needs to understand that profit tax and health care are national matters. Real estate tax is a matter of a municipality. Therefore these matters can not be combined.


If someone rents out one or more accommodations or uses it in another way for business purposes, then the owner should be charged based on how he benefits. The present real estate tax is not based on how the real estate  is used, but is a fixed amount per year. Therefore a situation of inequality arises.


Business people who do not inhabit their houses and make a profit on them,

will most likely accommodate these houses in a private company or a similar structure. In this way they will have to pay less tax on their merits.


We notice that of two identical plots, the owner that makes much more profit on his plot will obviously benefit more than his neighbor while both pay the same amount of real estate tax.


Pensionados who do not rent out their house while being away will have no benefits from this house. They do have to pay the full real estate tax and therefore have to suffer for the eliminated profit tax of which they do not and did not take part.


It would be fair if all house-owners, who would be considered for real estate tax, would be levied according to the Dutch standards. Furthermore the ones who make profit on the rent of their accommodations should be levied in the regular manner and not through this real estate tax.


Concerning the excessive increased costs of health care, this of course has nothing to do with the real estate tax.


The consequences of the present plans are:


The lessors of accommodations will increase the costs to the tenants.


Owners of a second home who do not rent out their house and do not make a profit on the house, will be disadvantaged. It is unjust that they will have to pay a tax including components that are not applicable to their situation.

Therefore some of them will want to sell their property and others may not continue maintaining their property anymore. These houses will be neglected and their value will decrease. Then the validation will be even more invalid and the island will be spiraling downwards.


The decision to send an assessment to a select group of people instead of everyone at the same time, is a form of legal inequality.


Lastly retroactive levying, back to 01-01-2011, must be an error in procedures since no-one has ever been informed in an earlier stage and was therefore not prepared to this unexpected high expense.


Hopefully the officials who are responsible for the design and execution of the real estate tax will realize the consequences of certain aspects of this tax and reconsider them.


A concerned inhabitant of Statia