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Hiring in Aruba
Aruba is an Island country and a constituent country of the Kingdom of Netherlands, whereby it is located in the Caribbean Sea. The four major sectors that make significant contributions to the GDP are tourism, aloe exports, petroleum refining and offshore banking. Aruba mainly trades with Colombia, the United States, Venezuela and Netherlands. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Aruba’s legal and tax regulations. Employment regulations including probation period, holidays and termination are postulated by Aruba’s Labor Legislation. Labor code states that employees are entitled to a one-month notice period after five years of service. Aruba residents are taxed on their worldwide income. Nonresidents are taxed only on Aruba source income. Thus, Global PEO’s or EOR facilitate companies by ensuring compliance with the aforementioned labor code and tax laws.
statutory labor requirements
Probation Period
- This trial period must be agreed to in writing and may not exceed two months; any stipulation to the contrary is null and void.
Annual Leave
- Every employee is entitled to an amount of vacation days equal to at least three times the contracted number of working days per week with the understanding that an employee who works six days a week is entitled to at least fifteen vacation days per year.
Public Holidays
- New Year's Day (1st January)
- G.F Betico Croes Day (25th January)
- Carnival (24th February)
- National Anthem & Flag Day (18th March)
- Good Friday (10th April)
- Easter Monday (13th April)
- Ascension Day (21st May)
- Christmas Day (25th December)
- Boxing Day (26th December)
Maternity Leave
- An employee is entitled to payment of 100% of her salary when she is on pregnancy- and maternity leave.
- The pregnancy leave can be two to six weeks before the estimated due date and the maternity leave can be eight to twelve weeks as of the date the employee gave birth.
- The total amount of time on leave (pregnancy leave and maternity leave combined) must in all events be at least fourteen weeks.
Paternity Leave
- There is no paternity leave
Sick Leave
- In the event an employee is unable to perform his/her labor due to sickness (that is not intentionally caused by the employee), the employer is obligated to continue payment of (100% of) the employee’s salary during a relative short period of time (unless otherwise stipulated in the labor agreement).
Work Hours
- For regular workers the maximum working hours per week is 45 hours provided the employee does not work more than eight hours a day.
- If the workweek consists of five days or less, the employee should not work more than 8½ hours a day.
Overtime
- In the event the employer requires its employees to work overtime, an overtime permit has to be obtained.
- After obtaining the permit an employee is allowed to work longer hours, in which event the employer is obliged to pay the employee overtime.
- The overtime percentages to be paid are as follows:
- after working hours: 150% (working hours are: the regular working hours of the employee during that day);
- during the employee’s break: 150%;
- during the half day of rest: 150% (after January 1, 2014: 175%);
- during the full day of rest: 200%;
- during a public holiday or a remembrance day: 200% (after January 1, 2014: 250%);
Notice Period
- The mandatory notice period to be taken into by an employer is:
- In case of an employment of less than five years: one month
- In case the employee has been employed more than five but less than ten years: two months
- In case the employment has lasted longer than ten years but less than fifteen years: three months
- In case the employment has lasted more than fifteen years: four months.
Severance
- Employees will receive: -
- 1 week pay per each year between two and 10 years of service
- 1.5 week pay per each year between 11 and 20 years of service
- 2 weeks' pay for each year of services above 20 years.
13th / 14th Month Pay
- No
- There is no evidence that there is a requirement to pay the 13th or the 14th month.
- Instead the only holiday bonus is given to unemployed people or pensioners.
income tax
- Aruba residents are taxed on their worldwide income
- Nonresidents are taxed only on Aruba source income
- Income is taxed under a scheduler system
- Employment income, the results derived from conducting a sole proprietorship, and revenue from immovable and moveable property are, in principle, considered taxable income
|
Taxable Income |
Rate |
|
AWG 27,751 - 61,338 |
14% |
|
AWG 61,339 – 91,120 |
25% |
|
AWG 91,121 – 169,534 |
42% |
|
Over 169,534 |
52% |
deductible expenses
- Subject to certain restrictions, deductions are granted for medical expenses and insurance, retirement annuities, mortgage interest etc.
- Personal allowances are available to taxpayers and their spouses, children, and other dependents
- Special allowances are available under the expatriate regime and fringe benefits policy
|
Deductible Expenses |
|
immigration
- A work- and residence permit to work in Aruba on a paid basis requires a labor market review.
- It is required that you work for only one Aruban employer in a specified job title.
- You must apply for this labor market test at the DPL.
- After receiving a statement from DPL, you can apply to DIMAS for your residence permit application.
- DIMAS then tests your admission requirements.
- There is no need for labor market testing for resident domestic staff.
- There are still more cases where you are entitled to exemption, and no labor market testing is required.
- Individuals should check with the DPL to determine whether they are eligible for exemption.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
Maximum 180 days |
|
|
Work Permit |
|
1 year |
|
value added tax
- Turnover tax is levied on the sale of goods and the provision of services
- The standard turnover tax rate is 1.5%
- Exemptions are available
|
Turnover Tax |
|
|
Standard Rate |
1.5% |
withholding tax
Dividends
- A 0%, 5%, or 10% withholding tax may be levied on dividends paid to nonresident companies, although exemptions are available
Interest
- Aruba does not levy withholding tax on interest
Royalties
- Aruba does not levy withholding tax on royalties
Fees for Technical Services
- Aruba does not levy withholding tax on technical service fees
|
WHT |
|
|
Dividends |
0%/5%10% |
|
Interest |
0% |
|
Royalties |
0% |
|
Technical Service Fees |
0% |
termination
Generally, an employment contract can be terminated in the following ways:
- Termination by giving notice, in which event the prior approval from the Director of the Department of Labor and Research (Directie Arbeid en Onderzoek) has to be obtained pursuant to the Ordinance on Termination of Employment Agreements
- Without such consent any termination by giving notice will be considered null and void;
- Termination by mutual consent
- Dissolution of the employment agreement by the Court of First Instance of Aruba;
- Immediate termination of the employment agreement, which is only allowed if there is an urgent reason, justifying an immediate termination. Such urgent reason and the immediate termination would immediately have to be informed to the employee.
- The mandatory notice period to be taken into by an employer is:
- In case of an employment of less than five years: one month
- In case the employee has been employed more than five but less than ten years: two months
- In case the employment has lasted longer than ten years but less than fifteen years: three months
- In case the employment has lasted more than fifteen years: four months.
- Employees will receive:
- 1 week pay per each year between two and 10 years of service
- 1.5 week pay per each year between 11 and 20 years of service
- 2 weeks' pay for each year of services above 20 years.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The deadline for filing the income tax return is within two months after receiving the invitation for filing the tax return.
- If no invitation has been received from the Tax Inspector within 6 months after the calendar year, the taxpayer has the obligation to request for the issuance of the tax return within 15 days after this period (ultimately by July 15).
- In principle the calendar year end, unless the tax payer requests a different tax year.
- Resident taxpayers have to file an income tax return based on their worldwide income.
- Non-resident taxpayers need to file an income tax return for certain Aruba source income (e.g. income related to real estate in Aruba, income generated through employment in Aruba, etc.)
- Joint filing is permitted
employee accruals
| Christmas Bonus% | 0% |
| Christmas Bonus Over Vacations % | 0% |
| Severance per Year % | Employees will receive: - • 1 week pay per each year between two and 10 years of service (1.917% of annual salary) • 1.5 week pay per each year between 11 and 20 years of service (3.25% of annual salary) • 2 weeks' pay for each year of services above 20 years (3.83% of annual salary) Based on one year employment |
| Vacations % | Employees are entitled to 15 days of annual leave given that they work 6 days a week (4.12% of annual leave) |
| Notice % | Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 14.37% |
employer accruals
Additional information (Country Accruals)
| Pension | 6.00% |
| Social Security | 8.90% |
| Additional Pension | 10.50% |
| Accident Insurance | 2.50% |
| Sickness Insurance | 2.65% |
| Social Insurance | 10.00% |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | An employee who works six days a week is entitled to at least fifteen vacation days per year. | This equals 4.1% (15/365 days) of annual income |
| Maternity Leave | An employee is entitled to 14 weeks of paid annual leave | This equals 3.8% (14/365 days) of annual income |
| Sick Leave | In the event an employee is unable to perform his/her labor due to sickness (that is not intentionally caused by the employee), the employer is obligated to continue payment of (100% of) the employee’s salary during a relative short period of time (unless otherwise stipulated in the labor agreement). | Subjective |
| Overtime | Overtime is paid at 50% more than the normal hourly rate. Overtime limit is 60 hours a month. | Normal hourly rate is around 14.125 AWG. Overtime is paid at an additional 7.06 AWG. |
| Severance | Employees will receive: - • 1 week pay per each year between two and 10 years of service • 1.5 week pay per each year between 11 and 20 years of service • 2 weeks' pay for each year of services above 20 years. |
This equals 1.92% (1/52 weeks) of annual income |
| Social Security | Employers must make the following contributions: - 1. Old age pension and widow & orphans pension insurance (10.5%) 2.General health insurance (8.9%) 3. Sickness insurance (2.6%) 4. Accident insurance (0.25% to 2.5%) 5. Cessantia (AWG 40 per employee) |
This equals 24.5% of annual income plus AWG 40 per employee (depends on the number of employees) |
