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- By Wei Landgraf
Penshonado Program Sint Maarten: 10% Tax for Retirees Over 50 (2026)
The Penshonado is the single most underrated reason Americans and Canadians end up retiring in Sint Maarten instead of Florida or Nova Scotia. It’s a special tax regime for residents 50 and older with foreign-sourced income, and it can drop your effective Sint Maarten tax rate on that income to roughly 10%.
I help North American buyers structure their move to SXM. Let me walk you through the actual program. Not the brochure version.
Key Takeaways
- Tax rate: approximately 10% on qualifying foreign income (some clients elect a fixed taxable base of NAF 500,000 instead).
- Age: 50 or older at the moment of registration.
- Prior residency rule: you must have lived outside Sint Maarten for at least 60 consecutive months before applying.
- Property requirement: acquire a property valued at minimum NAF 450,000 (~USD 250,000) within 18 months of registration, for personal use only.
- Filing deadline: register with the SXM tax authority within 2 months of registering with the population registry.
- What it does NOT do: eliminate your US or Canadian home-country tax obligations.
What is the Penshonado, exactly?
The word comes from Papiamento and the older Dutch-Caribbean tradition of attracting retirees to the islands by offering a clean, predictable tax box. Aruba and Curaçao have similar regimes. Sint Maarten’s version is administered through the local tax authority and applies to the year you register and onward.
Mechanically, you opt into a special tax box for your “qualifying foreign income.” That box is taxed at a reduced rate. Broadly cited at 10%. Instead of the regular progressive scale that maxes out around 47.5% on top earners.
Who actually qualifies
You qualify if you can check all of these:
- Age 50+ at the moment of your registration.
- Lived outside Sint Maarten for the prior 60 consecutive months. Most North Americans easily clear this. You’ve never lived here. The rule prevents people who’ve been here as residents from “resetting” themselves into the Penshonado box.
- Register with the population registry (Civil Registry) of Sint Maarten. This happens at the Census Office in Philipsburg as part of your residency permit process.
- Register with the Tax Authority within 2 months of the population registry date. Miss this and you can lose the regime for that year. You may have to wait until the next tax year to opt in.
- Acquire qualifying real estate valued at minimum NAF 450,000 (~USD 250,000) within 18 months of registration. The property must be for personal use, not a pure rental investment.
If you’re 49 and want this rate, wait. The age rule is firm.
The two tax election choices
Most clients pick the first. The second is for very high earners.
Election 1: ~10% rate on qualifying foreign income
This is the standard election. You declare your foreign-sourced income. Pensions, foreign rental income, foreign investment income, dividends from US/Canadian brokerage accounts. And that income is taxed in Sint Maarten at approximately 10%.
What’s “qualifying”? Generally:
- US 401(k), IRA, and pension distributions
- Canadian RRSP/RRIF distributions, OAS, CPP
- US Social Security
- Brokerage interest, dividends, and realized gains
- Rental income from properties outside Sint Maarten
What’s “qualifying”? Generally:
- Income earned from work performed inside Sint Maarten
- Rental income from a Sint Maarten property
- Capital gains from sales of Sint Maarten real estate
- Active business income generated locally
Local-source income is taxed at standard SXM rates.
Election 2: Fixed taxable base of NAF 500,000
Instead of declaring actual foreign income, you elect a fixed deemed taxable base of NAF 500,000 (~USD 280,000) and pay tax on that base at the regular progressive rate. That works out to a fixed annual SXM tax bill in the order of NAF 100,000–135,000, which is very high. But for retirees with very large foreign income (think $1M+/year), this caps the SXM exposure and is sometimes the better deal. Most retirees do not benefit from this election. Confirm with a SXM tax advisor before choosing.
The property requirement, in plain English
Practical realities:
- You can acquire it before registration. Many retirees buy first, register second.
- You can use a mortgage. The valuation, not the equity, is what counts.
- The valuation is the official registered value, which may differ from purchase price.
- The 18-month clock is a hard deadline. Miss it and you lose the regime retroactively for the period in question.
How the Penshonado interacts with US taxes
US citizens. And US green-card holders. Are taxed on worldwide income regardless of where they live. The Penshonado does not change that. What it does:
- Foreign Tax Credit (FTC): the SXM tax you pay (10%) generally offsets US tax on the same income, dollar for dollar (subject to the FTC limitation calculation).
- Foreign Earned Income Exclusion (FEIE): does not apply to retirement income (it's only for earned income. Wages, self-employment).
- State tax: you may still owe state tax depending on whether you formally break residency from your old state. California, New York, Virginia, New Mexico, and South Carolina are particularly aggressive. Plan the residency-break carefully.
- Reporting: FBAR (FinCEN 114) for foreign accounts over $10K, FATCA Form 8938, and possibly Form 3520 for foreign trusts.
The math typically works out: instead of paying ~22-32% blended federal+state, you pay 10% to SXM and then top up to your US bracket via the FTC. Net effect: you cap your global tax at your US bracket. Which is still a real benefit because you avoid state tax on income that’s properly sourced as foreign.
How the Penshonado interacts with Canadian taxes
Canada taxes residents on worldwide income, like the US, but it doesn’t tax non-residents on foreign-sourced income. So the strategy is different from the US one. You actually break Canadian residency.
- Departure tax: when you leave Canada, the CRA treats you as having sold your assets at fair market value (with exceptions for certain assets). Plan this carefully.
- Provincial tax: ends when you cease to be a provincial resident.
- Withholding tax on Canadian-source income: Canada withholds 25% (or treaty rate) on RRSP/RRIF distributions paid to non-residents. There is no Canada–Sint Maarten tax treaty, so the 25% withholding applies in full unless you elect a Section 217 return.
- CPP/OAS: still payable but subject to non-resident withholding.
This is the area where Canadian retirees most commonly get tripped up. There’s no treaty backstop.
The application timeline
Realistic timeline for a US or Canadian buyer:
| Step | Time |
|---|---|
| Initial scouting trip + offer on property | Months 0–3 |
| Property acquisition closes | Month 3–6 |
| Apply for Sint Maarten residence permit | Month 4–8 |
| Population registry registration | Month 6–9 |
| File Penshonado election with Tax Authority | Within 2 months of population registry |
| First Penshonado tax year | Calendar year of election |
You can buy first and register later, or vice versa. Buying first reduces the 18-month-property-deadline pressure. Registering first lets you start the residency clock sooner. Either order works. It depends on your timing and where the right property is in the market
Common mistakes I watch clients almost make
- Missing the 2-month tax-authority filing window. Set a calendar reminder the day you register at the Census Office.
- Over-paying for the qualifying property. The minimum is NAF 450,000. Some sellers see “Penshonado buyer” and pad the price. Use a real comp analysis.
- Holding the property in a US LLC. Title and use rules are tighter than US buyers expect. Get the structure cleared with both a SXM advisor and your home-country tax preparer before closing.
- Forgetting state-residency break (US). If your driver’s license, voter registration, and primary doctor are still in California, California will assert you’re still a resident.
- Mixing local and foreign income carelessly. If you take a “small consulting gig” with a SXM company, that’s local income, taxed normally. Keep your foreign income clean and segregated.
Common questions
Does my spouse get the Penshonado rate too?
Generally yes if you both meet the age and residency requirements and elect together. Spouses are typically assessed on a joint or coordinated basis.
Can I work part-time and still keep the Penshonado?
You can. But any income from work performed in Sint Maarten is local-source and taxed at the standard rate. The Penshonado only applies to qualifying foreign income.
What happens if I sell the qualifying property?
You must replace it with another qualifying property within a reasonable time, otherwise you lose the regime.
Is the property requirement real or symbolic?
Real. It’s enforced. The Tax Authority and Census Office cross-check.
How long does the Penshonado last?
Indefinitely, as long as you maintain the conditions (residency, age, qualifying property, no breach of local tax filings).
Can I do this on the French side (Saint-Martin)?
No. The Penshonado is a Sint Maarten (Dutch side) program. The French side has its own retirement-friendly setup but it’s structured differently.
What to do next
01
Read the retirement hub if you haven’t.
02
Run the numbers with a SXM tax advisor. The 10% headline rate is real but the structuring matters.
03
Look at qualifying properties in your target neighborhoods: Cupecoy, Pelican Key, Simpson Bay, Maho.
04
Book a Day With Wei to walk three or four candidate properties in person.