The main advantages of an AVV lie in its ability to provide precise control over business processes through an operations-oriented approach that directly links process organization to the company’s financial results. The methodology allows not only for calculating a more accurate cost of goods and services, but also for identifying unproductive expenses, forming a cross-functional view of the business. Thanks to an operations measurement system, an AVV makes cost information understandable to all employees and useful for strategic decision-making.
What is AVV?
Aruba Exempt Company (AVV), a unique corporate form designed to attract foreign investment and support global business. Historically, the AVV emerged in response to the growing demand for flexible and transparent offshore solutions, especially from European and Asian entrepreneurs interested in international expansion.
Management and representative offices: organizational structure
Effective corporate governance is the key to the long-term sustainability of an AVV. Aruba law requires the appointment of a Managing Director and a Legal Representative, who may be residents or non-residents, but must have sufficient qualifications to conduct international business. In certain cases, it is recommended to engage a Trust Office, specialized organizations that provide independent oversight and ensure compliance procedures.
The implementation of COREDO’s corporate governance solutions has shown that the optimal AVV structure includes:
- Appointment of a professional managing director with experience in international financial centers.
- Use of a trust office to control corporate documentation and ensure compliance with AML/KYC requirements.
- Establishing a transparent internal control system, including regular audits and reporting according to international standards.
Requirements for registration and activities of AVV
AVV registration process
Registering an Aruba Exempt Company (AVV) is a process that requires strict compliance with corporate and legal procedures. In practice COREDO has implemented dozens of projects covering all stages, from preliminary business planning to obtaining licenses.
- Aruba Business Registration: Submitting an application for registration to the Chamber of Commerce of Aruba. It is important to prepare a unique company name in advance that complies with corporate law requirements.
- Certificate of No Objection: Obtaining a certificate from the Minister of Justice confirming no objections to the registration of the AVV. This is a critically important step, especially for structures with foreign participation.
- Civil Law Notary: Executing the incorporation documents through a notary, including the Articles of Incorporation and Articles of Association. The documents must clearly reflect the company’s purposes, governance structure and shareholders’ rights.
- Obtaining a Business License (if required) for certain types of activities related to financial services, investments or intellectual property licensing.
Documents required for AVV registration include:
- A detailed business plan outlining the development strategy and sources of financing.
- Information about beneficiaries, shareholders and directors (taking into account AML/KYC requirements).
- Evidence of the source of funds and the legality of capital.
- Proof of registered address and the presence of a local representative (if required).
Restrictions and tax consequences
Despite the attractiveness of the Tax Exempt Company status, an AVV is subject to a number of restrictions. The main requirement: no economic activity on the territory of Aruba. If the company violates this rule, it automatically loses tax benefits and becomes subject to local taxation.
The Aruba tax regime provides strict control over sources of income and the structure of operations. If it goes beyond the permitted types of activities, the AVV is required to pay corporate tax at the standard rate, as well as undergo audits and provide expanded financial reporting.
The COREDO team recommends integrating regular compliance audits and implementing AML/KYC procedures to timely identify risks and prevent violations. In one of COREDO’s cases, a client faced a change in tax legislation that required rapid business restructuring and conversion of the AVV into another legal form.
Conversion of an AVV into another legal form
In the context of rapidly changing international standards and transparency requirements, the possibility of AVV company conversion becomes a strategic tool for business adaptation. Aruba’s legislation allows converting an AVV into a VBA company structure (Variable Capital Company) or an NV company structure (Public Limited Company).
The process includes:
- Preparation of a new set of constituent documents reflecting the changed governance structure and company objectives.
- Obtaining approval from the Chamber of Commerce and, if necessary, from the Minister of Justice.
- Holding a shareholders’ meeting and formally approving the changes.
- Formalizing the changes through a Civil Law Notary.
In COREDO’s practice, such conversions are often used to scale the business, enter new markets in Europe and Asia, and increase the company’s investment attractiveness. For example, when converting from an AVV to a VBA, the structure becomes more flexible for attracting venture capital and working with investment funds.
These conversions are especially relevant in connection with legislative changes requiring the conversion of an AVV into one of the modern legal forms: VBA or NV.
What practical recommendations?
What practical recommendations will help effectively apply international taxation tools and reduce the risks of double taxation? An AVV is an effective tool for International Tax Planning, especially when organizing holding, investment and IP structures. Key strategies implemented by the COREDO team:
- Using an AVV for centralized management of license payments for intellectual property between units in the EU, Asia and the CIS.
- Structuring Holding Companies and Investment Companies to optimize tax burdens on dividends and interest.
- Applying an AVV to implement Captive Insurance and Financial Leasing schemes, which legally reduce taxes and increase the group’s financial stability.
How to minimize risks in managing an AVV
- Implement compliance procedures that meet international AML/KYC standards and anti-money laundering laws.
- Regular audits and financial reporting according to IFRS standards.
- Engage professional managers and trust offices to oversee corporate governance.
Comparison of AVV and corporate structures
| Company type | Tax benefits | Activity restrictions | Management structure |
|---|---|---|---|
| AVV | Full tax exemption | Cannot participate in Aruba’s economy | Local representative required |
| VBA | Standard tax rate | No restrictions | No local representative required |
| NV | Standard tax rate | No restrictions | No local representative required |
Assessment of the ROI of using an AVV and consequences
Conclusion
Aruba Exempt Company (AVV): this is not just an offshore company, but a strategic tool for international business, enabling the implementation of complex Offshore Company Formation schemes and taking advantage of the benefits of a Tax Exempt Company. Solutions developed by COREDO allow clients to effectively use an AVV for international tax planning, intellectual property management, and financial flows.
At the same time, success requires not only knowledge of the law but also the ability to adapt to market changes, integrate compliance and build transparent corporate structures. In this context, COREDO’s practice confirms: the AVV is the optimal choice for those seeking sustainable development, transparency and global business scaling.
If you are considering an AVV as part of your international strategy, the COREDO team is ready to offer comprehensive support at all stages, from registration to management and transformation of corporate structures.