Key changes in Aruba regarding minimum wage and fringe benefits

Change in the Minimum Wage

As of 1 January 2026, the minimum wage in Aruba will be set at AWG 11.58 gross per hour for employees aged 18 and over. This represents an important change, as the minimum wage will now be expressed as an hourly wage, bringing an end to the inequality of the previous calculation method, under which the minimum wage was effectively based on a weekly amount regardless of whether more than 40 hours were worked in that week.

For the calculation of a monthly salary, the hourly wage is multiplied by the number of hours worked and by a factor of 4.333.

Based on the new minimum hourly wage, the minimum monthly salary for a 40-hour workweek is calculated as follows:

40 hours × AWG 11.58 × 4.333 = AWG 2,007.05 gross per month

In Celery, an hourly wage or a period wage can be entered per employee. In both cases, a minimum hourly wage of AWG 11.58 gross must be applied.

Changes to the Regulation on the Fiscal Treatment of Fringe Benefits

As of 1 January 2026, a substantially modernized Regulation on the Fiscal Treatment of Fringe Benefits will enter into force (see appendix). This regulation largely replaces the outdated provisions from 2003 and has direct consequences for payroll administration in Aruba.

The revised regulation represents a fundamental modernization of the fiscal treatment of fringe benefits. Below, we outline the most important payroll-relevant changes.

1. More Room for Tax-Free Reimbursement of Business Expenses

One of the most significant innovations is the introduction of a general exemption for business expense reimbursements. Reimbursements and benefits are not considered taxable wage income if:

• the costs are business-related and necessary for the employment;
• they are directly related to the employee’s duties; and
• they are properly recorded in the payroll administration.

This gives employers greater flexibility but also requires proper structuring of payroll records and internal expense categories. Without proper documentation, the exemption cannot be applied.

2. Company Car: New Valuation Basis and Lower Add-On for Sustainable Vehicles

From 2026 onwards, the taxable benefit for a company car will no longer be based on the new car purchase price, but on 15% of the book value as of 1 January, with a minimum of 50% of the acquisition value.

In addition, lower percentages apply to energy-efficient vehicles:

• hybrid vehicles: 10%
• fully electric vehicles: 5%

This results in a lower taxable benefit for older vehicles and provides a clear fiscal incentive for electric driving.

3. Mileage Allowance for Private Cars Doubled

The maximum tax-free mileage allowance for business travel using a private car increases from AWG 0.60 to AWG 1.20 per kilometer.

Mileage related to commuting between home and work is explicitly classified as private use and therefore does not qualify for this tax-free allowance.

4. Higher Fixed Allowances and New Telephone/Internet Allowance

The fixed monthly tax-free allowances for car and representation expenses have been significantly increased. Below is an overview of the old and new amounts:

Position	Car Costs	Representation
Director	250 → 350	250 → 300
Manager	200 → 300	100 → 150
Sales	400 → 500	100 → 150
Accountant / Advisor	300 → 400	100 → 150
Other positions (business >25%)	200 → 300

In general, the previously established amounts have increased by approximately AWG 100 per month.

In addition, a new fixed allowance for telephone and internet expenses is introduced. Depending on the employee’s position, this allowance ranges from AWG 100 to AWG 200 per month.

5. Meals: Higher Taxable Benefit

The minimum taxable benefit for employer-provided meals is increased as follows:

• breakfast / lunch: AWG 5.00 (previously AWG 2.50)
• hot meal: AWG 7.50 (previously AWG 5.00)

6. Employer-Provided Housing: Simpler and Clearer Rules

The fiscal valuation of housing provided by the employer has been simplified:

• unfurnished housing: maximum 15% of annual salary
• furnished housing: maximum 20% of annual salary
• second residence: always fully taxable

7. New and Expanded Exemptions for Expatriates

Several exemptions for employees recruited from abroad have been increased or expanded, including:

• relocation and furnishing costs: increased from AWG 15,000 to AWG 20,000
• accommodation and rental car: extended from 2 to 3 months
• new tax-free signing bonus of up to one month’s salary (maximum AWG 10,000)

8. Fiscal Support for Wellbeing, Training and Jubilees

The regulation introduces several new exemptions, including:

• health and wellbeing: up to AWG 125 per month, such as gym memberships, mindfulness, meditation or yoga classes, books, apps or training courses that contribute to health and wellbeing;
• education and professional development: fully tax-free;
• higher jubilee and service milestone allowances.

9. Business Travel: Per Diem Allowance Without Receipts

For business travel, a per diem allowance of up to AWG 225 per day may be paid tax-free, without the need to retain receipts (except for airline tickets and rental cars).

10. Effective Date

All of the above changes will take effect as of 1 January 2026. Transitional provisions apply to existing expatriate arrangements.

 

Interesting articles:

Aruba-Regeling fiscale behandeling secundaire arbeidsvoorwaarden

AB 2025 no. 44. (MvT nieuwe FB-regeling met ingang van 1 januari 2026)