An Overview of the Curacao Tax System

Curaçao, an autonomous country within the Kingdom of the Netherlands, has a tax system structured to foster international investment. Its position in the Caribbean and fiscal environment have made it a financial hub. The island’s tax legislation is competitive, with specific regimes for various residents and business activities. This framework combines European legal standards with Caribbean economic incentives, administered at a national level for both personal and corporate taxation.

Personal Taxation Framework

An individual’s tax liability in Curaçao is determined by their residency status. A person is a tax resident if their “center of vital interests,” like their primary home and personal or economic relations, is on the island. This is a facts-and-circumstances test, not one based on a fixed number of days. Residents are subject to tax on their worldwide income, while non-residents are only taxed on income from specific sources within Curaçao.

Taxable income for residents includes earnings from employment, business profits, real estate income, and returns on movable assets. Curaçao uses a progressive tax system with rates starting at 9.75% and increasing to a top marginal rate of 46.5% on income over ANG 154,867. Taxpayers can lower their taxable income through deductions for items like mortgage interest on a primary residence, life insurance premiums, and certain medical expenses.

The “Penshonado” scheme is designed for foreign retirees and high-net-worth individuals. Applicants must be at least 50 years old and prove financial self-sufficiency. The main benefit is a flat tax rate of 10% on foreign-source income, making it attractive for those with pensions or investments outside Curaçao. Alternatively, an individual can choose to be taxed at standard progressive rates on a deemed taxable income of ANG 500,000. Applying requires a formal request to the tax inspectorate with proof of eligibility.

Residents must also make social security contributions, which fund national insurance programs for old-age pensions (AOV), widows and orphans benefits (AWW), and long-term care (AVBZ). These premiums are calculated as a percentage of salary up to a specified income ceiling. Income earned above this cap is not subject to further social security premiums.

Corporate and Business Taxation

As of January 1, 2020, Curaçao shifted to a territorial corporate tax system. The corporate profit tax, or “winstbelasting,” is levied only on profits from a domestic enterprise. Profits from foreign activities are generally excluded if the company has sufficient economic substance. A corporation is a resident if incorporated under Curaçao law or if its central management is on the island.

The standard profit tax rate is 22%, with a reduced rate of 15% on the first ANG 500,000 of taxable profit. A minimum corporate tax of 15% also applies to multinational corporations with annual revenue of at least €750 million. Taxable profit is calculated by subtracting deductible business expenses from total income. The portion of profit considered domestic is determined by the ratio of local to total expenses.

The Economic Zone (E-Zone) regime offers a reduced profit tax rate of 2% to companies that primarily conduct business with foreign entities. E-Zones are designated areas intended to stimulate international trade and services. To qualify, a company’s activities must focus on foreign markets, with no more than 25% of its turnover from Curaçao’s domestic economy. Eligible activities include:

• International e-commerce
• Logistics
• Call centers
• Regional repair and maintenance services

The entity must be a limited liability company (NV or BV) and maintain a physical presence within the zone.

Curaçao’s Turnover Tax (“Omzetbelasting” or OB) functions like a sales tax or VAT, applied to goods and services provided within the country. The standard rate is 6%, with rates of 7% and 9% for certain items. Exemptions are available for transactions by E-Zone companies with foreign entities, as well as for sectors like healthcare, education, and some financial services.

Investment-Related Taxes and Structures

When a Curaçao company distributes profits, a 10% dividend withholding tax is generally levied. Exemptions and reductions are available, especially under the Tax Regulation for the Kingdom of the Netherlands (BRK), which prevents double taxation on dividends paid to parent companies in the Netherlands.

Capital gains for both individuals and corporations are generally not subject to tax. This exemption applies if the gain is not part of a business enterprise’s profits. For example, an individual selling personal shares would not be taxed on the profit, but a company trading securities would have those gains taxed as business income.

The Curaçao Private Foundation, or “Stichting Particulier Fonds” (SPF), is a legal entity used for asset protection and estate planning. An SPF is a distinct legal person with no owners or members, controlled by a board. It can hold assets like real estate and investment portfolios and make distributions to beneficiaries.

A private foundation that does not conduct an active business is exempt from profit tax, allowing its investment income and capital gains to accumulate tax-free. Distributions from an SPF to its beneficiaries are also generally not subject to gift tax in Curaçao.

Real Estate and Inheritance Taxation

Property ownership in Curaçao incurs the Real Property Tax, or “Onroerendezaakbelasting.” This annual tax is levied on the value of immovable property, with the owner being responsible for payment. The tax is calculated on the property’s assessed value at progressive rates ranging from 0.4% to 0.6%. This tax applies to all real estate, including residential, commercial, and industrial properties.

Curaçao imposes an Inheritance and Gift Tax (“Successie- en Schenkingsrecht”) on assets transferred through inheritance or as a gift. The tax is paid by the beneficiary, and the rate varies based on two factors: the relationship to the donor and the value of the assets. Rates for spouses and direct descendants range from 2% to 6%. For unrelated individuals, rates can be as high as 24%, and a special 25% rate can apply to distributions from entities like a private foundation or trust.

Tax Compliance and Administration

Any individual or business must first obtain a CRIB number (“Curaçao Registratie en Informatie van Belastingplichtigen”). This unique identification number is issued by the Tax Inspectorate and is required for all tax matters, including filing returns and making payments. Registration involves submitting an application with identification documents.

Taxpayers must meet several filing deadlines. The personal income tax return is due two months after receiving the form from tax authorities. For corporations, a provisional return is due by March 31st, and the final return is due within six months of the fiscal year-end. Turnover tax (OB) returns are filed monthly, with payment due by the 15th of the following month, though small businesses may file quarterly or annually.

Taxes are typically paid via bank transfer. For both personal and corporate income tax, the system uses provisional assessments based on the prior year’s liability. Taxpayers make installment payments on this assessment during the year. After the final tax return is assessed, any difference between the provisional payments and the final amount is settled.