CURAÇAO OFFERS A WIDE RANGE OF TAX INCENTIVES GEARED TOWARDS SPECIFIC BUSINESS NEEDS.
FOR ALL BUSINESSES THE FOLLOWING FISCAL INCENTIVES ARE AVAILABLE:
- Accelerated depreciation of business assets;
- Investment allowance of 10% of the total investments The investment allowance cannot be applied to certain investments (e.g. in land). However, if the investments are alienated, a disinvestment addition should be included to the taxable income of the year of the disinvestment.
TAX DEFERRAL OR EXEMPTIONS
- Retirement contributions for pensions are tax deductible.
- Profits and losses from a permanent establishment abroad are tax exempted.
- Income from foreign real estate is tax exempted.
- It is possible to achieve a profit tax exempt company merger or a stock merger.
This incentive is available for newly incorporated companies that contribute to broadening the local economic base. This so called ‘tax holiday’ consists of tax exemptions and/or reduced tax rates such as:
- Exemption from import duties;
- Exemption from income tax on dividends;
- Corporate tax rate of 2% or in certain cases up to 15%;
- Exemption from property tax.
The tax holiday is granted for a period of 5 to 11 years. Requirements for the tax holiday:
- Minimum investment of at least ANG 250,000 (approx. USD 140,000);
- For hotels and similar recreational businesses a minimum investment of at least ANG 1 million (USD 555,000).
In addition to these general incentives Curaçao offers the following specific incentives and entities depending on your specific situation.
INTERNATIONAL SHIPPING COMPANY
Aside from the shipping and aviation tax rate, international shipping companies can request the application of the tonnage tax. With the tonnage tax the company declares a fixed amount of profit based on the tonnage of the ship instead of the actual profit. The tonnage tax can be requested by companies that solely exploit ships. To use the tonnage tax the company must register its ship in the tonnage tax register.
- Gross profit of the company is calculated based on a fixed profit starting at ANG 2.00, going down to ANG 0.60 per net registered ton (USD 1,12 and USD o.34 respectively).
- The calculated fixed profit is taxed at the general rate of 25%.
- The user/non-owner and the managing company can also be assessed on the tonnage.
The export regime applies to companies that are active internationally. There is no distinction between companies owned by local or foreign shareholders. The most important requirement is that 90% or more of the company’s business profit is the result of transactions with foreign clients. There is also no distinction between income from trade or from services.
The regime supports the following activities:
- Export of goods.
- International trade and services.
- Providing loans and licenses, providing the use of intellectual property, acting as a holding company or being a member of a cooperation.
- The profit of a qualifying company will be taxed against an effective tax rate of approximately 3.6%. This will be reduced in 2016 to 3.2% depending on a further reduction of the general Corporate Income Tax rate from 25% now to 22% in 2016.
Through the use of a transparent company, the risks of operating a business may be limited without the company being subjected to profit tax. The company is transparent for tax purposes and will be treated as a partnership and the shareholders as the partners in that partnership. The shareholders / partners are deemed to have received direct benefits according to their share in the profit of the company.
The transparent company is for example often used to set up a joint venture.
The BV and the NV can obtain an exempted status for profit tax. The exempt company regime is geared towards investment and finance purposes. An exempt company may for example be used as a mutual fund or for intercompany finance activities. However, investment in real estate is not allowed. To qualify for the exempted status, the BV must meet certain conditions with regard to the allowed activities, management, shareholders registry and annual accounts.
PRIVATE FOUNDATION AND A CURAÇAO TRUST
A private foundation and a trust are widely used for investment purposes or for management of family assets. If the private foundation or trust do not carry on a business, it is exempted from corporate income tax. It is possible to request that the private foundation or trust are regarded as a taxable Special Purpose Fund (in Dutch: doelvermogen).
The corporate tax rate will be 10% on regular income as well as capital gains.
In case the Private Foundation does operate a business, the profit from that business will be subject to the general profit tax rate of 25%, and 22% in 2016.
Two special income tax regimes are available for those who want to move to Curaçao:
• Pension (penshonado) regime.
• Expatriate regime.
Available to individuals who earn pension income or who live from capital returns and take up residence in Curaçao. To be eligible the following requirements must be met. Persons can apply that:
• Have lived abroad in the five years before becoming a resident;
• Have reached the age of 50;
• Are legally admitted for residency for an indefinite period of time;
• Are entitled either to a foreign pension or other income from sources abroad, including income from work performed abroad;
• Own a residence on the island with a value of at least ANG 450,000 (approx. USD 250,000).
There is no requirement as to nationality and no stipulation of a minimum period of residency.
The legislation provides for two income tax options, namely:
Income from foreign sources is taxed at 10%, or
Foreign income is fixed at ANG 500,000 (USD 280,000) and the corresponding income tax due amounts to approx. ANG 220,000 (USD 120,000)
Depending on the age of the individual social securities will be due as well.
The regime is meant for employees who contribute ‘specific expertise’ to a company in Curaçao. It offers advantages such as exempted salary components and fringe benefits. Most important advantage is that a net salary does not have to be grossed up. If granted it applies for a maximum of 5 years, with the possibility of an extension up to 10 years.
• Completed studies at an institution of higher education or academic institution;
• At least 5 years of working experience;
• A salary of at least ANG 150,000 (approx. USD 83,500); and
• The “specific expertise” may not be, or not readily be, available in the local labor market.