Curaçao: Country and Foreign Investment
This page was last updated on 19 August 2019.
Irreconcilable differences between the constituent islands led to a constitutional crisis erupting in the Netherlands Antilles in 2004. A joint commission appointed by the Netherlands and the local government concluded that the jurisdiction should be broken up, with the islands of Curaçao and St Maarten becoming autonomous alongside the Netherlands and the Caribbean island of Aruba, while the remaining three islands – Bonaire, Saba and St. Eustatius – were to be brought under the direct control of the Dutch government in The Hague.
The dismantlement of the Netherlands Antilles began in July 2007; as a jurisdiction within the Kingdom of the Netherlands it was dissolved on 10 October 2010. Two new territories, Curaçao and St. Maarten, came into existence. The other three islands, Bonaire, Saba and St. Eustatius became overseas municipalities of the Netherlands (known as ‘OMONs’).
The Dutch monarch remains head of state and the Netherlands continues to be responsible for foreign affairs and defence. The citizens of Curaçao continue to be Dutch nationals.
Curaçao lies in the southern part of the Caribbean, just to the north of Venezuela. The capital, Willemstad, is the main financial centre and seat of government.
The legal, political and administrative systems are largely modelled on Dutch originals, but there has been some common law influence on the offshore regime. The official languages are Dutch, English and Papamientu, a form of creole. At present the local currency is the Netherlands Antillean guilder (ANG); plans to replace it with a new Caribbean guilder have stalled due to uncertainty about location of the currency’s central bank.
There is a well-connected airport on Curaçao, with flights running throughout the Caribbean and daily non-stop services to Amsterdam, Bogotá and Miami. Curaçao has a good port and is part of the Dutch ship registry.
Curaçao has a very open economy and is highly dependent on tourism and offshore financial services. Most goods are imported since there are few natural resources. The important refinery in Curaçao, run by troubled neighbour Venezuela's state oil company PDVSA, was closed down for a period but is now partially open again, and used mostly for trans-shipment to China.
GDP is estimated at US$3.15 billion (2015), which gives a GDP per capital of $19,950. This is reasonable for the Caribbean area as a whole, though unemployment is high (14.1% in 2017). Levels of GDP have fluctuated for some time, largely due to instability in neighbouring Venezuela.
Local taxes are quite high for residents, but there is a well-developed offshore sector which originated in World War II as a refuge for Dutch companies fleeing the German occupation. Many financial links are to the Netherlands in one direction and to South America in the other. The financial and professional infrastructure is well-developed, with a Dutch (civil law) cast. Banking, mutual funds (for professional investors), shipping, licensing, insurance and holding companies are the main offshore sectors. Taxation levels on most offshore activities are light.
The Netherlands Antilles, and Curaçao by default, only had tax treaties with Norway and, of course, the Netherlands, which gives access to the many Dutch tax treaties and a good withholding tax regime. However, Curaçao has been seeking to create a more extensive tax treaty network, and has entered into tax information exchange agreements with 25 countries.
At the end of 1999, Netherlands Antilles passed new tax legislation known as the New Fiscal Framework intended to improve the jurisdiction's image as an offshore financial centre and to revitalise its financial services industry.
The legislation, which came into force from 1st January 2002 along with a revised 'BRK' (Tax Arrangements for the Dutch Kingdom), removed the distinction between 'onshore' and 'offshore' companies and simplified tax rates. Existing offshore companies were exempted until 2019. Alongside the tax legislation, a new corporate form was introduced to allow offshore operations on a tax-exempt basis: this is the NABV (Netherlands Antilles besloten vennootschap) or AEC in English (Antilles exempt company), and it has supplanted the offshore NV for many purposes.