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Curaçao: Offshore Legal and Tax Regimes

Introduction

NB: The Netherlands Antilles as such ceased to exist in October 2010. This page deals with Curaçao, the largest component of the jurisdiction, which has taken its place in many respects.

Under the legislation which applied until 2002, in order to qualify for offshore status a Netherlands Antilles entity had to be wholly owned by non-residents, and its income had to arise outside the jurisdiction. However, various business sectors had specially favourable taxation regimes which reflect their international nature. These special regimes are described in this section along with the tax treatment of offshore corporations as such.

In December 1999 the Netherlands Antilles adopted new legislation under the heading of The New Fiscal Framework (NFF). This legislation was intended to avert inclusion on the OECD's threatened 'black-list' of errant offshore jurisdictions in 2000. The NFF involved the abolition of the distinction between offshore and onshore companies, at least for new formations, the introduction of a new company form named NABV (Nederlands Antilliaanse Besloten Vennootschap) which can be tax-exempt but which does not benefit from tax treaties, the introduction of a 10% withholding tax on dividends (not in fact being put into effect), and the reduction of the profits tax rate to 30% (plus 15% municipal surcharge). See Forms of Company for details of the conditions under which an NABV can request exemption from profits tax and withholding tax. Under the NFF, a 100% participation exemption has been introduced for profits derived from shareholdings in resident companies and qualifying Dutch-resident companies. The exemption is 95% for shareholdings in other non-resident companies.

Other provisions under the NFF and the revised 'BRK' (tax treaty with the Netherlands) include:

  • dividends from a Dutch corporation to Curaçao corporate shareholders, who own at least 25% of the shares in the Dutch corporation, will be exempted from Dutch dividend withholding tax, provided that the dividend is subject to Curaçao tax at a rate of at least 8.3%.
  • the Dutch corporation will have to withhold 8.3% dividend withholding tax from the gross dividend. The 8.3% which has been withheld upon the dividend distribution in the Netherlands can be credited against tax in Curaçao.
  • dividends and capital gains derived from shareholdings in a Netherlands corporation will be exempted from additional profit tax in Curaçao provided that the shareholding amounts to at least 25% and that 8.3% Curaçao tax is paid on the gross amount of dividends received.
  • dividends paid by Dutch corporations to Curaçao corporations unable to take advantage of the participation exemption will be subject to 15% Dutch dividend withholding tax. Existing Curaçao offshore corporations may elect for the new dividend treatment.
  • the activities of an exempted company (NABV) will be restricted to investments in debt instruments, securities and deposits
  • for Curaçao corporations incorporated before June 30, 1999, subject to profit tax and having a book year which ends before 1st January 2002, the grandfathering rules with respect to the offshore regime will remain applicable until 2019 as long as the company continues to have substantial business.

 

 

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