Curaçao: Offshore Legal and Tax Regimes
Tax Treatment of Offshore Operations
See Domestic Corporate Taxation for the general principles of Curaçao corporate taxation, which also apply to offshore entities. The taxation of Curaçao companies is generally governed by the National Ordinance on Profit Tax 1940; special taxation regimes have been introduced for companies falling under articles 8A, 8B, 14 and 14A of the Ordinance, as follows (NB the special regimes normally apply only to non-treaty-related income - also note that these articles have been repealed under the New Fiscal Framework and will only continue to apply to existing companies under the grandfathering provisions of the NFF - see above). The following rates were correct at the time of writing:
- Investment and Holding companies Income is taxed at 2.4% on the first ANG100,000 of net income and 3% on the balance. Municipal surtax is not applied. Capital gains are not taxed; but capital losses are not deductible.
- Mutual Funds These are exempt from profits tax if they have either minimum net assets of US$50m, at least fifty shareholders, and four local employees, or if they have minimum net assets of US$300m and two local employees; otherwise the fund will be taxed on its net assets, giving a minimum charge to tax of US$1,000 rising to a maximum charge of US$10,000.
- Trading companies The normal applicable rates of tax are 24% on the first ANG100,000 of net income and 30% thereafter; however it is usually possible to obtain a ruling from the Inspector of Taxes exempting 90% of income, which has the effect of reducing the rates to the usual offshore levels of 2.4% and 3%.
- Banks Investment and interest income (which qualifies under Article 14) is taxed on the usual offshore basis at 2.4% and 3%; commission and fee income will suffer 24% and 30% unless a tax ruling can be obtained (normally possible).
- Intellectual Property Holding companies If a tax ruling can be obtained, the effective tax rate for income from royalties, licenses, patents, copyrights, trademarks etc will be 1%.
- Insurance companies Foreign-owned captive and reinsurance companies not in receipt of treaty-related income benefit from a concession that deems their income to be ANG100,000, giving them a fixed tax rate of ANG2,400 annually.
- Real Estate Holding companies These companies are not taxed on income derived from real estate (or subsidiaries wholly or predominantly engaged in owning real estate) outside Curaçao.
- Ocean Shipping and Aviation companies These companies can apply to pay tonnage tax. A broad definition of taxable profits makes the tonnage tax very attractive and enables shipping companies to calculate their notional profit on the net tonnage of the ship. The notional taxable profit per ship is calculated on a sliding scale based on the net tonnage of the vessel: 0-10,000 = ANG2.00 per ton, 10,000-25,000 = ANG1.35 per ton and over 25,000 ton = ANG0.60 per ton.
Businesses organised as Stichtings (Foundations) will be treated as if they are companies from a tax point of view. Partnerships are treated as fiscally transparent, so that the individual partners pay taxes, not the partnership (see Domestic Personal Taxation).