Curaçao: Personal Taxation
The 'Penshando' Tax Regime
Since 1987 (with amendments in 1997) Curaçao has offered a favourable personal tax regime for retired people. The regime is available on the following conditions:
- The "penshonado" should be at least 50 years old on the date that he registers himself as a resident;
- The pensioner should not have lived in the Netherlands Antilles in the five years before making the application for 'penshanado' status;
- The pensioner must own a house in the Netherlands Antilles with a value of at least US$255,000 for his personal use and available to him within 18 months after his registration as a resident;
- The application for favourable tax treatment must be filed within two months after registration as a resident;
A "penshonado" may choose between two tax regimes:
- Worldwide income, not derived from business or employment within Curaçao, including pension-rights of which at least 70% are externally funded, can be taxed at a flat 10% rate; or
- All foreign income will be fixed at US$281,000 and taxed at the normal progressive rates, which amounts to an effective tax of US$152,000).
Foreign income is considered to be all income from a foreign source, including non-resident (so called "offshore") companies established in Curaçao, all income from savings at local banks; and the rental-value of the house owned by the penshonado.
"Local" income is all income that the penshonado receives from employment in a company established in Curaçao in which he owns 40% or more of the capital stock and/or income obtained as a director or officer of a company and/or income received from bonds issued by a local company. Local income is taxed at the normal tax-rate for local citizens. The penshonado may not enter into employment with a company in which he does not own at least 40% of the capital-stock.