Taxes

Residents of Curacao are taxed on worldwide income. Nonresidents however are taxed only on certain specified income generated on Curaçao. Individuals are taxed from their date of arrival. Accordingly, there is no significance to the timing of arrival.

Profit Tax
Profit tax is levied on the profit of:

• limited liability companies (NV’s);
• limited partnerships and other companies or associations whose capital is divided into shares;
• co-operative societies and mutual insurance companies;
• associations and foundations, as long as they are conducting a business;
• entities established outside Curacao but receiving revenues from Curacao.

The base for the profit tax is the taxable profit after deducting all allocated costs, depreciation, investment allowance, donations and set-offs of losses. The tariff is stipulated at 34.5%. This includes the island surcharge. For possible tax reductions, please check the section Fiscal Incentives.

Income Tax
Progressive rates are levied on taxable income. In addition, an island surcharge is levied on the amount of tax due. The maximum rate amounts to 49.4% from the year 2006 onwards.

Special reduced tax rates apply to certain non-recurrent items of income, for example, liquidation proceeds from a company, set at a maximum of 33.8%, and dividends from or capital gains on the sale of “substantial share interests,” set at 19.5%. Interest earned on bank accounts in Curaçao is taxed at a rate of 6.5%.

Tax returns are filed on a calendar-year basis. Each spouse is taxed individually on his or her personal income (e.g., income derived from a business, profession or employment). Non-personalized income is, in principle, included in the taxable income of the spouse with the higher personal income.

Wage Tax (PAYE)
Curaçao makes use of the pay-as-you-earn (PAYE) system. This means, that tax is withheld from the employee’s wage or salary according to the tax rate table stipulated by ministerial decree. The employer is liable for withholding wage taxes.

Dividend Withholding Tax
A dividend withholding tax was introduced as of January 1, 2000. However, the provisions have not become effective yet, and it is not likely to happen in the near future.

Assessment
Salaries and wages are subject to tax withholding at the source. Provisional assessments can be issued during a fiscal year. Any additional tax is payable on receipt of an assessment. Curaçao tax relief may be obtained for specific sources of foreign income.

Turnover Tax (OB)
The turnover tax (5%) is levied on the provision of services and deliveries by entrepreneurs and companies. A limited number of services and deliveries are exempt. ‘Services’ do not include advisory and management services provided to or by offshore companies and offshore banks.

Property Transfer Tax (‘Overdrachtsbelasting’)
The transfer of Curaçao located immovable or real property is subject to a 4% transfer duty.

Land Taxes (‘Grondbelasting’)
A land tax is levied on real estate located in Curaçao at an annual rate of 0.3% of the value of both undeveloped land and built-up land. The 15% island surcharge is also applicable.

Inheritance and Gift Tax
Gifts and receipts from the estate of a Curacao resident are taxable. Nonresidents owning real estate in Curacao are also subject to these taxes. The rates (2% up to 24%) depend on the amounts received and the relationship of the beneficiary to the deceased or the donor. Gifts and receipts from estates of a nonresident shareholder of a Curaçao company are not subject to Curaçao estate and gift taxes.

Social Security Taxes

• Old-age pension, widows and orphans tax as of 2008: 6, 5% paid by the employee, 7, 5% by the employer, out of a maximum of US$ 45,133 gross wages. Expats may be exempted.
• Health insurance coverage for workers earning up to US$ 27,650 is compulsory. Contributions are 2.1% for the employee, 8.3% for the employer.
• Contributions for accident insurance range from 0.5% to 5%, on a maximum salary of US$ 32,120.
• AVBZ (a national social insurance): 2% of taxable income, with a maximum of US$ 4,295 per year or 1% of taxable income for a minimum income of US$ 2,921 (unmarried) or US$ 3,314. The employer’s share amounts to 0.5% of the employee’s income, with a maximum of US$ 1.015 per year.
• Old-age pensioners are taxed at a rate of 1.5%.

Import and Excise Duties
Import duties are levied on the value of imported products, with the exception of primary food stuffs. The rate varies from 5% to 22%, depending on the type of product.
Excise duties are levied on alcoholic beverages, cigarettes and fuel products.

Room Tax
A new room tax legislation was introduced in 2009 (AB 2009, 33) in an effort to co-finance promotional activities for the island. The room tax applies to all non-residents of Curacao, staying in all types of accommodations like timesharing locations, apartments and hotels. This tax also applies to all persons who make part of their home available for lodging facilities.

Tonnage Tax
In 2007 the Shipping Registration Tax (SRT) was amended and converted to a Tonnage Tax. Under the old regulation, a shipping company that registered a ship under the SRT would pay ANG 0.40 per gross ton. Under the new rules, the owner of a registered ship has to declare a profit per net ton, and pays 34.5% over the calculated profit and on basis of a shipping profit scale.

E-Zones
The tax facilities offered to E-Zone companies in the E-Zones in Curacao are:
• 0% import, export and excise duties
• 2% profit tax on export profits
• 0% sales tax
• 0% land and property taxes.