NB:
The Netherlands Antilles as such ceased to exist
in October 2010. This page deals with Curacao,
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.
Curaçao
Legal Regime for Offshore Companies
Most offshore operations in the
Netherlands Antilles have hitherto taken the
form of a limited liability company (Naamloze
Venootschap, or NV). See Types
of Company for the basic legal consititution
of an NV.
The
formation process for an offshore NV follows
the normal pattern. Beneficial ownership does
not have to be disclosed, but the professional
firms involved apply a 'know-your-customer'
rule. Opening a bank account will require references
of some type. A registered office must be maintained
in the jurisdiction.
Offshore
companies do not have to be audited, other than
financial institutions, which are regulated
by the central bank (see Offshore
Business Sectors).
See Law of Offshore
for details of the legal regime applying to
particular business sectors.
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Curaçao Tax Treatment of Offshore
Operations
See Domestic
Corporate Taxes for the general principles
of Curacao corporate taxation, which also apply
to offshore entities. The taxation of Curacao
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 Taxes).
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Curaçao E-Commerce
Taxation Regime
As
of April 1, 2001, special tax legislation for
international Internet companies on Curaçao
came into force to act as an incentive to persuade
e-commerce companies to relocate their activities
to the island. The new law replaces the old
Free Zone law and governs 'E-Zones', which are
areas within Curaçao where international
trade and supporting services may be carried
out by electronic communication and electronic
commerce.
Only
companies with capital divided into shares may
perform activities in the e-zones including
trading or providing services to companies located
outside the Netherlands Antilles.
A
company may be allowed to conduct business with
other firms located in an e-zone but the company
has to apply to the local authority before doing
so. If approved, the company must meet a certain
set of conditions relating to price setting,
quality of the goods and services on offer and
the distribution of goods. The turnover generated
through local business may not exceed 25% of
the total turnover.
In
terms of profit tax, the profit of companies
within the e-zones will be taxed at 2% - including
surtax - until January 1, 2026. This rate is
not applicable on the profit of an e-zone company
if it is generated by the sale of goods or services
to companies located in Curaçao or generated
through the rendering of services to affiliated
companies located in the country. In addition
there is no import duty or turnover tax charged
on goods entering the e-zones.
Finally,
employees who have lived in excess of five years
outside Curaçao before starting work
in an e-zone can qualify for expatriate status,
with certain tax-free benefits - providing certain
conditions are met. An e-zone company can calculate
the wage tax on the net salary of the employee
without being required to 'gross up' the salary.
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Curaçao Taxation
of Foreign Employees of Offshore Operations
This section refers to the taxation
of foreign employees of offshore operations,
see Domestic Personal
Taxes for the general principles of individual
taxation in Curaçao, which also apply
to the resident employees of offshore entities.
Since 1987 there has been a special tax regime
in the Netherlands Antilles for 'specialist
expatriate employees in the financial services
(offshore) sector or another important economic
business sector generating hard currency and
of significance to the community'. As will be
seen above, this definition has to be interpreted
in the context of each particular business sector.
Any individual business or employee therefore
needs to take professional advice regarding
their 'expatriate' status and the availability
of the special tax regime.
Resident
expatriates with access to the special regime
were, at the time of writing, allowed 35% tax
exemption on fringe benefits up to 40% of their
salary, with a maximum of ANG40,000; in addition,
the following benefits are exempt from tax altogether:
- foreign
social security contributions towards retirement
provision;
- educational
costs at the international or Dutch school
in Curacao, or an equivalent school abroad,
to a maximum of ANG25,000 per child per year;
- relocation
costs including hotel rooms for two months
on arrival;
- settling-in
and moving-out allowances, being the lower
of two months' salary or ANG12,000.
Non-residents (residential status depends on
location of permanent home, habitual residence,
and 'centre of economic and social interest')
are taxed only on certain types of Curaçao
income: see Domestic
Personal Taxes.
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Curaçao Exchange Control
Curaçao
companies owned by non-residents that do not
carry on business on the islands may obtain
a license from the Bank of Curaçao and
Sint Maarten (the central bank) which exempts
them from all exchange control regulations.
Many
transactions involving foreign exchange in Curaçao
attract a 1% 'license' tax which is payable
by the bank concerned to the central bank. The
rules are complex, and professional advice is
needed if this tax is likely to be a significant
factor.
The
repatriation of income or capital from Curaçao
requires a license, but these are granted automatically
on application.
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Curaçao Employment and Residence
A stay in Curaçao
for work or residence requires residence and/or
work permits, unless you are Antillean, or already
a long-time resident (more than 10 years). Residence
permits have to be applied for in person at
the Governor's offices; a good deal of personal,
medical and financial information and documentation
is required. Work permits have to be applied
for by employers, after advertising a position
in local newspapers and failing to fill it.
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