Curacao and tax benefits
Since 2001, Curaçao has been offering Economic Zone (E-zone) facilities. An E-zone refers to a specific area or building designated as an E-zone, where activities involving goods and services can take place. Within these zones, there are highly favorable tax incentives.
Companies that establish themselves in the goods E-zones are primarily internationally-oriented corporations that use Curaçao as a transit point for their goods, with destinations primarily in (Latin) America. In the services E-zones, you’ll find companies mainly offering services through the internet. It is crucial that these services are aimed at foreign markets, with no more than 25% of revenue generated from transactions with residents of Curaçao. Furthermore, the profit tax incentive does not apply to profits generated from this 25% of revenue.
Only legal entities with capital divided into shares, such as the Curaçao public limited liability company, can establish themselves in an E-zone. Any company wishing to set up in an E-zone must submit an official request to the executive council.
Various tax incentives apply, including:
– A 2% profit tax rate (in effect until the end of 2025) instead of the regular Curaçao profit tax rate of 22% (as of 2019).
– Exemption from turnover tax and import duties.
– A specific wage tax incentive for employees of the E-zone company.
On January 1, 2014, Curaçao introduced a new scheme for companies focusing on exporting goods and services, accounting for 90% or more of their activities. This new scheme may be an attractive alternative for companies still using the old offshore regime that ended on January 1, 2020.
The export scheme is particularly designed for companies engaged in international trade, financial services, intellectual property rights exploitation, holding activities, as well as repair or maintenance work abroad or similar activities taking place in Curaçao, followed by the export of repaired goods from Curaçao. This scheme closely resembles the E-zone scheme but imposes stricter requirements on the execution of business activities in or from Curaçao.
Under this scheme, 5% of the profit is taxed at the regular tax rate of 25%, while 95% is taxed at 10% of 25%. This results in an effective tax rate of approximately 3.63% on profits.
Low-Taxed Investment Company
Additionally, there is an opportunity to utilize a low-taxed investment company in Curaçao. This involves relocating the actual management of a Dutch B.V. to Curaçao. The Dutch B.V. attains the status of a normal ‘onshore’ company and is considered as being based in Curaçao.
After the seat relocation, the Dutch B.V. establishes a Curaçao B.V. Upon request, the Curaçao B.V. can be exempted from profit tax. The assets of the relocated Dutch B.V. can be contributed as capital to the Curaçao B.V. and generate tax-free returns.
The exact implications of this new BRNC (Kingdom Tax Scheme) are currently under discussion in the parliaments of the Netherlands and Curaçao. For more information and expert advice on establishing an entity in Curaçao under the E-zone facilities, please contact Adriaan Smit, financial and real estate advisor. He is available to assist and provide guidance.