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NEWS ALERT - January 2012

NEW TAX TREATY BETWEEN THE NETHERLANDS AND CURACAO

ON OCTOBER 10TH, 2010 CURACAO BECAME AN AUTONOMOUS TERRITORY WITHIN THE KINGDOM OF THE NETHERLANDS.
RECENTLY THE AUTHORITIES OF THE NETHERLANDS AND CURACAO AGREED ON A NEW TAX TREATY TO BE ENTERED INTO BETWEEN THE NETHERLANDS AND CURACAO.
THIS NEW TAX TREATY WILL REPLACE THE CURRENT TAX TREATY FOR THE KINGDOM OF THE NETHERLANDS THAT ALSO COVERS THE OTHER OVERSEAS TERRITORIES OF THE KINGDOM OF THE NETHERLANDS.
THE NEW TAX TREAY BETWEEN THE NETHERLANDS AND CURACAO IS SCHEDULED TO BECOME EFFECTIVE ON JANUARY 1ST, 2013.

THE MAIN TAX AMENDMENTS FOR CORPORATIONS WILL BE AS FOLLOWS:

  1. REDUCTION OF DUTCH DIVIDEND WITHHOLDING TAX
    DIVIDEND DISTRIBUTIONS FROM A DUTCH SUBSIDIARY COMPANY TO A CURACAO HOLDING COMPANY WILL BE SUBJECT TO:
    2. A. 0% DUTCH WITHHOLDING TAX WHEN THE CURACAO HOLDING COMPANY HOLDS A SUBSTANTIAL SHAREHOLDING (AT LEAST 25%) IN THE DUTCH SUBSIDIARY AND PROVIDED THAT THE CURACAO HOLDING COMPANY IS FISCALLY CONSIDERED AN ACTIVE COMPANY WITH SUBSTANCE.
    B. 5% DUTCH WITHHOLDING TAX WHEN THE CURACAO HOLDING COMPANY HOLDS A SUBSTANTIAL SHAREHOLDING (AT LEAST 25%) IN THE DUTCH SUBSIDIARY AND WHEN THE CURACAO HOLDING COMPANY IS FISCALLY NOT CONSIDERED AN ACTIVE COMPANY WITH SUBSTANCE. THIS REDUCED 5% DUTCH WITHHOLDING TAX WILL APPLY THROUGH DECEMBER 31ST, 2019.
    C. 5% DUTCH WITHHOLDING TAX WHEN THE CURACAO HOLDING COMPANY HOLDS A SHAREHOLDING (IRRESPECTIVE THE SIZE) IN A DUTCH SUBSIDIARY THAT IS LOCATED IN EITHER ONE OF THE SO-CALLED BES ISLANDS OF THE KINGDOM OF THE NETHERLANDS, I.E. BONAIRE, EUSTATIUS AND SABA.
    D. 15% DUTCH DIVIDEND WITHHOLDING TAX IN ALL OTHER SITUATIONS.
  2. EXEMPTION FROM DUTCH PROFIT TAX ON CAPITAL GAINS REALIZED ON THE SALE OF SUBSTANTIAL SHAREHOLDINGS
    UNDER DUTCH PROFIT TAX LAWS THE CAPITAL GAINS RELAZED ON THE SALE OF A SUBSTANTIAL SHAREHOLDING (25% OR MORE) IN A DUTCH COMPANY BY A FOREIGN CORPORATE SHAREHOLDER ARE IN PRINCIPLE SUBJECT TO DUTCH PROFIT TAX. UNDER THE NEW TAX TREATY SUCH CAPITAL GAINS REALIZED BY A CURACAO HOLDING COMPANY ON THE SALE OF SUCH A SUBSTANTIAL SHAREHOLDING IN A DUTCH SUBSIDIARY WILL AT ALL TIMES BE EXEMPT FROM SAID DUTCH PROFIT TAX.

 

NEWS ALERT - OCTOBER 2011

CURACAO TRUST INTRODUCED!

On October 12, 2011 the Parliament of Curacao approved new legislation introducing the Curacao trust (similar to the Anglo-Saxon trust). The trust legislation will enter into effect on the day following its publication in the official Curacao Gazette, i.e. shortly.

MAIN LEGAL FEATURES

  • The Curacao trust must be incorporated by notarial deed, which notarial deed must also describe the assets of the trust. A notarial deed is also required for any future amendments of the trust deed as well as for the formal cancellation of the trust.
  • The Curacao trust must have at least one (1) trustee and at least one (1) beneficiary. At all times the Curacao trust must have at least one (1) local trustee, i.e either an individual who is a resident of Curacao or an entity that is located in Curacao.
  • The settlor of the Curacao trust may act as trustee and/or beneficiary.
  • The Curacao trust can also appoint a protector.
  • In case the trustee or protector also act as beneficiary, the trust must have a second beneficiary so both trustee and protector can never act as sole beneficiary of the trust.
  • The trust must be registered with the Chamber of Commerce and same registration requirement applies to all amendments of the trust deed.
  • In addition to cancellation of the trust by notarial deed the trust is also legally considered to be cancelled if the trustee becomes the sole beneficiary or if the trust assets have evaporated or if the trust has been established for a limited term and said term has lapsed.

 

MAIN TAX FEATURES

  • The trust is not subject to Curacao profit tax provided the trust does not conduct a business.
  • However the trust can elect for profit tax at a fixed rate of 10%, each time for a period of three (3) years(if desirable from a foreign tax planning point of view).
  • Distributions made by the trust to non-residents of Curacao are not subject to Curacao personal income tax.
  • Gifts to a trust respectively inheritances from a trust are not subject to Curacao inheritance tax provided that the benefactor respectively the testator are non-residents of Curacao.

 

NOTE: Needless to say that with the introduction of the Curacao trust, the Curacao financial services industry is now able to offer to their worldwide clientele a pendant of the "Anglo-Saxon" trust for asset protection and individual tax planning purposes!

 

NEWS ALERT - SEPTEMBER 2011

BELASTINGPLAN 2011

On September 15, the Parliament of Curacao approved a package of amendments of the Curacao tax laws aiming at mitigating the tax burden for both individuals and corporations. Most of the amendments will enter into effect in the fiscal year 2012. The most significant changes for the financial services industry are the following:

Private Foundation (SPF):

The SPF is exempt from profit tax provided it does not conduct a business. Under the new rules the SPF can elect to be regarded as a taxable business enterprise, thus being subject to a profit tax rate of 10% on both income and capital gains. This election for taxation enters into effect retroactively as from January 1, 2011. The election for taxation is valid for a period of 3 years.

Fiscal Transparency of N.V. or B.V.:

It will be possible to use the Curacao N.V. or B.V. as fiscal transparent entities. This implies that the N.V. and B.V. will be regarded as a partnership thus allocating the assets/activities/profit of the transparent entity directly to its shareholders where these profits will be taxed.

Reduction of profit tax:

The profit tax rate will be reduced from 34.5% to 27.5%.

Value Added Tax (VAT):

The rate will increase from 5% to 6%. In addition the exploitation of real estate located in Curacao will become subject to VAT, i.e. lease income from real estate. The lease of real estate as main residence is not subject to VAT.

 

NEWS ALERT - FEBRUARY 2011

2. TIEA Mexico: On February 4, 2011, the bilateral tax information exchange agreement between The Netherlands Antilles and Mexico has come into force. This agreement applies to Curacao, St. Maarten, Bonaire, St. Eustatius and Saba.

 

NEWS ALERT - SEPTEMBER 2010

Changes of the Statute for the Kingdom of the Netherlands as per October 10, 2010

At present the Kingdom of The Netherlands comprises of 3 member states, i.e.

  1. The Netherlands in Europe;
  2. The Netherlands Antilles in the Caribbean;
  3. Aruba in the Caribbean


whereby the Netherlands Antilles comprise of 5 islands, i.e.

  1. Curaçao
  2. Bonaire
  3. St. Maarten
  4. Saba
  5. St. Eustatius


On September 9, 2010 it was decided that the following constitutional reform will be implemented on October 10, 2010:

  • Curacao and St. Maarten will each become a member state of the Kingdom of The Netherlands;
  • Bonaire, Saba and St. Eustatius will become municipalities of the Netherlands in Europe.


This constitutional reform will not have any major effects on the current laws and regulations that are applicable to entities established in the Netherlands Antilles besides the fact that the name Netherlands Antilles will cease to exist and be replaced by the name Curacao.

 

NEWS ALERT - JANUARY 2010

Spain- Netherlands Antilles

On January 27, 2010 the bilateral Tax Information Exchange Agreement (TIEA) between The Netherlands Antilles and Spain came into force.

The TIEA has the following two major tax advantages:

1.   As a direct consequence the Netherlands Antilles shall NOT be considered as a tax haven en thus The Netherlands Antilles shall be excluded from the Spanish "black list" of tax have jurisdictions.

2.   The TIEA provides for the possibility to set up new corporate structures whereby dividends from countries in the European Union and dividends from non-EU countries with which Spain has concluded a bilateral tax treaty, can be distributed and received in a tax efficient manner. This means, under certain conditions, with zero income or withholding taxation.

 

NEWS ALERT - NOVEMBER 2009

I. OECD WHITE LIST
In September 2009 the Organization for Economic Co-operation and Development (OECD) placed the Netherlands Antilles on the OECD WHITE LIST thus giving an enormous positive boost to the international reputation and acceptance of the Netherlands Antilles as a financial offshore center.
II. DUTCH CARIBBEAN SECURITIES EXCHANGE (DCSX)
It is expected that late 2009 the Dutch Caribbean Securities Exchange (DCSX) will become operational in Curacao. The purpose of the DCSX is to become an international securities exchange with a time and cost efficient transparent listing for international and regional corporations and investment funds. It goes without saying that such a listing can add substantial substance to entities resident in the Netherlands Antilles.
III. TAX EXEMPT COMPANY (TEC) AS ROYALTY COMPANY
Since its introduction in 2000 the Netherlands Antilles TEC has enjoyed an exemption from profit tax for certain qualifying financing activities and for certain qualifying investment activities. The TEC may now also enjoy an exemption from profit tax for qualifying come derived from owning and licensing intellectual property rights, e.g. film rights.
IV. PARTICPATION EXEMPTION
The participation exemption regime has been fine tuned to be more in accordance with the OECD guidelines. However the new legislation still provides for a 100% exemption for all qualifying participations, now also including income from a qualifying permanent establishment or permanent representative.