Curacao as a Tax haven

Introduction.

If you consider a tax haven to be somewhere that you can avoid paying taxes – then you won’t be able to use Curacao as a tax haven. However, if you’re looking for a Caribbean country in which to locate your business that has some highly favorable tax regimes – then you could do far worse than to use Curacao as your tax haven. Needless to say using an established and reputable tax advisor can save you money on any of your taxes.

Curacao constitutionally.

Don’t worry, we’re not going to get all political here, you can find out more about that if you want to yourself, but we do need to explain a bit about the constitution of Curacao and how that affects its standing in international law and its tax structures. Historically, as part of the Netherlands Antilles, Curacao has been an autonomous country within the Netherlands. Following years of discussion and negotiations as to whether or not the island should seek full independence, in a free vote on the island in May 2009 Curacao took the decision to accept a new constitutional relationship with Holland; thereby tying it to certain conditions in both its judicial and financial affairs. Coupled with the already existing New Fiscal Framework (NFF), developed on the island in 1999 – Curacao has renounced any attempt to become what the OECD would term an uncooperative tax haven.

Tax advantages of being on Curacao.

Just because Curacao is conforming with the OECD in standards for transparency and the effective interchange of information relating to taxes – doesn’t mean to say that Curacao isn’t an attractive prospect for foreign companies or, indeed, wealthy people seeking to become tax exiles from their native land. Obviously we know need to consider the taxes you might pay as a private individual or as a business, in order for you to judge just how good a tax haven Curacao could be for yourself. The following is a summary of the main points concerning taxes on Curacao.

Personal taxation.

To all intents and purposes all residents are taxed on their world-wide income, whilst non-residents are taxed only on that part of their income that is generated within Curacao, or the wider Netherlands Antilles. Whilst progressive rates of income tax can apply the current maximum rate of income tax is 57.2%. Nonrecurring items of income, such as substantial share interest, attracts tax at just 32.5%. Individuals could also be liable for a profit tax of 34.5% arising from capital divided into shares, mutual insurance companies, co-operative societies etc. Inheritances and gifts from an estate are taxable. For residents the rates vary from just 2% to 24%, depending on its value and the relationship between the donor and recipient; nonresidents would not normally be taxed as the recipient of an inheritance or gift from an estate.

Import-Export duties.

Whilst primary foodstuffs are exempt from import taxes, to all other goods the import duty varies between 5% and 22%, depending on the product. Alcohol, cigarettes and fuel are all subject to other excise duties. Exporting to EU countries incurs a zero percent import duty, whilst goods where at least a 35% of it was produced/manufactured in Curacao – can also enjoy a zero import tax in to the USA.

Turn-over tax.

This is one of the really good pieces of information for anyone seeking to start a business in Curacao; turn-over tax of just 5% and is levied against the provision of services or deliveries by entrepreneurs and companies, some of whom can even find themselves completely exempted from this tax.

Employment taxes.

Curacao operates a PAYE system for employees on the island and, if you locate a business here and employ other staff – you are responsible for withholding any taxes due. Furthermore, as an employer you should know about the social security taxes your company would be liable for. Although rates vary slightly, for an average Curacao wage you would have to contribute 8.3% to your employees 2.1% toward pension funds. If the employee earns more than the average wage this employer contribution falls. You will also have to insure all your workers against accidents, rates for this vary according to the annual salary- starting at just 0.5% but rising to 5%. Finally there ‘s a health tax, another form of social insurance, which is 2% of taxable income up to $946 per annum.

Curaçao