Free establishment and even 0% income tax
In mid-2018, the Export Facility (± 3.2% income tax) was replaced by an income tax exemption for the foreign result. The company, unlike the E-zone, does not have to be in a certain area to benefit from this tax benefit: every desired location in Curaçao is eligible for the exemption.
This facility haa been introduced for internationally operating companies. For companies that make use of this, the foreign result is exempt from income tax.
Why the exemption from income tax in Curaçao?
The facility originally offers an alternative to companies that currently still use the transitional arrangement applicable to the offshore (until 01.01.2020). However, the facility is more extensive than the offshore arrangement and is also accessible to newly joining export companies. For companies in Curaçao that benefit from this facility, the foreign result is therefore exempt from income tax.
With a profit of € 100,000 you pay € 20,000 corporation tax in the Netherlands. With a profit greater than € 200,000 a 25% corporate tax applies in the Netherlands. In Curaçao you do not pay corporate tax (profit tax) on profit earned abroad.
For whom is the exemption intended?
The 0% rate is intended for companies with the following specifications:
- The most important requirement is that the company makes a profit from activities focused on abroad. Activities focused on abroad, that is from Curaçao. Only the foreign profit is exempt; or
- The company (imports and) exports goods; or
- The company focuses on international trade and services that can be performed with or for the benefit of electronic communication and information options; or
- The company focuses on international storage services; or
- The company provides or manages loans; or
- The company benefits from qualifying intangible assets (development in Curaçao, or on behalf of a Curaçao company and approval by the Bureau Telecommunication and Post
The company can have both local and foreign shareholders.
Presence (substance requirement) in Curaçao
The company must have enough substance (presence) in Curaçao. Assessment is done based on:
- Business address in Curaçao (can be arranged through our partners IQ EQ and Workspot);
- At least 50% of the statutory and decision-making board members live or are established in Curaçao, this can be realized through our partner IQ EQ;
- These board members have the necessary professional knowledge to properly perform their duties (transactional decision-making, transaction handling);
- The company has a number of qualified full-time employees fitting to the nature and scope of the activities;
- The board decisions are taken in Curaçao;
- The most important bank accounts of the company are in Curaçao;
- The accounting is conducted in Curaçao (can be arranged through our partner WB Accountants | Tax Advisors);
- The company runs a real risk regarding loans or legal relationships that form the basis for the interest received and paid, royalties, rent and the like;
- The company is not regarded simultaneously as a tax resident in another country;
- The company has an appropriate amount of annually recurring local operating costs.
Certain services such as services provided by notaries, lawyers, accountants, tax advisors, management services and (re) insurance services are excluded from the 0% profit tax.
Example business cases
For various international trading activities, it is possible to opt for both establishment in an E-zone and the profit tax exemption. The choice will increasingly fall on the exemption. Examples of possible business activities that may be exempt:
- Importing and / or exporting goods to and / or from, for example, EU or South America;
- IT companies that sell hardware to customers in, for example, the EU or South America;
- Web stores;
- Call centers;
- Digitization of documents;
- Web developers and hosting (development, management, hosting and operation of websites);
- Online gaming, online casinos;
- Traders in foreign real estate.
Profit tax exemption for your company?
The location does not have to take place at specific locations on Curaçao, so that the location costs can be relatively low.
Do you also want to benefit from the profit tax exemption with your company? We would like to advise you on all aspects of this. Contact us without obligation. SmitsvandenBroek Adviseurs | Accountants has many years of experience in tax law and accountancy in Curaçao. Our advisers know all aspects of the exempt income tax and the E-zones.