December amendments to preferential tax regimes legislation introduced on July 1, 2018

On Thursday 20 December 2018 Parliament of Curaçao adopted changes to Curaçao tax law. These changes regard in particular the legislation for the remediation of the preferential tax regimes which was introduced on 1 July 2018. The changes which have now been introduced are partly an addition to the earlier legislation and partly an amendment of this legislation.

The most impactful changes regard the following:

  • The Curaçao Investment Company
  • The territorial exemption
  • E-zone
  • Substance
  • Country by country reporting
  • Grandfathering rule

The main focus of the changes has been to bring the preferential regimes of Curaçao in line with the standards developed by the OECD (Organisation for Economic Co-operation and Development). The purpose is to ensure that Curaçao complies with the international standards to prevent evasion of taxes while preserving the attractiveness of Curaçao as a Financial Services Jurisdiction.

In this newsflash we discuss the updates as per December 2018.

The Curaçao investment company (CIC)

As per 1 July 2018 the tax-exempt company is renamed into the ‘Curaçao Investment Company’. The income of this CIC from qualifying activities will as before remain free from profit tax. Based on the updates of December 2018 the international qualifying activities of a CIC will also be exempt from Curaçao turnover tax. To be eligible for this regime the substance requirements introduced in the 1 July legislation should be met.

As per 1 January 2018 a CIC must annually submit a profit tax return to the Curaçao Inspectorate of Taxes. In addition, the CIC should submit together with its profit tax return a declaration from a qualifying independent expert that the CIC meets the conditions stated in the Profit Tax Ordinance.

Please note that if the CIC does not comply with the requirements, the Inspectorate of Taxes may impose an assessment and fines and may even revoke the CIC status with retroactive effect.

What to do?

Assess if you can meet the relative substance requirements. Discuss with your tax advisor how to proceed.

The territorial exemption

The former export regime has been replaced by a new territorial exemption. As per 1 July 2018 a company can apply this exemption for profit earned by providing services or goods to customers abroad.

This foreign income exemption can also be applied by companies which perform local as well as international business activities. The exemption can however only be applied on the profit realised in connection with international business activities.

The foreign income exemption may also be a suitable alternative for e-commerce companies that as of 31 December 2018 no longer qualify for the e-zone regime.

Originally, the Curaçao government proposed to introduce a 3% turnover tax which was to be levied as per 1 January 2019 on turnover realized through international business activities. However, in the amendments of December 2018 this proposal is eliminated. As a result, income which is exempted from profit tax based on the foreign income exemption regime is also exempted from Curaçao turnover tax.

The government proposes to introduce in future a minimum tax / fee. Such fee will be further specified in a State Decree.


As of 1 July 2018 new e-commerce and service activities are no longer qualifying for the e-zone regime. On the other hand, based on the amendments, companies that perform activities consisting of maintenance and repair services in the e-zone on behalf of local customers, may now qualify for this regime.

Please note, that to qualify for the e-zone regime the substance requirements as introduced in the 1 July legislation must be met.

What to do?

If you perform e-commerce or services in the E-zone discuss with your tax advisor how to proceed. What alternative is possible for you.

Substance requirements

As mentioned above, to qualify for status of a Curaçao Investment Company or the e-zone regime, the substance requirements as introduced in the 1 July legislation must be met. It is required to have enough employees and local business expenses in line with the size and type of activities of the company. It is also required to have local employees who perform the core activities of the company. The December 2018 amendments clarify that these activities must be locally performed.

Country by country reporting

Curaçao signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports. In connection herewith, Curaçao has introduced local legislation implementing the Country-by-Country Reporting obligations with retroactive effect as per 1 January 2018.

If the ultimate parent company of a Multinational Enterprise with a consolidated group turnover exceeding ANG 1,500,000,000 (approximately USD 842,700,000), is a Curaçao tax resident entity, this entity is obliged to notify the Curaçao Tax Inspector of its reporting obligation before the end of its financial year and should file a Country-by-Country report with the Curaçao Inspectorate of Taxes within 12 months after the last day of the fiscal year.

A Curaçao resident entity that forms part of a Multinational Enterprise but is not the reporting entity for Country-by-Country reporting, should notify the Curaçao Inspectorate of Taxes of the name of the reporting entity and the jurisdiction in which the reporting entity is a tax resident before the end of its financial year.

Furthermore, the Curacao entity of a Multinational Enterprise with a consolidated turnover of ANG 1,500,000,000 must include in its administration a master and a local file. The earlier adopted threshold of ANG 100,000,000 as a requirement for maintaining these files has now been increased.

Grandfathering rule

As the Curaçao government introduced new legislation as per 1 July 2018, it is important to know that companies qualifying for a specific regime as per that date which, due to the new legislation, may not qualify after 1 July, will remain eligible to that regime for the remainder of the book year ending on 31 December 2018.



If you would like to know more, or have questions or comments with regard to the content of this news, please contact:

Drs. Paul G.E.M. Smeets

Management, Finance and Tax Consultancy

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