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Taxation in Curacao
 
 
 

General

The Netherlands Antilles have officially been dissolved, with St Maarten and Curacao becoming constituent countries within the Kingdom of the Netherlands. The five islands of the Netherlands Antilles have in principle the same tax laws, although the sales tax on Curaçao and Bonaire is different from the sales tax on St Maarten, Saba and St Eustatius or Statia.

The income/profit tax of residents is levied on the income/profit generated world-wide, while foreign residents are subject to the Netherlands Antilles tax if they generate income or profit from Netherlands Antilles sources. The tax system is a so called classical system, which means that a corporation must pay tax on its profit while the shareholder of such corporation must again pay tax on dividends received from the corporation. There are however certain facilities that reduce or eliminate this economic double tax effect.

Although Aruba and the Netherlands are part of the same Dutch Kingdom and the tax laws have been the same up to the period around the second world war, the tax laws of these three parts of the Kingdom have changed in different directions. The fact that the tax laws originate from the same system makes it possible to have the same judges decide on the tax law disputes. The judges from the Netherlands fly in at least twice a year to settle tax cases.

Each part of the Dutch Kingdom has its own right to tax which means that there is also the possibility of double taxation. Already in 1964 the Dutch Kingdom has one tax arrangement that solves double taxation issues and arranges for the possibilities to exchange information. This TAK (Tax Agreement for the Dutch Kingdom) has been amended several times and is at this moment (June 2006) again in discussion on the subject of the dividends paid from the Netherlands to the Netherlands Antilles.

The social security system covers on the national level old age (AOV), widows and orphans (AWW) and exceptional medical expenses (AVBZ) and on the employer-level sickness (ZV) and accident insurance (OV).

The collection of the taxes and social security contributions is being divided between the Island Collector (EO), the Land Collector (LO) and the Social Security Bank (SVB).

Income Tax

Capital gains generated through the sale of the source of income is in general not taxable unless it is generated in the course of a business or stems from the sale of shares in a company that form a so called substantial interest.

Residents are taxed on their income generated world-wide from the following sources:

• income from a business or profession as entrepreneur; the rules that apply here are in principle the same as the rules that apply to a corporation to calculate the profit generated;

• income from employment;

• income from property (real estate);

• income from capital;

• certain periodic receipts.


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