The agreement will introduce a 0% dividend withholding tax
rate on distributions of profits. At present, the lowest
dividend withholding tax rate available is 8.3%, but the zero
rate will apply to dividends paid to certain active parent
companies if they satisfy a limitation of benefits (LOB)
"The dividend withholding tax rate on dividends paid to
parent companies that will not qualify under the LOB provision
will be 15%," said Marc Sanders of Taxand Netherlands.
"However, this rate will be reduced to 5% up to and including
2019 for distributions by companies to their parent companies
which hold a minimum interest of 25%. Furthermore, the
Netherlands has confirmed that a frequently used structure to
eliminate dividend withholding tax between the Netherlands and
Curacao through the use of a Dutch Coop will be respected until
at least the end of 2014."
While the 0% dividend withholding tax rate could bring about
the birth of new tax planning schemes, Sanders points out that
the LOB provision to be contained in the agreement is likely to
limit those opportunities.
"Curacao was old-school planning in the 1980s and 1990s with
a lot of structures through it. The new agreement may resurrect
part of that but anti-abuse clauses are included," said
Sanders. "So the new agreement will probably not result in a
major resurgence of Curacao as a tax planning location but will
certainly offer new opportunities."
The agreement – which will also see the countries
engage in automatic information exchange – is subject
to parliamentary procedures in both countries and is expected
to become effective from January 1 2015.