|Emile G Steevensz
The other approved measures, which are expected to enter
into force on January 1 2017, include, among others:
- Tax measures to regulate mergers,
demergers and conversions;
- Updated share merger exchange rules;
- Rules to comply with the OECD's BEPS
- General amendments in the profit tax
ordinance, sales tax and real transfer tax.
Tax rules for mergers, demergers and conversions
With the introduction of Book II of the Curaçao Civil
Code in 2004, mergers, demergers and conversion rules were
introduced in Curaçao corporate law. However, the
accompanying tax measures, like in the Netherlands, were not
introduced. Various proposals have been circulated and finally
the accompanying measures were approved by parliament.
The final rules intend to prevent profit tax and/or income
tax being levied as a result of a merger, demerger or
conversion, provided certain conditions are met. The rules
include strict anti-abuse measures.
Modernisation of share merger exchange rules
A decree stating the rules for accompanying tax measures for
a share exchange merger were published in 1997. This decree
made it possible to acquire a company by an exchange of shares
without taxes being levied, subject to certain conditions. In
order to avoid or minimise the substantial interest rules, the
decree was slightly amended in 2012 to prevent tax exempt
companies from acquiring shares in operational companies.
Under the Curaçao personal income tax regime and as
outlined in the substantial interest rules, dividends and
capital gains are, on request, subject to 19.5% personal income
tax. Provided certain conditions are met, taxation of dividend
income under the substantial interest rules can be reduced
significantly under the fictitious return of investment
The share merger rules are applicable on the acquisition of
resident entities, as well as foreign companies. Company shares
can be purchased in exchange for shares, as long as the
Curaçao parent company acquires enough shares to own
more than 50% of the voting rights in the acquired company. In
cases where the parent company possesses 50% of the voting
rights, the share merger rules apply when more shares and
voting rights are acquired.
Transfer pricing rules
In July, Curaçao signed the OECD Multilateral
Competent Authority Agreement for the automatic exchange of
country-by-country reports (the CbC MCAA). As result,
Curaçao introduced transfer pricing rules in the General
Ordinance for Taxes (Algemene Landsverordining
The rules apply for legal entities that directly or
indirectly participate in other related companies or
participate in the management, or supervise the management, of
other companies and conclude transactions with that related
entity. The legal entity is responsible for keeping a record,
or being in possession, of the following:
1) Documents that describe the conditions
under which the transactions are concluded; and
2) Documents that show that the price of the
transactions are at arm's length.
The rules also apply in case the same individual
participates in different companies or participates in the
management or supervises the management.
The rules also apply on transactions that existed before the
transfer pricing rules are effective. Transfer pricing
documentation regarding transactions performed after the rules
come into force must be available when the transaction takes
The transfer pricing documentation is part of the
administration of the company. Non-compliance may result in the
company having the burden of proving to tax authorities that
corrections applied by the tax authorities are incorrect.
Ultimate beneficial ownership register
Legal entities must keep a register with all the names of
their beneficial owners.
Beneficial owners are the individuals who, based on articles
of association or otherwise, possess 25% or more of the capital
of the company.
In the case of a limited partnership, the names of the
limited partners must be kept by the business.
Real transfer tax
The real transfer tax ordinance has also been
Ships larger than 20 cubic meters are exempt from the
provisions to stimulate the registration of ships in the
Curaçao maritime register and therefore the 4% real
transfer tax will not apply.
Furthermore, exemptions from the real transfer tax were
introduced for mergers, demergers and internal reorganisations
in which real estate is involved, provided certain conditions
are met. The same applies when a private owned business is
acquired by a limited liability company.
Emile G Steevensz (email@example.com)
Steevensz|Beckers Tax Lawyers
Tel: +599 9 736 05 06