Benefits of the new Netherlands and Curacao tax agreement

Jeroen Adeler, Director of Product Development based in Amsterdam and Marjet Rozema, Managing Director of the Curacao office, look at the business advantages of the new tax treaty between the Netherlands and Curacao.

As we have previously reported, new bilateral rules for the avoidance of double taxation between the Netherlands and Curacao have been approved, and will be in force from 1 December 2015 however, the rules mainly apply for tax years from January 2016.

The arrangement between the two nations is based on the 2010 version of OECD Model tax convention however there are some some deviations; most notably two anti-abuse measures to prevent tax structuring. Also, the description of permanent establishments was extended. The agreement includes the furnishing of services including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purposes. The agreement puts Curacao on par with similar intermediary jurisdictions such as Barbados and Panama, for structuring and managing Dutch inbound and outbound investments.

The tax arrangement has been closely monitored by TMF Group since its first publication in June 2014 and includes some of the recommendations of the OECD’s BEPS project.

Key advantages for businesses

Some notable benefits of the treaty include:

  • No dividend withholding tax from the Netherlands to Curacao under specific circumstances
  • The current 8.3% dividend withholding tax will drop to 5% for existing structures until 2020
  • No withholding taxes on interest and royalties
  • No substantial interest rules should generally apply for existing structures until 2020.

The agreement provides a variety of opportunities for a number of businesses and activities such as improving supply-chain structures, cash pooling, factoring, setting-up captives, IP planning, leasing structures, wealth management and asset protection.

And there are many other reasons for investors to consider Curacao as a hub: the multilingual island is strategically located near South America - one of the world’s fastest-growing economic regions and a key location for Europe.

Got questions? Get in touch with our experts in Curacao and the Netherlands.

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