November 27, 2013

Fiscal consequences (for non-residents) of owning private property on Curacao

This article has been edited on November 12, 2019

Below we will briefly stipulate the fiscal consequences of leasing your Curacao real
estate to a third party, according to Curacao tax law. We shall differentiate between
property that is owned by individuals and company owned property like a Ltd./
Co./BV.

1  Individuals who lease a property to lessees.
In the case that you receive lease income with respect to a property on Curacao,
you are automatically liable to pay income tax on Curacao regardless weather you live on
Curacao yourself or not.  If you live abroad there will be “a foreign tax
liability. This means you have to complete an annual tax return
(inkomstenbelasting model B) and file it with the  tax office. On this return
you will have to state 65% of the yearly rental income.  You may deduct
only paid interest on a mortgage related to the purchase or improvement of
the property (if applicable). If the interest supersedes the lease income, you
may deduct the negative income during the following 5 years. (If you live
in the Netherlands you will also have to file your property in ‘BOX 3’ of
your income tax return, but you will be granted a tax exemption according
to the Tax Agreement of the Kingdom.)

2  The property is owned by a Dutch (or other country) company.

The company will have to annually file a complete statement of costs and
assets at the tax office, as if it were a separate company. This has to be
filed first as a preliminary tax return before the April 1st
each year. The final  tax return and payment is to be filed  before the 1st
of July each year. Currently the profit tax rate is 22 percent.
In the Netherlands the company is entitled to an exemption with respect to
this income.

3  VAT / Tourist tax.
If the lease contract of your property is 1 year or longer, no sales tax is applicable
in case the lessee is a formal Curacao resident. However, for short term lease,
you will have to charge 6 percent to the lessee In case the lessee  is a non-resident, you will
have to charge 7 percent sales tax.

(The above text is of an informative nature, no rights may be derived from it). 

www.mullertax.com


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