Curaçao: Revocation of the Ministerial Decree 'real presence'

Entities that make use of most Curaçao tax regimes must have real economic presence (substance) in Curaçao in order to apply such tax regime or to avoid fines. Pursuant to the Curaçao Profit Tax Ordinance, an entity has real economic presence if it:

• employs a number of qualifying fulltime local employees (whether on payroll or not), that is suitable for the size and activities of the entity or the concern[1]; and
• incurs an amount of annually recurring, local operational costs that is suitable for the size and activities of the entity or concern.

The Minister of Finance enacted a Ministerial Decree towards the end of 2019 in which guidelines were provided further explaining the above criteria. However, upon review, the Forum for Harmful Tax Practices of the OECD informed the Curaçao Government that the Ministerial Decree did not meet the Forum’s substance criteria.

As a result, the Ministerial Decree has been withdrawn effective as of 24 July 2020.

[1] A concern is comprised of the entity together with the entities:

1. in which the entity has an interest of at least one third;
2. that have an interest in the entity of at least one third;
3. in which a third party has an interest of at least one third, while this third party also has an interest in the entity of at least one third.