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Doing Business in Curaçao

Preface This guide has been prepared by Baker Tilly Curaçao, an independent member of Baker Tilly International. It is designed to provide information on a number of subjects important to those considering investing or doing business in Curaçao.

Baker Tilly International is the world’s 8th largest network of independent accounting and business advisory firms by combined fee income, and is represented by 156 firms in 131 countries and 26,000 people worldwide. Its members provide high quality accounting, assurance, tax and specialist business advice to privately held businesses and public interest entities.

This guide is one of a series of country profiles compiled for use by Baker Tilly International member firms’ clients and professional staff. Copies may be downloaded from www.bakertillyinternational.com.

Doing Business in Curaçao has been designed for the information of readers. Whilst every effort has been made to ensure accuracy, information contained in this guide may not be comprehensive and recipients should not act upon it without seeking professional advice. Facts and figures as presented are correct at the time of writing.

Up-to-date advice and general assistance on Curaçao matters can be obtained from Baker Tilly Curaçao; contact details can be found at the end of this guide.

January 2013

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Doing Business in Curaçao

Contents1 Fact Sheet 2

2 Business Entities and Accounting 4 2.1 Business Entities 4 2.2 Accounting Requirements 6 2.3 Filing Requirements 7

3 Finance and Investment 8 3.1 Exchange Control and Other Restrictions 8 3.2 Sources of Finance 8

4 Employment Regulations and Social Security 10 4.1 Residence and Work Permits 10 4.2 Employment 10 4.3 Social Security 11

5 Taxation 12 5.1 Personal Tax 12 5.2 Business Taxes 14 5.3 International Tax Provisions 18

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1 Fact sheetGeography

Location Curaçao is an island located south of the Caribbean

Area 444km2

Land boundaries None

Coastline 364km surrounded by the Caribbean Sea

Climate Tropical

Terrain Rocky, mixed volcanic and coral origin

Time zone GMT -4

People

Nationality Dutch

Population Approximately 131,100 (April 2011)

Religion Predominantly Catholic (80%)

Language Dutch, Papiamentu

Government

Country name Curaçao

Government type The Kingdom of the Netherlands (the Kingdom) includes four countries: the Netherlands, Aruba, Curaçao and St. Maarten. The Kingdom is a constitutional hereditary monarchy governed under a parliamentary system. Aruba, Curaçao and St. Maarten are virtually independent political entities, yet share foreign and defence policies with the Netherlands

Capital Willemstad

Administrative divisions Every country within the Kingdom, including Curaçao, has its own government

Political situation On 10 October 2010, the former country the Netherlands Antilles ceased to exist and the islands of Curaçao and St. Maarten became separate countries within the Kingdom. Bonaire, St. Eustatius and Saba (together the so-called BES Islands) acquired the status of extraordinary municipalities within the Netherlands

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Economy

GDP – per capita US$20,567

GDP – real growth rate 4%

Labour force 62,627

Unemployment 6,045

Currency (code) Netherlands Antillean Guilder (ANG)

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2 Business Entities and Accounting2.1 Business Entities

The most popular types of business entities in Curaçao are the public or limited liability companies. Specific types of business entities are exempt companies, E-Zone companies and transparent companies.

2.1.1 Legal business entities

Curaçao corporate law is based on Dutch corporate law and basically recognises two types of legal business entities:

• Thepublicliabilitycompany(naamloze vennootschap or NV)

• Thelimitedliabilitycompany(besloten vennootschap met beperkte aansprakelijkheid or BV).

The NV was the most common legal vehicle in Curaçao until the introduction of the BV in 1999. The BV and NV share many characteristics.

A legal business entity may be established and owned by one or more shareholders, which may be either, legal entities or individuals, residents or non-residents. Incorporation is achieved by a notary deed; amendment of the articles of association also requires such a deed. For non-residents it is possible to incorporate a company by proxy. A company must be registered with the Chamber of Commerce and the legal business entity can own property in its own name, is allowed to contract in its own name and can sue and be sued.

Under Curaçao corporate law, the management and supervision functions may be separated between the executive board and the supervisory board – the “two-tier system” – or be merged to form a single board – the “one-tier system”.

A legal business entity must have at least one managing director, which can be another entity or a private person. At least one managing director must be domiciled in Curaçao. Under certain circumstances it suffices to have a local representative. The power and authority of the managing director(s) are determined by law and the articles of association. Supervisory directors must be private persons.

The capital of the legal business entity consists of at least one share with any nominal value and voting power. Shares may be either bearer or registered shares (under some circumstances restrictions regarding bearer shares apply) and may vary in class, voting rights, participation in profit distributions and rights to liquidation proceeds.

A large NV must publish audited financial statements in order to facilitate inspection by third parties, such as creditors, employees or business partners. A NV is classified as large based on the number of employees, the total balance sheet value of assets and net turnover.

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The relevant differences between the Curaçao NV and BV are:

• TheBV,irrespectiveofitssize,issubjecttolessstrictauditandpublicationrequirements

• TheBVcan,undercertainconditions,obtainanexemptstatusforprofittaxpurposes

• ABVmayonlyissueregisteredshares.

A legal business entity is generally subject to profit tax.

2.1.2 Non-legal business entities

Doing business in Curaçao is possible through entities that are not legal business entities, such as sole proprietorships and certain partnerships (vennootschap). These entities are, in general, considered fiscally transparent. As a result, profits and losses as well as capital allowances are directly attributed to the owners of these entities.

2.1.3 Private foundation

A private foundation is a legal entity regulated by law. They are particularly suitable for estate planning, as a holding entity, or other investment vehicle or for asset protection. The private foundation provides an alternative to non-legal entities such as a trust. A private foundation is not considered to carry on a business. The purpose clause of the private foundation may be drafted to meet the founder’s specific needs, as long as no business activities are undertaken.

The board of directors decides on distributions in accordance with the articles of incorporation. The founder may, subject to the articles of incorporation, have authority to appoint and dismiss members of the board of directors.

A private foundation’s income generally consists of passive income such as interest or dividend income and is exempt from profit tax. The private foundation must keep proper books and records.

Contributions of funds or assets to the private foundation by a non-resident of Curaçao are exempt from estate and gift taxes and no gift tax is due in Curaçao on distributions by the private foundation.

2.1.4 Trust

The Curaçao trust is a legal relationship created – inter vivos or on death – by a person, the settlor, when assets are placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. A Curaçao trust can be used for a number of purposes, including as an investment trust, as a pension fund, for asset protection, as a charitable trust or as a college fund for children. A Curaçao trust is created by notarial deed.

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For tax purposes a trust is treated similarly to a private foundation. As long as the trust does not carry on a business, the income of a trust is not subject to profit tax and contributions received from, or payments made to, non-residents of Curaçao are exempt from estate and gift taxes.

2.2 AccountingRequirements

The accounting requirements as stipulated in Book 2 of Curaçao Civil Code are compulsory for all legal entities.

2.2.1 General provisions on annual accounts

Legal entities are required to prepare financial statements that consist of at least a balance sheet, a profit and loss statement and explanatory notes. The financial statements should contain sufficient information in order to enable a reader to form a reasonable opinion about a company’s financial position and results and, within limits, its liquidity and solvency.

The law generally stipulates that financial statements must be prepared within eight months of the financial year-end. The financial statements must be prepared in accordance with generally accepted accounting principles. The law does not state which principles are considered generally acceptable, but Dutch General Accepted Accounting Principles are commonly used. In the case of an ordinary NV or BV the general meeting of shareholders may extend the period to prepare the financial statements by up to six months after the end of the preceding financial year, in specified circumstances.

For large NVs the financial statements should be prepared within six months of the financial year-end and they must be prepared in accordance with International Financial Reporting Standards (IFRS). Other international generally accepted accounting principles may be permissible with valid reasons.

The financial statements should include a balanced and complete analysis, corresponding to the size and complexity of the legal entity and its group companies, of the situation at the balance sheet date, the developments during the financial year and the results. If necessary for a proper understanding of the developments, results or position of the legal entity and its group companies, the analysis should comprise both financial and non-financial performance indicators, including environmental and personnel issues.

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2.2.2 Report of the directors

A large NV is required to include a report of the directors in the annual accounts. This report must provide a true and fair view of the financial position at the balance sheet date and the performance during the financial year. Any stakeholder may demand that the company fulfils this obligation.

The Curaçao Civil Code stipulates that the report of the directors should provide information on any event of material significance that occurs after the end of the financial year. In addition, it must provide information on the expected future performance and should not contradict the financial statements.

2.2.3 Audit requirements

Large NVs are required by law to have their financial statements certified by an external expert. For other entities the articles will establish whether the financial statements must be audited. Generally speaking the general meeting is authorised but not obliged to appoint an external expert. The law clearly defines who is considered to be an external expert in the case of a large NV, namely a registered accountant (RA), an accounting consultant (AA), a certified public accountant (CPA), or an expert admitted by the Minister of Economic Affairs based on their professional competence.

2.3 Filing RequirementsFor NVs which are not classified as large and for BVs the individual shareholders are entitled to inspect the financial statements during a period of two years after preparation or adoption.

Large NVs are obliged to deposit a complete copy of the financial statements at the registered office, within eight days of adoption by the shareholders in general meeting, for inspection by stakeholders. If the financial statements have not been adopted and approved within two months of the maximum period as approved by the general meeting, the financial statements must be deposited immediately after preparation for inspection by stakeholders. The trade register of the Chamber of Commerce must be notified of the deposit of the financial statements for inspection, if applicable, together with a statement stating that the financial statements have not yet been adopted or approved.

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3 Finance and Investment 3.1 Exchange Control andOther Restrictions

All transactions made in foreign currencies by banks in Curaçao are subject to a license fee of 1% of the transaction value. Legislation provides for a number of facilities that are intended to stimulate (foreign) investment in Curaçao.

3.2 Source of Finance3.2.1 Banking

The Central Bank of Curaçao and St. Maarten’s objectives are to maintain the stability of the Netherlands Antillean Guilder (ANG) and to promote the efficient functioning of the financial system. The Central Bank’s monetary policy during recent decades has been geared toward promoting a stable value of the ANG with respect to the US$ by managing the foreign exchange reserves of Curaçao.

The Central Bank is the only institution entitled by law to issue paper money and responsible for the coins in circulation. Furthermore, the bank supervises banking and credit institutions as well as certain other service providers (such as trust service providers, insurance brokers and administrators of financial institutions/investment funds), manages the foreign exchange reserves and acts as the Government’s treasurer by receiving and making payments from and to the public through the tax collector’s accounts at the Central Bank.

The prudential supervision of banking and credit institutions is aimed at controlling the integrity of the financial system and at safeguarding the deposits of creditors at commercial banks. This supervision is pursued mainly through the bank’s analysis of the solvency and liquidity development of banking and credit institutions.

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3.2.2 Stock exchange

The Dutch Caribbean Securities Exchange (DCSX) is an international exchange for the listing and trading in domestic and international securities. It provides a facility for international and local corporations and investment funds, furnishing a high quality alternative for other jurisdictions of the Caribbean. The DCSX is licensed by the Minister of Finance, supervised by the Central Bank of Curaçao and St. Maarten.

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4 Employment Regulations and Social Security4.1 Residence and WorkPermits

Every foreigner (excluding Dutch nationals) wishing to become a resident of Curaçao requires a residence permit. A foreigner wishing to work in Curaçao requires a work permit. In general a work permit is only granted when no suitable qualified person is available on the Island. In other cases, if the employer is willing to provide a guarantee in respect of related expenses and responsibilities, a request for a work permit will be considered.

Holders of a Dutch passport can, under certain conditions, obtain a declaration of no objection against their presence in Curaçao. Applying for this declaration (van rechtswege) is typically faster than applying for a residence permit. Holders of a Dutch passport do not require a work permit.

4.2 EmploymentEmployment contracts may be concluded for an indefinite term, a definite term, or for a specific project. Consecutive temporary contracts (the maximum duration of each contract is one year) are permitted for three periods. Contracts are considered to be consecutive if interruptions between contracts do not exceed three months. If the total period of consecutive temporary contracts exceeds three years, the contract is, by law, converted into a contract for an indefinite term.

An indefinite term contract may only be terminated, without penalty, for material breach. The dismissed employee is often entitled to severance pay.

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4.3 Social SecurityA number of institutions in Curaçao are responsible for the application of several social security laws. In general, social security premiums are withheld and paid over by the employer. Contributions may be due in respect of:

• Oldagepension(AOV)–acompulsoryinsuranceagainstthefinancialconsequences of old age for the entire population, on account of which the insured person receives an old age pension on reaching 65 years of age

• Widow’s,widower’sandorphan’spension(AWW)–ageneralinsuranceguaranteeing financial support to the widow or widower after the passing away of a spouse and to children, generally up to the age of 15, upon the death of an insured mother or father

• Sicknessinsurance(ZV)–insuresemployeeswithanincomeunderacertainthreshold for the costs of medical care and loss of income as a consequence of sickness

• Accidentinsurance(OV)–obligesemployerstoinsuretheiremployeesforthecosts of medical care and loss of income as a consequence of an accident at work

• Cessantia–aseverancepaymentthatinsuresemployeesagainstthecostsofunemployment through no fault of their own. It grants the employee the right to a lump sum payment dependent on the duration of the employment and the most recently received wage

• Socialinsuranceforspecifichealthexpenses(AVBZ)–bearspartofthemedical expenses in special circumstances.

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5 Taxation 5.1 Personal Tax

Residents of Curaçao are subject to income tax on their worldwide income. Non-residents are subject to Curaçao income tax on certain income, such as income from real estate located within Curaçao.

Resident taxpayers are taxed on their taxable income, defined as income less deductible costs, minus losses brought forward. Income is defined as the results derived from real estate, capital, entrepreneurship and labour, and entitlements to periodic payments. Deductible costs are divided into personal burdens and extraordinary burdens.

Non-resident taxpayers are, in principle, taxed in the same way as resident taxpayers, however certain restrictions apply.

The income tax rate is progressive with a rising scale with six brackets ranging from 12% - 49%. For 2013 these figures are as follows.

Income from (ANG) Not more than (ANG) %

0 28,144 12

28,144 42,423 20

42,423 58,979 27

58,979 88,572 33

88,572 125,200 40

125,200 Unlimited 49

After applying the above rates, the taxable amount may be reduced with a basic reduction of ANG1,891 for 2013 and, if applicable, other reductions, such as child or senior reductions.

Income tax returns should be filed within 60 days after the date stipulated on the income tax return-form. It is possible to request an extension, which is limited to 18 months after the end of the tax year concerned.

Wage tax

Wage tax is a pre-levy of income tax and is withheld by the entity paying the income arising from current or former employment, generally the employer or a pension insurer.

Monthly wage tax returns should be filed and the wage tax paid to the tax authorities on or before the 15th day of the month following the month in which the wages were paid. The employer is also obliged to file wage tax cards and a wage summary sheet (for the calendar year) with the tax authorities before 1 April of the following calendar year.

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5.1.1 Penshonado facility

Under the penshonado facility, qualifying persons may benefit from lower income taxes. The main conditions for an individual to qualify are that the taxpayer:

• HasnotbeenaresidentofCuraçaofortheprecedingfiveyears

• UponbecomingaresidentofCuraçaohasreachedtheageof50

• ObtainsaprivatedwellingofavalueofatleastANG450,000(US$250,000).

A person meeting the above conditions may apply for one of the following tax treatments:

• Taxationofincomefromforeignsourcesat10%

• AdeemedforeignincomeofANG500,000,subjecttotheregular(progressive) income tax rates.

5.1.2 Expatriate facility

Under the expatriate facility, an employee may enter into a net salary arrangement with their employer whereby the gross salary is paid as net salary and the employer accounts for the wage tax.

In general the term “wages” includes all benefits received from employment such as salary, allowances, remuneration in kind such as a car or living accommodation. For the purposes of the expatriate scheme, the following fees are not treated as wages:

• Benefitsinkind(forexample,carorlivingaccommodation)toamaximumofANG15,000 per year

• Feesforchildeducation(conditionsapplyifthechildiseducatedabroad),per child for up to ANG25,000 per year

• Compensationtocoverthetravelexpensesassociatedwiththearrivalandrepatriation of the employee and their family up to ANG4,000 (single), ANG8,000 (couple without children) and ANG12,000 (couple with children)

• CompensationforhotelexpensesinCuracaoforuptotwomonths,withamaximum of ANG10,000 (single), ANG15,000 (couple without children) and ANG21,000 (couple with children)

• RefurbishmentallowanceuptoamaximumofANG12,000

• ReimbursementofcarrentalexpensesduringthefirsttwomonthsuptoANG2,700 per month.

An individual is eligible for the expatriate regime if they lived abroad for an uninterrupted period of five years or more prior to employment in Curaçao. Furthermore, they must possess “specific expertise” which is either not available or is scarce in the local labour market.

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Specific expertise is demonstrated as follows:

• Theemployeehasacademicqualificationsorhighervocationaltraining

• Theemployeehasatleastfiveyearsrelevantworkexperience

• TheemployeereceivesaremunerationofatleastANG150,000peryear.

The expatriate status is only available on request. The request must be made by the employer, countersigned by the employee and be submitted to the tax authorities of Curaçao. The expatriate status will, in principle, be granted for a maximum period of five years, however, subject to conditions, this period may be extended for a further period of up to five years.

5.2 Business Taxes5.2.1 Profit tax

Corporate income tax is levied on Curaçao legal entities and entities specifically mentioned in the Profit Tax Ordinance. In addition, profit tax is levied on the profits derived from either a permanent establishment in Curaçao, real estate located in Curaçao or from certain debts secured by a mortgage on real estate located in Curaçao.

Whether a company is deemed resident of Curaçao is generally based on the place of effective management. Companies incorporated under Curaçao law are deemed to reside in Curaçao and are required to file a profit tax return.

The profit tax rate is 27.5% (for 2013).

The profit tax system functions on a self-assessment basis. Three months after the financial year-end a provisional profit tax return should be filed with the tax authorities and profit tax due must be paid. Six months after the financial year-end, the final profit tax return should be filed with the tax authorities and any further profit tax due should be paid.

Accelerated depreciation

A company investing in fixed assets is allowed accelerated depreciation of one third of the investment in the year of making the investment or in one of the succeeding years.

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Investment allowance

An investment allowance is granted for certain investments if during the year the investment exceeds ANG5,000. An enhanced deduction, equal to regular depreciation, is allowed for a period of two years following the year of investment. For newly built buildings, expansions and renovations, the regular annual investment allowance is 12% of the total investment. For all other investments the regular allowance is 8%. Investments in land are excluded from the investment allowance.

Participation exemption

Under the participation exemption, capital gains realised on the sale of shares in a subsidiary may be fully exempt. In order to qualify, the tax payer should hold 5% or more of the shares in the subsidiary, although a smaller shareholding may qualify if the acquisition cost of the shares exceeds US$500,000.

Dividend distributions from such a shareholding may also be fully exempt if the subsidiary:

• Issubjecttoanominaltaxrateofatleast10%

• Deriveslessthan50%ofitsgrossincomefromdividends,interestorroyalties.

If the subsidiary does not meet one of the two requirements, the exemption applies to only 63% of the dividends, resulting in an effective tax rate of 10.17% on dividend income.

Dividends from subsidiaries with real estate assets comprising 90% or more of total assets are not required to meet the above conditions.

Curaçao profit tax law defines dividends as “distributions out of the profit or the retained earnings”. A repayment of capital, payments upon liquidation and redemption of shares are not considered to be dividends.

Fiscal unity

A Curaçao parent company may form a fiscal unity with one or more Curaçao subsidiaries if it holds 99% or more of the shares in the subsidiaries. As a result, two (or more) companies are treated as one tax entity for profit tax purposes. The parent company is required to file a profit tax return for the entire fiscal unity on the basis of consolidated financial statements. The subsidiaries are no longer obliged to file profit tax returns.

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Merger facility

The merger facility allows a company to transfer its enterprise or parts of its enterprise to another company without profit tax consequences. Certain conditions apply, such as (i) the companies involved in the merger should use the same valuation principles, (ii) the shares acquired cannot be disposed of for a period of three years after the merger and (iii) the assets transferred should be accounted for at the same amount on the transferor’s and transferee’s balance sheets.

Losses

Losses can be carried forward for a period of ten years. Carry back of losses is not permitted.

Transparent entity

Businesses in Curacao are permitted to operate as tax transparent legal entities (transparante vennootschap or TV). A TV is either a BV or a NV. In order to become a TV the entity must formally request to be treated as tax transparent. If approved, the entity will, for profit tax purposes, be treated as a partnership (ie tax transparent).

The conditions for qualification as a TV are:

• Allsharesmustberegistered

• Thedeedofincorporationshouldincludeaspecificregulationstipulatingthat a seller of TV shares is obliged to require the new shareholder to sign a declaration agreeing that the entity will be treated as a partnership

• Theboardofdirectorsisrequiredtokeeparegisterinwhichthenamesand addresses of all ultimate beneficial owners holding 10% or more of the shares in the TV are recorded.

If the BV or NV no longer wishes to be treated as tax transparent, the board of directors should request, in writing, to the tax authorities that the entity becomes taxable with effect from the start of the next accounting period.

The main advantage of a TV over a partnership is that shareholders of the TV cannot be held (fully or partially) liable for the debts of the legal entity while partners of a partnership are generally fully liable. Unlike a partnership, a TV can have one partner (ie one shareholder).

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A TV is not subject to profit tax. The assets and income from a TV are allocated pro rata to the shareholders. For Curacao tax purposes the TV does not distribute a dividend, but the income of the TV is regarded as taxable income for the shareholders.

If the shareholder is a private person residing in Curacao, the income from the TV is subject to income tax. The activities of the TV will determine how the income is treated and taxed for the shareholder. If the shareholder is a legal entity residing in Curacao, the income of the TV is subject to profit tax.

Please note that the tax transparency only relates to income and profit tax. A TV remains subject to Curacao turnover tax.

5.2.2 Turnover tax

Turnover tax is levied on entrepreneurs in Curaçao. Any person who exploits an asset (such as real estate or intellectual property rights) will, under certain conditions, be considered an entrepreneur for turnover tax purposes. It is a cumulative tax levied on the revenue from the sale of products and the rendering of services by businesses established in Curaçao. No credit is allowed for input turnover tax suffered. Exemptions from turnover tax may apply for certain entrepreneurs and certain services.

The turnover tax rate is 6%.

Monthly turnover tax returns should be filed and the tax due should be paid on or before the 15th day of the month following the month to which the turnover relates.

5.2.3 Withholding taxes

Curaçao does not levy a withholding tax on dividends or royalty payments.

Although Curaçao is not part of the European Union (EU), it has committed itself to the enactment of the EU Savings Directive. Interest payments to residents of EU member states are subject to a 35% withholding tax, unless the EU recipient requests to be exempted; in that case an exchange of information will occur and no taxes will be withheld. For non-EU residents, no interest withholding tax applies.

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5.3 International TaxProvisions

5.3.1 Tax treaties

Curaçao has double taxation agreements with Norway, the Netherlands, Bonaire, Aruba and St. Maarten.

Curaçao has tax information exchange agreements with Antigua and Barbuda, Australia, British Virgin Islands, Bermuda, Canada, Cayman Islands, Denmark, Faroe Islands, Finland, France, Greenland, Iceland, Mexico, New Zealand, Spain, St. Lucia, St. Kitts and Nevis, San Marino, Sweden, United Kingdom and the United States.

5.3.2 Tax holiday

A company incorporated in accordance with the laws of Curaçao may apply for a tax holiday if it contributes to the broadening of the economic base of Curaçao and meets other specific requirements. The benefits of a tax holiday are exemption from import duties on goods used in the business of the company and a reduced profit tax rate. Businesses that may benefit from these incentives are real estate development and tourism companies as well as industrial enterprises exporting more than 90% of total turnover.

5.3.3 Economic Zone (E-Zone)

E-Zone companies are subject to a profit tax rate of 2%, while no import duties, turnover tax, or other taxes are payable. To qualify as an E-Zone company all goods and services must be sold and rendered to clients outside Curaçao. Only corporate legal entities (with capital divided into shares) are admitted to the (geographically determined) E-Zones. An E-Zone company must contribute to the economic expansion of Curaçao by developing Curaçao as an international distribution centre by selling goods, or as an international service centre by providing services, to clients outside Curaçao or to businesses established in the E-Zone, increasing the inflow of foreign currency and employment in Curaçao.

5.3.4 Exempt company

A BV of which the objects clause and actual activities are limited to “investments in debt instruments, securities and deposits as well as the licensing of intellectual and industrial properties and similar assets” may, under certain conditions, qualify for a tax-exempt status, paying no profit tax at all.

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In recent years, tax-exempt status has been granted to (passive) holding companies, group finance companies, mutual funds and companies involved in derivatives activities. Financial activities, such as hedging activities and foreign exchange activities also qualify. The direct ownership of real estate by a BV has been specifically excluded from qualifying tax-exempt activities.

Other legal requirements to qualify, and remain qualified for the exemption of profit tax, are:

• Thecompanymustnotperformanybankingactivitiesoractivitiessubjecttothe overview of the Central Bank of Curaçao and St. Maarten

• Themanagementofthecompanywillkeeparegisterinwhichthenamesand addresses of all ultimate beneficial owners holding 10% or more of the shares in the company are recorded

• Thecompanyshouldhaveamanagementteamconsistingofoneormore Curaçao residents (private persons or certified trust companies). A Supervisory Board may be installed, consisting of non-residents, although these non-residents may not, independent of the resident directors, act on behalf of the company

• Themanagementofthecompanymustensurethatitsannualfinancialstatements are approved by an independent expert within 12 months of the end of the relevant financial year.

Although not subject to profit tax, the company is nonetheless required to file annual profit tax returns, accompanied by its (approved) financial statements.

Dividends received by the tax exempt company from entities situated outside the Kingdom of the Netherlands should originate from profits that have been subject to taxation at a comparable tax rate to that applicable in Curaçao. This rate is determined to be at least 13.75%. Countries that are a member of the EU or the OECD qualify automatically. Entities originating from other countries also qualify if their country has a treaty with the former Netherlands Antilles in which the applicable tax regime of the company has not been excluded; or if their country has concluded a tax information exchange agreement with Curaçao (or the former Netherlands Antilles) and no specific tax regime is applicable.

The independent expert examining the financial statements should determine whether the dividends qualify under the above rules. If more than 5% of the dividends received arise from non-qualifying origin, the independent expert should report this to the tax authorities. This might lead to the loss of exempt status.

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Member Firm Contact Details Baker Tilly CuraçaoSnipweg 30WillemstadCuraçaoT: +599 9 736 6300 / 6344F: +599 9 736 6383www.bakertillycuracao.com

Contacts:Eric Vesseur – audit Victor Bergisch – audit Arthur van Aalst – taxWilco van Oosten – tax Frank Groenewegen – business support

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