November 15, 2022
On 8 November 2022, the Sector Director of Fiscal Affairs extended the policy issued in June 2021 regarding the temporary relaxation of the tax facility for land development investments in a modified form.
The tax facility for land development investments consists of several exemptions in respect of amongst other real estate tax, profit tax (a reduced rate of 3%), import duties for certain goods and materials, and income tax on dividends and other profit distributions to shareholders and profit-holders. This total package of exemptions is usually known as ‘tax holiday’. The exemptions are granted upon request and are effective for 2 to 10 years, depending on the type of tax.
One of the conditions for the tax facility for land development investments is that the entity is focused on encouraging foreigner visitation. An entity is deemed to be focused on encouraging foreigner visitation if at least 80% of the manufactured real estate (other than hotels) is sold to foreigners or if 80% of the manufactured real estate (other than hotels) is mainly made available to foreigners. Due to the Covid-19 crisis, there were not many foreigners visiting Curaçao, therefore, it was difficult for investors to meet the mentioned 80% threshold. As a result, the Sector Director of Fiscal Affairs temporarily relaxed the 80% threshold to a 20% threshold. This relaxed temporary policy applies from June 2021 to December 31, 2022.
The current circumstances (e.g. the high inflation, the war in Ukraine, the problems at Schiphol airport, and the low value of the Euro) recently prompted the Sector Director of Fiscal Affairs to extend the relaxed policy in a modified form. Under the new policy, which applies from 1 January 2023 to 31 December 2023, an entity is deemed to be focused on encouraging foreigner visitation if at least 50% of the manufactured real estate (other than hotels) is sold to foreigners or if 50% of the manufactured real estate (other than hotels) is mainly made available to foreigners.
In case you have any questions in relation to the extension of the temporary relaxation of the tax facility for land development investments or would like to discuss the impact thereof on your business or personal situation, please feel free to reach out to your HBN contact or one of the persons below.
Wendell Meriaan
wendell.meriaan@hbnlawtax.com
Francois Simon
francois.simon@hbnlawtax.com
Rik Brem
rik.brem@hbnlawtax.com