THE CURACAO TRUST

Can be used as protected or segregated cell company

On 1 January 2012, new legislation entered into force according to which it is now possible to set up a trust (Curacao Trust) similar to the trust in Anglo-Saxon common law jurisdictions. The introduction of the Curacao Trust serves as an important instrument which could be used within financial transactions in the Caribbean as a significant part of these transactions are initiated from common law jurisdictions.

The Curacao Trust can be used for different purposes, such as, for example:

  • To set aside capital for children’s upbringing, education or maintenance
  • Estate planning
  • Charitable purposes
  • Structuring by pension funds or investment funds
  • Protected or Segregated Cell Company (e.g. to be used as an umbrella fund)

A Curacao Trust is subject to profit tax. The current profit tax rate is 27.5%. However, a trust is exempt from profit tax provided such profit is not the result of running or carrying out a business.

A Curacao Trust can also apply for taxation at a profit tax rate of 10% (no specific conditions apply). In these circumstances, a Curacao Trust is subject to profit tax laws, and can benefit from participation exemption, investment allowance, depreciation and loss compensation.

The main tax incentive is the participation exemption under which dividend income received from and capital gains realized on the disposal of qualifying shareholdings are fully tax exempt. The exemption applies in the following circumstances:

  • If the NV (the Dutch term for a public limited liability company) holds at least 5% of the paid-up capital or owns at least 5% of the voting rights in a company with a capital divided into shares.
  • A shareholding valued at least ANG 1 million (approx. USD 600,000).

Acquisition from a non-resident is not subject to Curacao gift tax. Distributions to a non-resident are not subject to Curacao gift or income tax. Curacao transfer tax may be due on the transfer of, for example, real estate situated in Curacao or ships registered in Curacao to or by the Curacao Trust.

The Curacao Trust must be incorporated by a notarial deed executed before a civil law notary in Curacao.

Karel Frielink
Attorney (Lawyer) / Partner

(2 August 2013)
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