Curaçao

Curaçao offers two primary types of corporate entities for business incorporation: the Besloten Vennootschap (B.V.), or private limited liability company, and the Naamloze Vennootschap (N.V.), or public limited liability company. Both entities are limited by shares and provide limited liability to their shareholders, yet they differ in terms of share transferability, internal governance, and regulatory treatment.

The core distinction between a B.V. and an N.V. lies in their approach to share issuance. A B.V. is prohibited from offering its shares to the public through regulated markets. Share transfers are typically private and often subject to restrictions, such as prior approval by other shareholders. An N.V., on the other hand, is permitted to issue shares publicly and may be listed on a stock exchange.

From a corporate law perspective, N.V.s offer more flexibility in terms of the types of shares they can issue (e.g., bearer shares, different classes with varying rights). B.V.s tend to offer greater customization in their internal governance documents. For example, a B.V.’s articles of association may stipulate that shareholder consent is required for managerial decisions or even assign managerial authority to shareholders directly—flexibility not typically available to N.V.s.

Furthermore, B.V.s may be dissolved automatically upon certain shareholder-related events, such as death or bankruptcy, if the articles so specify. This kind of dissolution clause is less common in N.V. structures.

In practice, for standard private operations where public fundraising is not contemplated and no complex capital structuring is required, the practical differences between a B.V. and an N.V. are minimal, particularly when no bespoke arrangements are requested.

Neither B.V.s nor N.V.s are subject to minimum capital requirements under Curaçao law. A company may be established with a single share, which may be issued at any nominal value and need not be fully paid up at the time of incorporation.

Full foreign ownership is permitted in both types of entities. Foreign individuals or legal entities may serve as shareholders and directors. However, every Curaçao company must appoint a representative within the jurisdiction for compliance and regulatory correspondence. This can be satisfied in one of two ways:

• By appointing a local legal representative (a resident individual or licensed fiduciary service provider) who holds the authority to act on behalf of the company before government agencies, or
• By appointing a resident director, who is physically located in Curaçao.

This requirement ensures that the company maintains a local point of contact for administrative and legal purposes.

Taxation in Curaçao: Territorial System and Substance Requirements

Curaçao’s corporate income tax regime operates on a territorial basis, meaning that only income arising from domestic sources is subject to taxation. Foreign-source income is exempt, provided the company can substantiate the location of its economic activity and meets relevant substance criteria.

To determine the portion of income attributable to Curaçao, the tax authority uses a coefficient-based approach. The calculation involves comparing local expenses (such as staff, office rent, or services performed in Curaçao) to foreign expenses (e.g., overseas contractors or support services). The resulting ratio is then applied to the company’s total net income to identify the taxable portion.

Companies aiming to benefit from the territorial exemption must demonstrate sufficient economic presence in Curaçao. These substance requirements vary depending on the company’s business model. In the case of holding or passive entities, appointing a resident director is generally sufficient to satisfy substance requirements. Non-compliance with these rules may result in denial of the tax exemption and possible penalties.

Under Curaçao’s tax law, dividends and capital gains derived from qualifying shareholdings are exempt from corporate tax, subject to specific conditions.

For local subsidiaries, the exemption applies in full. For foreign participations, the exemption is granted if the shares:

• Represent a non-passive investment, and
• The underlying entity is subject to tax on its profits (typically at a minimum effective rate of 10%).

If the foreign participation is considered a passive investment (e.g., portfolio shares) and the entity is not taxed at the minimum level, a partial participation exemption may apply. In such cases, only a portion of the dividend income—determined by a formula involving the prevailing corporate tax rate—is considered exempt.

Curaçao provides a 0% corporate tax rate for entities that qualify as investment companies, provided several criteria are met:

• The company’s purpose is limited to investment in credit instruments, securities, intellectual property, or similar rights;
• The company is managed exclusively by Curaçao residents or certified trust companies;
• Financial statements are audited annually by an independent auditor;
• Most underlying participations are taxable at or above 10%, or untaxed participations represent less than 5% of total investment income;
• The company maintains appropriate local staffing and infrastructure relative to its activities.

This regime is particularly relevant for asset management firms and IP-holding entities operating from Curaçao.

Currently, no withholding tax is levied on dividends paid to non-resident shareholders, making Curaçao attractive for international structuring.

Tax Filings and Financial Reporting

• A provisional tax return must be submitted, and any tax due paid, within three months of the financial year-end.
• The final return is due within six months, with a possible six-month extension upon request.
• Annual financial statements must be prepared within eight months of year-end and approved in a shareholder meeting within the same timeframe.

An audit requirement applies only to N.V.s that meet at least two of the following thresholds:

• Total assets ≥ ANG 5 million (~USD 2.8 million)
• Annual revenue ≥ ANG 10 million (~USD 5.6 million)
• Average number of employees ≥ 20

B.V.s are not subject to mandatory audits unless they opt in voluntarily or become regulated entities.

Both the B.V. and N.V. structures in Curaçao provide limited liability, flexibility in ownership, and access to a favorable tax regime. The choice between them largely depends on the company’s objectives, governance preferences, and capital structure needs. Curaçao’s territorial tax system, when combined with proper local substance, allows for efficient international business operations. Regulatory compliance, including timely tax filings and adherence to substance standards, remains central to maintaining favorable treatment.