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Tax benefits and obligations for real estate in Curacao
Curacao offers attractive opportunities for real estate investors. The pleasant climate, relaxed atmosphere and the ease of doing business in your own language make the island popular with buyers. In addition, Curacao has a tax system that differs from the Netherlands, which can provide additional advantages. One of these advantages is the use of a Stichting Particulier Fonds (SPF).
In this article we discuss the tax aspects of a second home in Curacao and how an SPF can work to your advantage.
Income tax Curacao
If you live in the Netherlands, you are liable to pay tax on your worldwide income. This means that a home in Curacao is part of your income and is taxed in the Netherlands in Box 3. However, according to the Tax Regulation Netherlands-Curacao, Curacao has the right to levy tax on real estate on the island. This means that in principle you pay income tax in Curacao and not in the Netherlands. If you use an SPF, you also do not pay tax in Curacao, more about that later.
Purchase tax Curacao
When purchasing a home in Curacao, you pay transfer tax, just like in the Netherlands. This rate is 4% of the transfer price. In addition, an annual property tax applies, which can amount to 0.6% of the value of the home.
Tax on rental income Curacao
If you rent out your home in Curacao, you are liable for income tax. However, this does not apply to the entire rental income, but only to 65% of it. The remaining 35% is considered a fictitious cost deduction. Furthermore, the mortgage interest is deductible. Any sales result from the future sale of the home is tax-free.
Curacao Private Fund Foundation (SPF)
An SPF offers investors attractive tax benefits. This is a special form of a foundation and can become the owner of your home in Curacao. This prevents you from having to pay income tax, because the income from investments, including passive rental income, is not taxed in the SPF.
There are two important differences between an SPF and a regular foundation:
An SPF may not conduct a business.
An SPF is allowed to make payments to founders or other affiliated parties, which is not permitted for a regular foundation.
Discover your possibilities
The tax benefits of an SPF can be considerable, but it is important to obtain good legal and tax advice. We are happy to help you.
The major fiscal advantage of an SPF is that it is in principle exempt from profit tax. Do you receive rental income from your real estate in Curacao? Then this is not taxed if the SPF is the owner of the real estate.
Of course, there are costs associated with setting up and managing an SPF. However, if you receive a high amount of rental income on an annual basis, an SPF is well worth considering.
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