In December 2011 an agreement has been reached on the main features of new bilateral tax regulations between the Netherlands on the one hand and Curacao. Recently, the Ministry of Finance made an important statement about not invoking the anti-avoidance provision.
On December 12, 2011, the Ministry of Finance published a press release in which the main features of a new BRK between the Netherlands and Curaçao were announced. As indicated in our previous news item, this announcement did not clarify to what extent the anti-abuse provisions of the current BRK would be included in the new regulations between the Netherlands and Curaçao. This can be important for Curaçao passive holding companies with an interest of 5% or more in a Dutch subsidiary. In those situations where one of the primary objectives is the avoidance of income tax or dividend withholding tax, the Netherlands may wish to levy corporate income tax on the Curaçao holding company if it receives dividends from the Dutch subsidiary, or if it earns profits from the transfer of shares in these Dutch subsidiaries. As mentioned in our previous news item, the Netherlands, in its announcement of December 12, 2011, explicitly stated that in such situations the anti-avoidance provisions of the current BRK would not apply in 2012.
This concession has been interpreted by some as implying that the Netherlands would be prepared to apply the relevant anti-avoidance provisions after 2012. We understand from sources within the Ministry of Finance that this interpretation is not correct and that in the situation described above the Netherlands would not invoke the anti-avoidance provisions through 2019. The press release of December 12, 2011, was meant to ensure that any levying of Dutch corporate income tax would not result in the registered office being transferred from Curaçao to a third country, such as Luxembourg. This additional concession is expected to be included in the text of the new BRK between Curaçao and the Netherlands.