According to Article 2 of the Income Tax Ordinance of Curaçao, an individual is considered a tax resident if they meet any of the following criteria:
- Physical Presence: Residing in Curaçao for more than 183 days in a calendar year.
- Domicile: Having a permanent home in Curaçao.
- Center of Vital Interests: Having the closest personal and economic ties to Curaçao.
For entities, tax residency is determined based on their place of incorporation or management and control.
Impact of International Tax Treaties
Curaçao has entered into several tax treaties with other countries to prevent double taxation and promote cross-border trade and investment. These treaties may modify or provide exceptions to the standard criteria for tax residency.
Key Provisions in Tax Treaties
- Tie-Breaker Rules: Treaties often include tie-breaker rules to determine tax residency in cases where an individual or entity is considered a resident of both Curaçao and the treaty partner country.
- Specific Exemptions: Some treaties may exempt certain types of income from taxation in Curaçao, even if the individual or entity is considered a tax resident.
- Reduced Withholding Taxes: Treaties may also reduce withholding taxes on dividends, interest, and royalties paid to non-residents.
Rationale for Treaty Modifications
The modifications or exceptions introduced by tax treaties aim to:
- Prevent Double Taxation: Ensure that individuals and entities are not taxed on the same income in both Curaçao and the treaty partner country.
- Promote Cross-Border Investment: Encourage investment and economic cooperation between Curaçao and other countries.
- Provide Clarity and Certainty: Establish clear rules for determining tax residency in cross-border situations.
If you need any other informational tax guides for other countries, feel free to browse our other articles below:
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