Tax incentives historic inner city Curacao

  1. Introduction

On January 1st, 2017, the Ordinance tax incentives historic inner city and monuments entered into force.

The unique appearance of the historic center of Willemstad and the monuments that are registered in the public register of monuments are of high value and importance for the attraction of tourists to Curaçao. The objective of the ordinance is to preserve and improve real estate in the inner city and protected monuments. Considering that the expenses for maintenance and preservation of older real estate are significantly higher, it was deemed desirable to facilitate and stimulate investment in such real estate.

  1. Protected monuments

The incentives are applicable to real estate situated in the historic center of Willemstad and to qualifying monuments. The historic center is defined as the urban and harbor area that has been designated as an historical area by the United Nations Educational and Cultural Organization (UNESCO) and recognized as such by National decree containing general measures[1].

A protected monument is a monument that is registered in the public register for protected monuments, as meant in article 6 of the Monument Ordinance Curaçao or real estate located in the historic center as meant above.

  1. Income tax incentives

3.1       Interest

Interest and other proceeds received on debt claims that are, as far as the principal is concerned, secured by mortgage on protected monuments, is tax exempt.

3.2       Investment allowance

If, during the financial year, investments are made in the maintenance or improvement of protected monuments, the standard rate of investment allowance of 10% is increased to 30%. Furthermore, the exclusion of investments in private dwellings is not applicable. Consequently, the 30% investment allowance is also applicable to investments in protected monuments that are used as private dwellings.

If the proceeds of an enterprise are realized from activities conducted from a work space that is situated in a protected monument, the expenses may be charged to the enterprise at a maximum of 20% of the invested amount[2].

3.3       Rent by a penshonado

Pursuant to the penshonado legislation, a penshonado has to own an unrented private dwelling with a value of at least ANG 450,000 (USD 252,800) in order to apply the penshonado income tax rate.

Based on this ordinance, a penshonado also qualifies for the penshonado income tax rate if he rents a protected monument in whole or in part with a value of at least ANG 450,000 (USD 252,800) and uses this real estate as private dwelling or lives in a protected monument he owns and which he may rent out for a maximum of four months per calendar year.

  1. Profit tax incentives

For profit tax purposes, the same incentives as mentioned in paragraphs 3.1 and 3.2 apply.

  1. Transfer tax incentive

 Transfer of title of a protected monument is exempt from Transfer tax.

  1. Stamp tax incentive

 Deeds of mortgage on protected monuments are exempt from stamp tax.

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[1] This National decree has not been published yet. In anticipation of publishing the National decree, the Minister of Finance has designated a prescribed area in the inner city of Willemstad as historic center in a notification (aanschrijving) dated 11 October 2017.

[2] This means that, in addition to the 30% investment allowance, 20% of the amount invested may be charged to the enterprise as tax deductible expenses.