Taxation for the director-owner of a business

Sep 14, 2022
Wednesday, September 14, 2022

Taxation of income being Director -Owner

  1. Introduction

A director-owner of shares in a company (hereinafter referred to as the “DO” [1]) will be confronted by several taxes, among others, profit, wage and income taxes. In this article, we provide you with a global overview of the taxation of income received by the DO, the deductibility of expenses and the social insurance premiums.


  1. Company level/profit tax

A DO will hold shares in a limited liability company (naamloze vennootschap; NV) or private limited company (besloten vennootschap; BV). In principle, a NV/BV is subject to profit tax at the rate of 22%[2] (2022).

A NV/BV’s expenses can, from a DO perspective, be separated into two groups:

  • business expenses, and
  • personal expenses incurred on behalf of the DO.

Costs incurred by NV/BV in the regular course of its business can, in principle, be deducted as business expenses. If the NV/BV settles personal expenses on behalf of the DO, these may not be deducted from NV/BV’s taxable income,

The profit tax legislation provides for non or partial deductibility of a number of expenses. These include for example representation expenses, expenses associated with food & beverage (20% non-deductible) and travel or lodging expenses in connection with attendance at courses, seminars or other similar events (20% non-deductible). A complete overview focusing on your specific situation can be provided by Baker Tilly


  1. Shareholder level/wage and income tax

Income tax is levied from individuals residing in Curaçao at progressive rates up to a maximum of 46.5% (highest tax rate in 2022). DO’s residing in Curaçao for tax purposes, are liable to income tax on their worldwide income. Salaries of a DO are taxed at the progressive rates. Dividends from the NV/BV are however taxed at flat income tax rate of 19.5%. When setting up a holding structure whereby the holding company is designated as a Curaçao Investment Company (CIC), the 19.5% income tax rate can be reduced to effectively 0.78% income tax. Please contact Baker Tilly for more information.


3.1        Employee insurances

Note that a DO does not qualify for coverage under the employee insurances if there is no relationship of authority between the DO and the company of which he/she is the director.

The above has the following consequences for the DO:

  • no premium ZV/OV and Cessantia becomes due on the wages;
  • in case of illness, reimbursement of sick days cannot be claimed from SVB;
  • in case of an accident on the job, disability pay cannot be claimed from SVB; and
  • DO’s cannot get a severance payment from SVB in case of dismissal.

If a DO wishes to be insured for any of the above, we suggest arranging for private sickness and/or disability insurance coverage through a private insurance company.


3.2        Customary pay regulation

 A DO is legally required to receive at least a so-called customary pay as wage from the operating company (a NV/BV).

In summary, the minimum amount of the customary pay is determined as follows:

  1. an amount equal to 50% of NV/BV’s turnover; or
  2. Naf 50.000, if the turnover of NV/BV exceeds NAf 100.000; or
  3. if it can be demonstrated that a lower wage is customary for similar jobs where a substantial interest has no influence on the employee’s position, the lower amount; or
  4. if the NV/BV employs other people, the customary pay is in principle equal to at least the highest wage earned by such other employees.

Customary pay is taxed as wages at progressive rates up to a maximum of 46.5% (the highest rate in 2022) plus social insurance premiums.

It is possible to earn customary pay in a tax-friendly manner, thus reducing the tax burden.

 Wage in kind

Compensation not being paid in cash (but in kind) is considered a taxable wage. Below are a few examples of wages in kind:

  • the private use of a company car provided by NV/BV is valued at 15% of the list price including turnover tax (OB) of the vehicle. A mandatory own contribution may be deducted from the 15% addition to the wage tax base;
  • the private use of a company mobile telephone or landline at home provided by NV/BV; and
  • the private use of an internet connection at home.

The foregoing has the added benefit of providing DO’s with more expendable cash per month as the NV/BV carries all costs associated with as used in this example, their car, mobile phone or internet connection.


Tax-free reimbursements and benefits

NV/BV can furthermore provide a number of tax-free reimbursements and benefits, thereby increasing a DO’s net take-home pay. Below are some of these tax-free reimbursements and benefits:

  • Reimbursement of costs related to health care and medical visits: NV/BV may reimburse health care costs for DO’s and their immediate family members on a tax-free basis.
  • Business expenses. NV/BV can reimburse (necessary) business expenses DO’s incur free from tax upon presentation of the invoice. These may include representation expenses such as lunches with clients or costs of parking associated with attendance at a business meeting, etc.

 Employee contribution of AOV/AWW, AVBZ and BVZ premiums. NV/BV can pay the employee’s contribution of the premium for AOV/AWW, AVBZ and BVZ without this forming part of the DO’s taxable wage.

For more tax-free reimbursements, please contact the tax team of Baker Tilly

Arthur van Aalst

Anjli Finessi

Maarten Tervoort



[1] A DO is an individual who (i) is the director of a company and (ii) has a substantial interest in said company. A substantial interest exists, among others, when a person directly or indirectly holds 5% or more of the issued capital of a company whose capital is wholly or partially divided into shares.

[2] Curaçao implemented a territorial system of taxation for profit tax purposes whereby the effective tax rate can be (significantly) reduced. A detailed description of the system of taxation falls outside the scope of this memorandum.

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