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The innovation box - how to receive maximum ROI from your Research & Development activities

Sep 15, 2022
Thursday, September 15, 2022

The innovation box - how to receive maximum ROI from your Research & Development activities

  1. Introduction

Curaçao profit tax legislation offers a 0% profit tax rate (2022) for profit derived from intangible assets for which the business has intellectual and industrial property rights or similar proprietary rights. This rate is applicable if the property and proprietary rights and assets are the results of own R&D (research and development) done in Curaçao.

In addition to self-developed rights, there can also be sufficient nexus with Curaçao if the R&D was done outside of Curaçao but on behalf of a Curaçao taxpayer.

  • What is a qualifying intangible asset?

A qualifying intangible asset is defined as an intangible asset that is the product of R&D for which the taxpayer has obtained an R&D declaration from the Bureau Telecommunication and Post (“BTP”):

  1. for which a patent or breeder’s right has been obtained or for which the issuance of a patent or breeder’s right has been requested;
  2. which constitutes a copyright for protected software;
  3. which entails a license to market a certain prescription drug;
  4. for which an additional protective certificate on patents issued by a patent bureau or similar institution has been obtained;
  5. which constitutes a registered utility model for protection of innovation; or
  6. which is related to an intangible asset as mentioned under 1 through 5.

A qualifying intangible fixed asset as mentioned above includes an exclusive license to use such an intangible fixed asset in a specific way, for a specific period, or in a specific geographical region.

Brands, logos and similar assets are not considered qualifying intangible fixed assets and income from such assets will, just as income from non-qualifying intangible assets, be subject to profit tax at the rate of 22% (2022).


1.2        What's the definition of a small taxpayer

A request submitted by a so-called small taxpayer (see definition here below) does not have to include a patent or other protected right. The intangible asset does, however, have to exhibit the characteristics mentioned in paragraph 1.1 and must be the product of own R&D. An R&D declaration can be requested from BTP without presenting a patent or similar protected right.

A taxpayer is designated as a small taxpayer for this purpose if:

(i)         the combined earnings generated by the intangible asset which is the product of own R&D during the period in question and the four preceding reporting periods, increased by the acquisition costs of said revenue during the same period, does not exceed NAf 75,000,000; and

(ii)        the combined net revenue during the period in question and the four preceding reporting periods[1] does not exceed NAf 500,000,000.


  1. Request small taxpayer for use of the innovation box

A small taxpayer must submit a research and development request (“R&D-request”) to BTP. The R&D request must include at least the following:

  1. documentation supporting the taxpayers' claim of being a small taxpayer;
  2. a description of the R&D for which the taxpayer is requesting an R&D declaration, including:
    • what work has been done by the taxpayer himself;
    • what work has been outsourced;
    • to whom the work has been outsourced;
    • the relationship between the taxpayer and the person or entity to whom the work has been outsourced;
  3. in what country or countries R&D took place;
  4. at whose expense and risk the intangible asset was developed;
  5. an overview of the period within which the R&D took place;
  6. a description of the essential functions performed by the taxpayer in Curaçao with regard to the R&D for the intangible assets in question;
  7. the Tax Identification Number (i.e. CRIB-number) of the taxpayer and that of the subject matter expert(s) employed by the taxpayer;
  8. description of the way in which the intangible asset is non-obvious, useful and novel[2];
  9. [3] for protected software, the request must include a declaration from an attorney admitted to practice in Curaçao which:
    • states that, and by whom and in which manner the software has been made public;
    • states to what extent the source code or object code contains the original characteristics of the developer; and
    • attaches the notarial deed in which the source code or object code has been legally recorded and registered with the Inspector in accordance with the Registration ordinance 1908, or has been submitted to the Bureau Intellectual Property in an i-Envelope.

The R&D request must be submitted within three months of the completion of the R&D project [4] and a fee of NAf 3,500 paid to Bureau Telecom for requesting the use of the Innovation Box. The R&D project refers to work systematically organized and performed by the taxpayer, directly and exclusively aimed at:

  • technological (both in product as service) or scientific research; or
  • the development of (partial) programming which is technologically innovative for the taxpayer.

Keep in mind: research and development activities do not include:

  1. building or setting equipment meant for practical application;
  2. work related to the import and adjustment of technology, products, processes or software programming, or parts thereof, purchased or to be purchased, without prejudice to point 19, under 4° hereafter;
  3. investigation into the presence of minerals;
  4. performing policy studies and strategic studies;
  5. work related to informational sessions, such as creating, presenting and attending courses, schooling, symposia and congresses;
  6. analyzing and evaluating existing production processes, if there is no direct correlation with own R&D;
  7. comparative studies of products, if there is no direct correlation with own R&D;
  8. exclusively changing the form or measurement of products or programming;
  9. quality control, other than the direct control of own R&D, and quality assurance;
  10. work related to building and installation based on existing techniques;
  11. preparation and implementation of production;
  12. building of a pilot plant at production scale, or of a prototype, being the realization of the principle of operation, of which it is likely that it could have a commercial or productive significance;
  13. work, done by the taxpayer on behalf of R&D activities of another, that on their own do not qualify as R&D activities;
  14. activities concerning adjustments or changes to existing products or programming that are technologically not significant;
  15. making changes to or modifying recipes and the composition of a product without there being a technologically new principle of operation of the product concerned;
  16. establishing and verifying non-technical specifications;
  17. assessing or determining functional requirements and conditions;
  18. establishing and conducting tests that are not directly and exclusively aimed at proving the principle of operation by the taxpayer;
  19. the following activities in relation to programming:
    • maintenance of software programs;
    • describing the architecture;
    • readying existing programming for use on a different hardware or software platform where platform means the totality of hardware and operating systems upon which information systems are developed (development platform) or upon which they are put into production (target platform);
    • developing programming which integrates or makes work together existing programming in a way that is technologically new to the taxpayer, except if the existing programming was primarily developed and is applied within the enterprise of the taxpayer or a fiscal unity to which the taxpayer belongs.


2.1        Programming - when does it qualify as R&D

Activities related to programming that is functionally innovative but not technologically innovative, do not qualify as R&D. To define the difference we give you an example on what is technologically innovative and functionally innovative: For example you have developed a kite and are looking to ways to make it more efficient to put air in the kite, therefore you increase the size of the pump system so it works easily. That's functionally innovative as it solves a functional challenge, but it's not really a change of technology, but when you change the pump system and you use new materials and new ways to blow air in the kite, then you change the technology behind the functionality, which is technologically innovative. 

The difference between R&D and engineering regarding programming is more difficult to establish than tangible goods. Engineering involves the application, planning, and implementation of different parts of which it has already been established that each individual part works. If there is no element of R&D in the program development, the project will qualify as engineering and, in principle, the innovation box will not be applicable.

2.2        Own versus outsourced R&D

Simply owning an intangible asset is not sufficient to apply the innovation box. A taxpayer must have developed the intangible good himself[5]. If the R&D is outsourced by a taxpayer, the Inspector may ask additional questions. Essential with outsourcing is that it must be demonstrated that the intangible asset was developed for the account and risk of the Curaçao taxpayer.

In order to demonstrate this, enough essential functions must be performed by the taxpayer to be able to allocate the intangible asset to the taxpayer. Also, when outsourcing, the taxpayer must have deciding authority and must functionally be able to supervise and manage the R&D. Among others, important factors are carrying the responsibility for a project based on personal expertise of the choices one makes during R&D and planning, budgeting, measuring performance, rewarding, adjusting/redefining the work areas, establishing the commercially attractive areas and assessing the chances of success or failure of the research. A taxpayer who is not functionally capable of steering the R&D based on his own expertise, will not qualify for application of the innovation box.

For additional information please contact:


Jeroen Diekerhof, tax adviser,

Arthur van Aalst, tax attorney,






[1] If the taxpayer is part of a concern, the threshold amounts are applicable on a consolidated basis.

[2] The Curaçao legislator has adhered to the standards set by the Organisation for Economic Cooperation and Development (“OECD”):

  • non-obvious: the intangible asset is considered non-obvious if someone who is skilled in the same particular field as the developer would view it as an unexpected or surprising development.
  • useful: the intangible asset is useful if it can be used and provides some practical benefit.
  • novel: the intangible asset is considered novel when it is different from all previous (similar) intangible assets in one or more of its constituent elements.

[3] The National decree regarding the innovation box stipulates that this information need not be provided by a small taxpayer. This would mean that for software only minimal information needs to be provided. Be advised that BTP may ask for similar information regardless to ascertain the (date of) creation.

[4] For projects completed between July 2018 and February 2022, this three-month period does not apply. For projects completed during this period, an R&D request must be submitted no later than 5 August 2022.

[5] Minutes of meetings, reports, drawings, correspondence, photos of prototypes, test results, measurements and calculations, showing a name and date, can be used as evidence. The exact and true costs and expenses of the R&D must follow from the bookkeeping.


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