Curaçao Innovation Box
Digital service companies in Curaçao are taking advantage of the opportunities available to them in order to fuel their creative drive and harness the potential of the region. By developing their next big tech hit, these companies benefit from a 0% profit tax rate on qualifying income.
Under the Innovation Box regime, income derived from intellectual property (IP) in Curaçao may be eligible for a reduced profit tax rate of 0%. This reduced rate applies when the income is generated from intangible assets that undergo research and development (R&D) in Curaçao, or when the intangible assets are developed for Curaçao tax-resident companies by a foreign, unaffiliated enterprise. If the development is outsourced, the taxpayer must demonstrate their capability to direct the R&D based on their own expertise.
Taxpayers can request a reduced effective tax rate of 0% for qualifying income from qualifying intangible assets when submitting their profit tax return. Qualifying intangible assets include copyrighted software, intangible assets with a supplementary protection certificate, and intangible assets with a registered utility model designed to protect innovation.
Steps to register for a Curaçao Innovation Box
To register a Curaçao Innovation Box, you need to follow these steps:
1. Determine eligibility: Ensure that your company meets the eligibility criteria for benefiting from the Curaçao Innovation Box. The criteria may include innovation-driven activities, intellectual property rights, and substantial activity in Curaçao.
2. Develop an innovation plan: Prepare a detailed innovation plan that outlines the innovative activities your company is engaged in or plans to undertake. This plan should showcase how the company utilizes its intellectual property rights and how it contributes to economic growth.
3. Establish a Curaçao company: Set up a company in Curaçao if you haven’t already done so. This could involve incorporating a local legal entity or acquiring an existing one to serve as the vehicle for operating your innovation activities.
4. File the innovation plan: Submit your innovation plan to the Curaçao Tax Administration (which is part of the Tax Inspectorate) for review. Make sure the plan includes all required information and demonstrates how your company meets the eligibility criteria.
5. Obtain the Innovating Company (IC) Certificate: Upon approval of your innovation plan, the Tax Inspectorate will issue an official IC Certificate qualifying your company for the Curaçao Innovation Box. This certificate serves as proof
that your company is eligible for the benefits provided by the Innovation Box regime.
6. Maintain accurate records: Keep proper records and documentation of your company’s activities, including invoices, financial statements, and evidence of intellectual property ownership. This will be important for compliance and future audits.
7. Apply for the Innovation Box tax regime: Once you have obtained the IC Certificate, you can apply for the Innovation Box tax regime by providing the necessary documentation and completing the required forms as specified by the Tax Inspectorate. This will enable your company to benefit from reduced tax rates on income earned from qualifying innovation activities.
8. Comply with reporting and monitoring requirements: Ensure ongoing compliance with the reporting and monitoring requirements stipulated by the Tax Inspectorate. This includes submitting periodic reports, financial statements, and any requested information related to your innovation activities.
9. Enjoy the benefits: Once your company is registered under the Curaçao Innovation Box, you can enjoy the benefits of reduced tax rates on income derived from eligible innovation activities. These benefits can help promote innovation, stimulate economic growth, and attract investment.
It is important to note that the process of registering a Curaçao Innovation Box may vary depending on specific regulations and requirements in place at the time of application. It is advisable to consult with local tax professionals or legal advisors familiar with Curaçao’s tax laws and regulations to ensure compliance with all applicable requirements.
There is also a possibility for “small taxpayers” to qualify if the IP is non-obvious, useful, and novel. However, certain limitations apply.
To be classified as a small taxpayer, the following conditions must be met:
- The total sum of benefits received from intangible R&D assets in the current financial year and the preceding four years, along with the corresponding expenses incurred, should not exceed ANG 75 million.
- The taxpayer’s total net turnover, as reflected in the (consolidated) financial statements of the current financial year and the preceding four financial years, must not exceed ANG 500 million.