A Curaçao-based director is now facing the country’s highest court, over unpaid taxes owed not by him personally, but by the company he once led. It’s a case that’s caught the attention of the legal and business communities, and for good reason, it could reshape how directors across the island are held accountable.
Here’s the crux, the director didn’t break any laws. But the company did fail to meet its tax obligations, and that’s what put his personal assets under seizure by the Tax Collector.
Both the Court of First Instance and the Court of Appeal have weighed in. Now the Supreme Court has been asked to rule, with several legal questions submitted by the Joint Court of Justice. At stake is how, and when, directors can be held personally liable for a company’s tax debts.
What happened?
After the company failed to pay its taxes, the authorities acted, not just against the business, but against the director himself. Enforcement orders were issued in the company’s name but delivered to his home, naming him the person responsible. He pushed back, arguing that he shouldn’t be personally targeted for company debts.
But according to the Court, the law allows for just that. Curaçao’s tax legislation states that directors can be held jointly and severally liable for tax debts. This liability doesn’t require a special declaration or evidence of mismanagement. It’s simply built into the role.
Limited room to object
While companies have clear avenues for contesting tax assessments, directors have fewer options. That doesn’t mean they’re powerless, but it does mean the road is narrower.
The Advocate General to the Supreme Court believes directors should be able to file objections, though only under certain conditions. And while tax law gives them limited footing, there may be more room under civil law, through what’s known as an enforcement dispute.
In practical terms? If the Tax Collector comes for your assets, your best legal route may not be through tax court at all, but through a civil court challenge.
What if the director isn’t at fault?
The case also raises an important question, What happens when a director acts in good faith, doing everything possible to pay the debt, only to be thwarted by circumstances outside their control?
In some areas of Curaçao’s tax law, directors can be excused from liability if they can prove they weren’t at fault. But this protection isn’t available across the board. The Advocate General argues that directors should be able to exculpate themselves in more situations, including cases of force majeure or where liability would clearly be unfair.
This would bring Curaçao’s framework closer to those of Aruba and the Netherlands, where broader legal protections exist for directors.
Can the director challenge the tax amount?
Typically, only companies can dispute the actual tax assessment. But when a director is facing personal enforcement, should they be allowed to question the amount?
The Advocate General thinks so, but only in civil court. This distinction is crucial. A challenge to the tax figure itself doesn’t belong in tax court if it comes from a director, it belongs in the civil enforcement process.
So where can a director turn?
Despite the complexity, the answer is relatively straightforward, in most cases, a director’s legal path leads to the civil court, not the tax or administrative courts. The tax court only comes into play when the director submits a formal request for exculpation that is denied by the Tax Inspector.
Outside of that, civil court remains the only option. But this route also has its limitations, filing a claim doesn’t automatically stop a seizure. Directors must ask the court for a temporary measure to suspend enforcement while the case is reviewed.
Why it matters
This case is about more than one person’s legal dispute. It highlights just how limited the current protections are for directors who find themselves personally on the hook for corporate tax debt. If the Supreme Court follows the Advocate General’s reasoning, we could see broader legal defenses become available, bringing greater fairness to the system.
Until then, the burden on directors remains significant. If you’re unsure about your own exposure or obligations as a director, this is a good time to review them, with the help of a tax advisor.
Have questions or need advice on how this could affect you? Our tax advisors are here to help. Contact us at 433-300 or info@cw.gt.com.
