On Curaçao, turnover tax is levied through a cumulative system. Turnover tax must be charged on every sale of goods or on each service performed. Curaçao does not have a VAT system. The concepts of supplying goods and performing services are interpreted broadly. In practice, this means entrepreneurs almost always owe turnover tax once they receive payment for a product or service. Imports of goods are also subject to turnover tax. What matters is that these activities take place in Curaçao, because only then do they fall within the turnover tax jurisdiction.
Seven Practical Steps to Get Turnover Tax Right
Turnover tax paid when importing goods for resale can be partly reclaimed. This tax may be deducted from the turnover tax payable for a given period. This prevents double taxation on import and sales. There is an important limitation. Only 50% of the turnover tax paid on import can be deducted. In addition, deductions are only allowed when imported goods are used for taxable activities. If the goods are used for exempt or non-taxable activities, deduction rights are limited or unavailable.
When goods are transported or shipped to Curaçao from abroad, the transport usually begins outside Curaçao. As a result, the delivery is treated as taking place outside the turnover tax jurisdiction. The tax follows the point where the transport begins, so no turnover tax is due on that delivery. It does not matter whether the supplier is based in Curaçao or abroad.
Sometimes a client pays an invoice only partially or not at all. In that case, the entrepreneur has paid too much turnover tax, because the tax was calculated on an amount that was never fully received. The law allows these excess payments to be reclaimed. A refund is also possible when part of the payment is returned to the customer, for example when a discount is granted afterwards. Timing is essential. The refund request must be submitted within two months after the end of the period in which the right to refund arose. Filing late means the right expires.
Since January 2025, Curaçao has updated its turnover tax filing rules in the online tax portal. Filing frequency now depends on annual taxable turnover.
- Less than XCG 30,000: one filing per year.
- Between XCG 30,000 and XCG 75,000: quarterly filing.
- More than XCG 75,000: monthly filing.
This approach aligns filing obligations with the size of the business.
Curaçao offers several exemptions. One applies to long-term rental of real estate intended for permanent residence. A rental period of more than one year qualifies as long-term, which means weekend rentals fall outside this exemption. Revenue earned by bus and taxi drivers in the course of their profession is also exempt. The same applies to income earned from school bus services. Care and nursing provided in an institution are exempt as well. This covers hospitals and other care facilities, whether commercial or not. The exemption applies not only to medical treatment or nursing, but also to general care provided to residents.
Some services are taxed where the customer is located rather than where the service provider operates. These include advertising and marketing services, consultancy services, telecommunications and IT services. If the customer is based abroad, no turnover tax is due.
The general rule states that services are taxed where the service provider is established. This would mean services provided by foreign businesses are never subject to Curaçao turnover tax. That outcome is not always desirable. An exception therefore applies. Services provided by foreign entrepreneurs are taxed where the benefit of the service is enjoyed. If the benefit is enjoyed in Curaçao, turnover tax is due. This applies regardless of whether the customer is a business or an individual. However, the customer’s status affects how the tax is paid. If the customer is a business, the reverse-charge mechanism applies, and the customer must self-assess. If the customer is an individual, the foreign service provider must register in Curaçao and remit the tax.
In summary, Curaçao’s turnover tax applies to most supplies of goods and services, with important exemptions and specific rules for imports, foreign services and refunds.
Need Guidance?
If you are exploring how these turnover tax rules apply to your business, we are here to help. A conversation with a tax adviser can bring clarity, uncover opportunities and keep you moving forward with confidence.