Netherlands And Curaçao Reach Agreement On New Bilateral Tax Arrangement

Feb 1, 2014 | Tax

On December 12, the Dutch Ministry of Finance announced that Curaçao and The Netherlands have reached agreement on the text of a new bilateral arrangement for the avoidance of double taxation (the “Arrangement”). The Arrangement shall replace the current Tax Arrangement of the Kingdom (“TAK”) and, subject to parliamentary procedures in both countries, should become effective per 1 January 2015.

The announcement reconfirms the introduction of a zero percent (0%) dividend withholding tax rate on distributions of profits albeit under strict conditions (the current dividend withholding tax rate under the TAK is 8.3%). The zero percent rate will apply on dividends paid to certain active parent companies qualifying under a “limitation of benefits” provision, which will be introduced. This “limitation of benefits” provision has however not yet been clarified.