Gift and Inheritance Tax (Estate Tax) in Curaçao

Has someone in your family passed away? And are you receiving an inheritance under a will or under the inheritance laws of Curaçao? Or is someone giving you a substantial gift? If so, you may have to pay tax on what you receive. Inheritance tax and gift tax are jointly referred to as estate and gift tax inheritance and gift tax.

Curaçao has had estate and gift tax since 1908. This is laid down in the Successiebelastingverordening 1908. In October 2018, this ordinance underwent a number of important changes.

What is estate and gift tax?

Estate and gift tax is a tax levied on the increase in wealth resulting from the death of, or a gift made by, a resident of Curaçao. So if someone living in Curaçao leaves an inheritance or makes a gift, the recipient must pay tax on the portion received. Please note: an inheritance consists of both assets and debts . This “increase in wealth” may of course consist of money, but also of tangible property such as a home, securities such as shares, or an antique car. Tax must also be paid on inherited rights, permits, monetary claims, and forced heirship rights left by a deceased person. In this blog, we will not go into further detail on movable and immovable property.

Do I have to pay inheritance tax or gift tax in Curaçao?

A large number of people who receive an inheritance or gift do not have to pay inheritance tax or gift tax. That is because the exemptions were significantly increased in October 2018. You pay estate and gift tax if the deceased or donor lives in Curaçao and you inherit or receive something from that person. It does not matter where the recipient lives. You pay tax on the value of everything you inherited from the deceased person.

If you receive an inheritance or gift from someone in Curaçao and your share exceeds the exemption, you must pay estate and gift tax. You must file the tax return yourself.

Transfer tax

Do you inherit from someone who owned immovable property in Curaçao, such as a house or a parcel of land, but who was not a resident of Curaçao at the time of death? In that case, you pay transfer tax instead of estate and gift tax. So if, for example, the deceased lived in the Netherlands and owned a house in Curaçao, the heirs must pay transfer tax. The transfer tax rate is 8% of the value. Any transfer tax already paid on acquisition may be deducted from the amount due. Unlike inheritance tax, there is no exemption for transfer tax. Transfer tax must also be paid in the case of gifts.

Example: Person X lived in Amsterdam and owned a house in Curaçao. He was married to Person Y, had 3 children (A, B and C), and did not have a will. The value of the house is XCG. 600,000. Person Y already owned half of it, so the value of the estate is XCG. 300,000. The heirs each receive 1/4.

The calculation for each heir is then as follows:

Value received: XCG. 75,000
Exemption: XCG. 0
Taxable amount: XCG. 75,000

The transfer tax payable per heir is therefore: (XCG. 75,000 × 8% =) XCG. 6,000 Persons Y, A, B and C will each receive an assessment for XCG. 6,000 in transfer tax.

If inheritance tax is also due in the Netherlands, do you then have to pay transfer tax in Curaçao and inheritance tax again in the Netherlands? Under the Tax Arrangement for the Kingdom (BRK), the Netherlands will credit the transfer tax due in Curaçao against the inheritance tax due in the Netherlands.

Inheritance tax exemptions in Curaçao

You do not pay tax on the full inheritance. Certain exemptions apply. Estate and gift tax is only due on the portion above those exemptions. The amount of the exemption depends on the relationship between the deceased and the recipient. Children, for example, have a higher exemption than brothers, sisters, or friends. Recipients are divided into 3 groups:

The first group consists of (adopted) children, grandchildren, great-grandchildren, parents, and parents-in-law. No distinction is made between recognized children born in wedlock and natural children born out of wedlock. Foster children may also fall within this group under certain conditions. This group has an exemption of XCG. 80,000. Please note: brothers, sisters, nephews, nieces, uncles, aunts, and spouses do not fall under this exemption.

The second group consists of the surviving spouse or life partner. This group has an exemption of XCG. 240,000. Are you married under community property rules? Then half of the community property, up to a maximum of 50%, is already yours. On the other half, you have an exemption of XCG. 240,000. Estate and gift tax is due only on the amount above that threshold.

The third group includes everyone else, such as brothers, sisters, nephews, acquaintances, and friends of the deceased. This group has an exemption of XCG. 8,000.

Life partner for estate and gift tax purposes

In 2018, the concept of a life partner was introduced into the Landsverordening Successiebelasting 1908. You may have no more than one spouse or life partner. You must be registered at the same address, unless one of you can no longer live at home due to medical reasons or old age, provided neither person has another life partner. A life partner is someone with whom you share your life as if you were married and with whom you have entered into a mutual duty of care. There must be a durable, committed partnership. A life partner may not be a blood relative or in-law. At the time of death, you must have met these conditions for at least 6 months prior to death, not counting the month of death. In the case of a gift, this period is at least 24 months, not counting the month in which the gift was made.

To be recognized as life partners, there must be a written declaration of cohabitation, a cohabitation agreement drawn up by a notary, or “a declaration included in a notarial deed or will confirming durable cohabitation and the running of a common household as if married.”

If none of the above has been drawn up, then you must provide a written declaration from the life partner, supported by written statements from third parties, and you must have been registered at the same address for at least 24 months.

The declaration(s), cohabitation agreement, notarial deed, or will must be submitted to the Inspector together with the tax return form.

Gift tax exemptions in Curaçao

Gifts are also subject to exemptions. The Parliament of Curaçao has divided these exemptions into two groups:

1. Echtgenoot, levenspartner, bloed- en aanverwanten in de rechte neerdalende lijn ((adoptie-) kinderen, kleinkinderen of achterkleinkinderen) , ouders, grootouders en schoonouders van de schenker(s). Deze groep heeft een vrijstelling van XCG. 20.000,- per year. Schenkt persoon A aan persoon B, en wordt de vrijstelling gebruikt? Dan deze vrijstelling in de toekomst niet meer gebruikt worden bij schenkingen van X aan Y.
2. In alle andere gevallen is dit XCG. 8.000,- per year. Schenkt persoon X aan persoon Y, en wordt de vrijstelling gebruikt? Dan deze vrijstelling in de toekomst niet meer gebruikt worden bij schenkingen van X aan Y.

Estate and gift tax rates in Curaçao

Filing an estate and gift tax return in Curaçao

Each heir must file a tax return. This can be done individually or jointly. If it is filed jointly, everyone must still sign the return. You file the return using the official tax return form. It must be completed fully and correctly. If you intentionally provide incorrect information or omit something, you may be fined up to 100% of the additional tax assessed.

After filing the return, you will receive a tax assessment. The tax due must be paid to the Landsontvanger. Under certain circumstances, a payment arrangement may be granted. Do you disagree with the assessment? Then you must file an objection with the Inspector within two months.

This blog contains concise information about estate and gift tax in Curaçao, including inheritance tax, transfer tax, and gift tax. We cannot guarantee that this information is always error-free, complete, or up to date. No rights can therefore be derived from our blogs.

Have we made a mistake, or has something changed? Please send an email to robin@livinggoed.com. We would be grateful.

Sources: Successiebelastingverordening 1908 (P.B. 1908, no. 48), National Ordinance of October 2, 2018 amending the Successiebelastingverordening 1908 (P.B. 2018, no. 59), belastingdienst.cw