Changing seats: Re-domiciliation to Curacao
A re-domiciliation is the transfer of a company's "seat of incorporation" into or out of a jurisdiction. Curaçao allows re-domiciliation in and out of Curaçao (entry and exit conversion) provided that the applicable foreign law is not inconsistent and it does not object to the conversion.
Under Curaçao laws, the company remains being the same legal entity, although with new articles of association and organized under the laws of Curaçao. The assets and obligations of the company are not passed on or transferred to any other (new) entity on the basis of the conversion and all its relationships, such as third party contractual rights and obligations (i.e. service or distribution agreements), will continue.
Generally, there is no need for a re-registration of any registered asset owned by the entity, such as immovable property or shares. Subsidiaries of the converted entity would not need to report a change of ownership/shareholder in their local jurisdiction.
What is it for?
A re-domiciliation into Curaçao creates opportunities for international investors and traders to emigrate his company and to become a tax resident of Curaçao taking advantage of the favorable tax regimes and vehicles, such as:
− Participation Exemption
− Transparent Company for profit tax purposes
− E-Zone company : 2% profit tax rate on international trading of goods or services
− Export Facility regime: 3.4% effective tax rate on international activities (proposed legislation)
− Exempt Company: 0% profit tax rate on holding, financing, investment, or licensing activities
− Private Foundation: 0% profit tax rate on passive holding, financing investment, or licensing activities
− No withholding taxes on dividends, interests and royalty payments abroad − No thin capitalization rules
These advantages may be utilized without the necessity of a rigorous corporate restructuring, i.e. a general transfer or a liquidation of the foreign company, therefore avoiding possible adverse tax consequences in the source state.
Another benefit from a re-domiciliation is substantial savings in costs and lengthy administrative procedures as the company’s business may continue uninterruptedly.
• Legal opinion asserting that the re-domiciliation is not precluded and does not affect the continuity of the entity under its domestic laws, and that any local procedure to re-domiciliate has been completed.
• Resolution from the competent authority of the entity (i.e. board of directors, shareholders) approving the conversion and the amendment of the articles of association.
• Curaçao Notarial Deed of Conversion containing the new articles of association.
• Balance sheet not older than one month before the date of the Notarial Deed with either
i) an equity equal or higher than the shares’ nominal value or ii) an equity that is not negative in cases where the shares do not have a nominal value, duly executed and signed by all directors.
• In case a foreign entity would convert into a Curaçao (Private) Foundation, a Curaçao Court decision is required. The location, date and time for the Hearing of the Court need to be published in a local newspaper.
• Certified copy of the ultimate beneficial owners.
• Registration with the Chamber of Commerce and Tax Inspectorate of Curaçao.
Should you require further information on re-domiciliation of a foreign entity to Curacao, feel free to contact us.