Company Formations: A jurisdictional guide to setting up a business

Published 26 June 2019 by InfoCapital N.V. Advisory & Management

QUESTION ONE - What are the most common structures used when international clients want to form a company in your jurisdiction? Any examples?

Curaçao’s most recent tax reforms promote an attractive investment climate for businesses, as the jurisdiction positions itself more and more as a substance destination for financial services such as family office services, investment funds, trust services, intellectual property rights management, wealth preservation & asset protection, shipping and aircraft registry, international trade services, exchange listing/trading and e-commerce solutions.

The international financial sector of Curaçao has actively cooperated with the Curaçao Government to ensure improvement and amendment of the legislation to keep pace with the constantly changing international requirements regarding compliance, substance and transparency. Another BEPS requirement is that partic­ipating jurisdictions amend their legislation to terminate or modify regimes which are deemed preferential. Curaçao has introduced new legislation to comply with these OECD BEPS standards, to ensure that our regimes are favourably reviewed.

The international trend is that companies that operate in a jurisdiction should have a real presence, or substance, in that jurisdiction. The substance should be pro­portional to the size and nature of the activities that the company performs. This means that, for example, a company with some basic investments that, if they were held directly by a natural person would not require much time and effort, will not require much substance. On the other hand, companies with a sizable number of assets and a substantial turnover should have several full-time local employees and operational expenses such as office space and equipment that is in line with the reasonably required time and effort for these activities. The company may employ people directly or indirectly, but the core activities should be performed in Curaçao. To be certain that a company meets these substance requirements, it will be possible to request a ruling from the inspector, who must respond to such request within one month.

QUESTION TWO - Please detail some of the favourable and unfavourable legislation that businesses considering establishing a presence in your jurisdiction should be aware of? How can you help them to streamline the process?

Curaçao has been a true financial centre since 1954. Due to its long-time activity in this area, the island has developed an infrastructure that is well suited for inter­national finance, investment banking, shipping registration, funds administration and related services. Some of the key factors that qualify Curaçao as a preferred financial centre are:

  • As part of the Kingdom of the Netherlands, the legal system is linked to the Dutch Supreme Court in The Hague;
  • Supervision of the Central Bank of Curaçao and St. Maarten provides complete security and stability;
  • Investment protection treaty eligibility as part of the Kingdom of the Netherlands;
  • Tax system is compliant by OECD norms and linked to well-known regulations and incentives of the Netherlands and other EU member countries.

The new regulation includes a general exemption for foreign source income in con­nection with the sale of goods or performance of services to customers abroad, based on the OECD-approved territoriality principle. As for IP income, the OECD has made it clear that all jurisdictions must adopt the so-called nexus approach. This is a form of substance, as it requires a company to have developed its own IP in order to benefit from tax incentives for the income generated from that IP. The amendments form a balanced new system that will ensure that both the investment climate of Curaçao and doing business in the country remains compliant and attractive for investors.

InfoCapital provides private clients with all necessary assistance and coordination throughout the company formation process, including registered office facilities and agents as well as local representatives.

As part of our private client services, InfoCapital has experience and background in providing trustee and board services to high net worth families, family offices and privately held corporations. The services include financial administration and reporting, financial audit and internal control, payroll services, corporate govern­ance matters and bank account management.

InfoCapital also provides exchange listing services through its affiliation with the Dutch Caribbean Securities Exchange (DCSX). The DCSX is supervised by the Central Bank of Curaçao and Sint Maarten and operates under the full license of the Ministry of Finance of the Curaçao Government and is the only authorised secu­rities exchange within the country of Curaçao. In addition, InfoCapital provides payments services under a private label, CX Pay.

QUESTION THREE - What due diligence is required to be undertaken by company formations agents under anti-money laundering laws in your jurisdiction?

Service providers must take reasonable measures to monitor clients and their transactions on a continuous and/or regular basis, by means of an established risk profile and risk classification of that specific client. Curaçao is not on the OECD nor the FATF AML Deficient List.

The international financial sector (IFS) of Curaçao strives to maintain its status as a premier and high quality, a globally competitive financial centre that has invested heavily in establishing a robust regulatory regime with supervision that meets or exceeds international standards. In recent years Curaçao has promoted more trans­parency, compliance and substance over traditional offshore structures based pri­marily on favourable tax structures. Much of the financial infrastructure in Curaçao has been set up to cater to structures that seek not only a favourable tax climate, but mostly to provide insight and transparency into property and money flows of the respective companies and private clients.

The specific needs of clients are carefully and thoroughly assessed and evaluated to provide customised and compliant solutions through the most fitting structures that are tailored around the principles of a risk-based approach. This approach is anchored on current laws and regulations on the prevention of money laundering and terrorist financing that aim to provide a better, less time and a more cost-ef­fective alternative to the normative approach.

Service providers can, therefore, allocate resources more effectively on high-risk clients, and meet compliance requirements with greater efficiency. This, in turn, creates greater latitude and flexibility for professional service providers to dedicate the desired and adequate attention to the risk assessment of specific client profiles, country, product or transaction types. This risk assessment is used to describe how the risks are either eliminated or mitigated pursuant to the money-laundering legislation.