Published On: Wed, Jun 11th, 2014

Netherlands and Curaçao divide pension tax

Dutch ParliamentTHE HAGUE, WILLEMSTAD - Netherlands and Curaçao will divide the tax income on pensions that have been built in the Netherlands but apply as income on Curaçao. This agreement is part of the new Tax Agreement Netherlands, Curacao (BRNC) which was sent by the Dutch Junior Minister Eric Wiebe of Finance to the Dutch Parliament yesterday.

The BRNC replaces the old agreements which are related to the Netherlands Antilles and date from 1965. Although it is officially an Act, it is a bilateral agreement between Curaçao and the Netherlands, which aims to avoid double taxation and to combat tax evasion.

Since June 2011, both countries negotiated on a regular basis. In December last year, Finance Minister Jose Jardim and Wiebe's predecessor Frans Weekers signed this agreement.

The collection of pension taxation was one of the topics were a clear arrangements was needed. More often than they used to, residents of the Netherlands are spending their retirement abroad, including in Curacao. The consequence is that the Netherlands, as the so-called source of income country, will lose income from these taxes.

One factor to consider is that a tax exemption applies to pension contributions during the construction of a pension. However, Curacao feared a considerable revenue loss if Netherlands would only be allowed to levy the retirement income tax.

For people who already live in Curacao when the agreement comes into force, a transitional arrangement applies, which means that they owe tax only to Curaçao.

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