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May 4, 2023

Dutch Finance Ministry proposes changes to Tax Arrangement between the Netherlands and Curaçao

  • Proposed changes to the Tax Arrangement between the Netherlands and Curaçao seek to comply with the Organisation for Economic Co-operation and Development's minimum standard.
  • The Tax Arrangement represents the two countries' intention to eliminate double taxation without creating opportunities for non-taxation or reduced taxation.
  • The proposed changes include a general anti-abuse provision in the form of a Principal Purposes Test and access to the mutual agreement procedure.
  • The proposed changes are expected to be effective on 1 January 2024.

On 28 April 2023, the Dutch Ministry of Finance published proposed changes to the Tax Arrangement between the Netherlands and Curaçao.


As Curaçao is an autonomous country within the Kingdom of the Netherlands, the countries entered into a Tax Arrangement to prevent the double taxation of income. The current Tax Arrangement dates from December 2015 and does not comply with the minimum standard proposed by the Organisation for Economic Co-operation and Development (OECD) to which both the Netherlands and Curaçao, as Inclusive Framework Members, have committed themselves.

Therefore, in May 2019, the Netherlands and Curaçao agreed to review and update the Tax Arrangement. The conclusion of this review is now being made available to the parliaments in both the Netherlands and Curaçao.

Key changes

The most important suggested changes to the Tax Arrangement (hereafter, the 2023 Tax Arrangement) can be summarized as follows:

  • The preamble is expanded to state that the common intention of both countries is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation (minimum standard).
  • The 2023 Tax Arrangement introduces a provision for Collective Investment Vehicles. Investors in entities that are transparent in both the Netherlands and Curaçao, such as limited partnerships (in Dutch: "commanditaire vennootschap") or mutual funds (in Dutch: "fonds voor gemene rekening"), may apply the tax treaty between their country of residence and the source jurisdiction. However, the Tax Arrangement allows the managers of Collective Investment Vehicles to apply the treaty on behalf of the investors, creating more efficiency for investors through such vehicles.
  • The residence article is further aligned with article 4 of the OECD model treaty: pension funds are explicitly mentioned as tax residents and corporations that apply the Curaçao territorial system are explicitly acknowledged as tax residents in the technical explanation. Under the 2015 Tax Arrangement, the dual residence of corporations was already resolved by the competent authorities of the countries, but the 2023 Tax Arrangement makes the mutual agreement procedure, including arbitration, available to such taxpayers.
  • Curaçao Investment Companies (CICs, subject to 0% taxation) are acknowledged as tax residents but are excluded from the benefits of the dividend article to the extent the dividend income results from passive investment.
  • A Principal Purpose Test (PPT) has been introduced, in addition to the Limitation of Benefits Test (LOB) that was already included in the dividend article of the Tax Arrangement (minimum standard). The general anti-abuse article in the current Tax Arrangement is abolished.
    • The PPT contains an option for the taxpayer to provide rebuttal evidence.
    • One country cannot apply the PPT without consulting the competent authority of the other country.
    • In the mutually agreed technical explanation, the countries have agreed that taxpayers may commence a mutual agreement procedure with arbitration or judicial procedures if the competent authority refuses the benefits of the Tax Arrangement based on the PPT.
  • The mutual agreement procedure (minimum standard) is slightly amended to allow taxpayers to approach both tax authorities and to require taxpayers to request arbitration in writing.

The expected entry-into-force date of the 2023 Tax Arrangement is 1 January 2024. A detailed EY Tax Alert on the 2023 Tax Arrangement will be issued once the Arrangement is signed into law.


For additional information with respect to this Alert, please contact the following:


Ernst & Young Tax Advisors Dutch Caribbean, International Tax and Transaction Services, Willemstad

Ernst & Young LLP (United States), Caribbean Tax Desk, New York


Ernst & Young Belastingadviseurs LLP, International Tax and Transaction Services, Amsterdam

Ernst & Young Belastingadviseurs LLP, International Tax and Transaction Services, Rotterdam

Ernst & Young LLP (United States), Netherlands Tax Desk, New York

Ernst & Young LLP (United States), Netherlands Tax Desk, Chicago

Ernst & Young LLP (United States), Netherlands Tax Desk, San Jose/San Francisco

Ernst & Young Tax Services Limited (Hong Kong), Netherlands Tax Desk, Hong Kong

Ernst & Young (China) Advisory Limited (China Mainland), Netherlands/EMEA Tax Desk, Shanghai

Ernst & Young (China) Advisory Limited (China Mainland), Netherlands/EMEA Tax Desk, Beijing

EY Corporate Advisors Pte Ltd (Singapore), Netherlands/EMEA Tax Desk, Singapore

Ernst & Young LLP (United Kingdom), Netherlands Tax Desk, London

Ernst & Young Tax Co (Japan), Netherlands/EMEA Tax Desk, Tokyo

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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