Curaçao’s International Financial Services Sector

Since the 1950’s, the international financial services sector has been an important economic pillar for Curaçao. For over 70 years, Curaçao has shown its strength in its multilingual and highly educated workforce. Nowadays, Curaçao is an established, secure and reliable international financial center.

TEXT CURAÇAO INTERNATIONAL FINANCIAL SERVICES ASSOCIATION (CIFA)

Due to its long history, the island has developed a sophisticated international financial sector. A wide variety of international companies are managed from Curaçao, such as investment companies, (group) finance companies, holding companies, mutual funds, captive insurance, international banking institutions, intellectual property holding companies, family offices and hedge funds.

History
After Germany invaded the Netherlands and Dutch multinationals shifted their legal domiciles to Curaçao, the island became a safe haven for Dutch multinationals to conduct international business and to protect their (international) business interests. The arrival of Dutch multinationals during the Second World War also brought accountants, lawyers, and other professionals to the Dutch islands, a crucial ingredient for the development of the international financial services sector.

After the war, the government created a special low-tax regime for foreign companies that legally reside in Curaçao, but with most of their physical business being conducted outside of Curaçao. With this special low-tax regime, Curaçao could persuade Dutch multinationals to locate subsidiaries on the island. It was then that the international financial sector of Curaçao was born.

The island’s connection with the Dutch Kingdom has always been very important for the international financial sector. In the 1960’s the Netherlands’ post war Tax Treaty with the USA was extended to the Dutch overseas territories and Curaçao became a major player in the Eurobond market. In the 70s, 80’s and 90’s, the international financial sector continued to be an important economic pillar.

Curaçao has taken great strides over the past years to meet international standards set by intra-governmental bodies and non-governmental organizations like the European Union, the Organization for Economic Cooperation and Development (OECD), the G20 and the Financial Action Task Force. In early 2000, Curaçao abolished all tax legislation that was perceived to be harmful by the international community. A well-balanced, transitional regime was introduced for existing international structures. Nowadays, there are no longer distinctions in the tax laws between foreign and local tax payers.

Curaçao is regarded as a cooperative jurisdiction and is mentioned on the white list of the OECD. Furthermore, Curaçao is FATF approved, which confirms that the necessary anti-money laundering, anti-terrorist financing, know your customer, suspicious transactions and related processes and legislation are in place, adequate and in conformity with international FATF standards. This was last acknowledged during the plenary meeting of the FATF in Paris in October 2012.

Current Situation
The Curaçao international financial services sector offers products and services tailored to the need of high net worth individuals, families and closely held businesses, up to and including internationally listed corporations. Curaçao’s financial services sector offers a wide range of products and services in the area of Asset Protection, Inbound and Outbound Finance and Trading.

The independent and high-quality legal system of Curaçao is based on the Dutch civil law system. Additionally, Curaçao falls under the jurisdiction of the Supreme Court in The Hague in the Netherlands, which is also the Supreme Court for the Netherlands itself. The supervision of the financial system is under the rigorous supervision of the Central Bank of Curaçao and St. Maarten and is executed in close cooperation with the Dutch Central Bank. The regulatory and supervisory environment in Curaçao is comparable to that of the Netherlands, meeting high standards and compliance with the anti-money laundering and anti-terrorist financing guidelines of the G20’s Financial Action Task Force.

In comparison to the size of the economy, Curaçao tax legislation is highly sophisticated. In addition, Curaçao has concluded a large number of treaties such as more than 40 foreign investment protection agreements, 24 tax information exchange agreements (TIEAs) and six agreements for the avoidance of double taxation (DTAs). The tax system, including treaty eligibility, is also linked to that of the Netherlands.

Curaçao: Connecting Markets

Despite the fact that Curaçao has historically always been a center of commerce and business between Europe and the Americas, the international financial sector was operating independently and was predominantly focused on facilitating Dutch and US companies.

Currently, Curaçao is focusing on Latin America more than ever before. Its geographical location and the available cultural mix of European and Latin American nationals and languages makes Curaçao the ideal hub for international operations conducting business with Latin America. A number of opportunities exist and are already being developed. In the beginning of 2014, Curaçao, for example, signed a Double Taxation Agreement (DTA) with the Republic of the Seychelles and a Tax Information Exchange Agreement (TIEA) with Argentina, showing Curaçao’s commitment to transparency and the development of the Latin American market.

CIFA’s vision is to make Curaçao the gateway of choice, both inbound and outbound, for cross border international financial service transactions with Latin America, the US, Europe and Asia. As representative organization of the international financial services sector of Curaçao, CIFA acts as a sounding board and advises the government, regulatory agencies and monetary authorities on issues concerning the international financial services sector. Furthermore, CIFA initiates and endorses the development of new concepts, products and services by actively lobbying for new state of the-art laws and regulation (fiscal, corporate and compliance).

CIFC
Another important organization active in the international financial sector is the Curaçao International Financial Center (CIFC). CIFC is a public private partnership between the Government of Curaçao, the Central Bank of Curaçao & St. Maarten and the private sector. The goal of this public private partnership this year is to promote Curaçao as international financial center in the defined target markets, namely Latin America.

In 2014, the promotional activities of CIFC will concentrate on the promotion of the jurisdiction at five international conferences in the region. For every conference, CIFC invites companies of the international financial sector of Curaçao to participate and promote Curaçao in a joint effort.

This year, CIFC successfully promoted Curaçao in Bolivia at the IFA LATAM conference and at the 7th annual U.S. – Latin America Tax Planning Strategies Conference in Miami. In the beginning of September, CIFC will be present at the STEP LATAM Conference in Mexico. In October and November, CIFC will be present at the Latin Markets Private Wealth Latin America & Caribbean Conference and the Private Banking LatAm and Americas Family Office Forum, respectively, which are both held in Miami.