A recent ruling by the Court of First Instance of Curaçao demonstrates that the Tax Authorities cannot increase the value of real estate without limitation. For property owners, the ruling provides an important lesson: it is not only the amount of a valuation that matters, but also whether a revaluation is legally permitted.
In this case, the Tax Inspector reassessed the value of a property, resulting in a substantial increase in the real estate tax (OZB) due for 2023. The Inspector considered the reassessment justified because it had become known that a house had been built on the property.
However, the Court made it clear that the law only permits an interim revaluation under specific conditions. Such a revaluation is allowed only when the property itself has changed as a result of, for example, construction, improvement, renovation or demolition, and that change represents a value of at least XCG 25,000.
This was precisely the key issue in these proceedings. Construction of the house had been completed well before the relevant period. Although the Inspector had only become aware of the house in 2022, the Court ruled that this was not relevant for the application of the law.
The statutory provisions are based on the moment when the property actually changes, rather than on the moment when the Inspector becomes aware of that change. Since construction had been completed some time earlier and no relevant changes had subsequently taken place, there was no legal basis for the revaluation in 2023.
This conclusion had significant consequences. The value determined by the Inspector could not be upheld, resulting in a very favorable outcome for the taxpayer. The tax assessment was ultimately reduced by more than XCG 52,000.
The ruling emphasizes the importance of critically reviewing tax assessments. An assessment that appears correct at first glance may, upon closer examination, still be successfully challenged. The key takeaway is that an assessment that initially seems correct may not always be legally valid. A timely analysis of the facts and circumstances, together with the applicable legal provisions, can sometimes make a substantial difference.
Do you have questions about the revaluation of real estate, an OZB assessment or another tax matter? The tax professionals at BDO Dutch Caribbean are happy to assist you.