Changes related to facility for young employees

A new tax ordinance is recently introduced that amongst others aims to increase employment among young employees. However, please note that it also introduces broader reforms to existing tax legislation regarding the Curaçao Investment Company (in Dutch: “Curaçaose Beleggingsvennootschap”) and the Customary Wage Rule (in Dutch: “Gebruikelijke loonregeling”). These changes are:

 

1. Payroll Tax and Social Security exemption for young employees (As of July 1, 2025)

  • Who qualifies? Curaçao residents aged 18–29 years.
  • Salary is not considered taxable income for the employee.
  • Additional employer benefit:
    • No withholding of payroll tax or social security contributions required on wages for qualifying young employees. These benefits are furthermore exempted from profit tax for the employer.

 

Application process: Employers should submit a request to the Tax Inspector within 3 months of hiring If approved, the exemption can be applicable for up to 2 years. Please note that several conditions should be taken into consideration when applying. For more information on these conditions, feel free to contact us.

 

2. Overtime tax relief (As of July 1, 2025)

On request, up to 10 hours of overtime wage per week may be excluded from an employee’s taxable income, provided the employee’s gross annual is below XCG 84,396 (based on 5-day workweek, for the year 2025) or XCG 70,330 (based on 6-day workweek, for the year 2025). For completeness’ sake we note that the conditions of the Labor Regulation apply for i.e. what is considered overtime. For more information on this, feel free to contact us.

 

3. Increased deemed income from Curaçao Investment Company/foreign entity primarily involved in lending/investing (As of August 1, 2025)

The deemed income from a Curaçao Investment Company or from a foreign entity primarily involved in lending/investing increases from 4% to 10% per year. 

 

4. Expansion ‘Customary Wage Rule’ (As of August 1, 2025)

The minimum salary requirement for shareholders performing work through their own entity (at least 5% share ownership) will now also apply for:

  • Curaçao investment companies.
  • Statutory tax-exempt entities/trusts (in Dutch: “Doelvermogens”).
  • Insurance, shipping, and aviation companies.
  • E-zone companies.
  • Transparent entities.
  • Entities with an exemption under the Foreign Exchange Regulations of Curaçao/Sint Maarten.
  • Foreign directors and commissioners of Curaçao entities.

 

Minimum salary Customary Wage Rule:

Salary must be in principle:

  • at least 50% of the company’s revenue, or
  • XCG 50,000 if annual revenue exceeds XCG 100,000. 

Please note that there may be exceptions applicable in a specific case. For more information on the minimum salary rules, feel free to contact us by phone or e-mail.

 

Stay informed and ensure compliance with the new regulations. For more information, contact one of our tax advisor at belastingen@bdo.cw or +5999 462 1200.