Buying a House on Curaçao: Personal Purchase, Company, or SPF?

Buying a House on Curaçao: Personal Purchase, BV, or SPF?

When purchasing a house on the island of Curaçao, we as real estate agents quickly ask, “How are you buying the house?” By this, we mean: In what capacity are you purchasing the property? This is a question that is not commonly asked in other countries. In this article, we will outline the choices you have and the pros and cons of each option. Of course, the final decision will depend on your personal situation and the purpose of your purchase. Don’t forget to consider your future plans as well.

Not yet sure about this subject during negotiations and price determination? No worries, we have a solution for that too. We draft the purchase agreement with the addition “or another named entity.” This means that until the legal transfer at the notary, you have the time to designate another entity (an organization with legal personality, capable of performing legal actions like an individual) to finalize the purchase. This could be a private limited company (BV), a public limited company (NV), or a private foundation (SPF). Meanwhile, you remain bound to the agreement as an individual until the replacement entity is named.

Buying a House on Curaçao as a Private Individual

Let’s start with the basics: investing as a private individual. Simply put, you buy a property in your name. Easy, right? Well, just like a good party, this option has its ups and downs.

Pros:

• No Administration: Minimal paperwork, more time to enjoy the beach.
• No Extra Costs: For a private purchase, you only need to bring yourself to the notary, the cheapest option.
• Full Control: You decide over your new paradise property. Build a slide from your bedroom to the pool? Why not!

Cons:

• Personal Liability: If something goes wrong, you’re liable. Since you are the owner, it is easy to find out, for a fee, who owns the house through the Curaçao cadastre. If you have a creditor, they can easily place a lien on your house as it is part of your personal assets.
• Tax Implications: Depending on where you come from, taxes can surprise you like a sudden rain shower during a barbecue. Investigate the tax differences thoroughly. The property is now part of your private assets.

Want to rent out the purchased house privately? Read our article on “Tax on Renting Out Your Home.”

Buying a House on Curaçao through a BV: Business-Savvy and Smart?

Setting up a BV (private limited company) in Curaçao can feel like upgrading from economy to business class. More comfort, but also more expensive.

Pros:

• Limited Liability: Financial mishaps? Your private assets remain protected. The house is no longer your personal property but belongs to a separate entity.
• No Transfer Tax on Share Sales: If you establish one BV per house and sell the BV’s shares, you technically do not sell the property, saving the subsequent buyer 4% transfer tax.
• Multiple Partners: Buying property with multiple people, such as friends or family? A BV can help in clearly defining mutual relations, rights, and obligations.
• No Minimum Capital Requirement: No minimum capital needs to be deposited upon establishment.

Cons:

• Administrative Obligations: More paperwork. You might need an assistant. You must meet the annual administrative obligations of a BV.
• Notary Involvement: Establishing a BV requires a notary, which takes time and patience in Curaçao.
• Costs: Establishing a BV is not free. It’s like buying a very expensive sunscreen with a bit of gold in it. Initial costs are at least 5000 NAF, plus annual costs for preparing financial statements and filing with the Chamber of Commerce.
• Business Permit: A BV needs a business permit issued by the Executive Council on the advice of the Economic Affairs Service (DEZ). Issuance can take years, although you can start operating the BV with the application.

Buying a House on Curaçao through an NV: Big Projects, Big Ambitions

For the high rollers among us, there is the NV (public limited company). Ideal for large projects like that resort you’ve always wanted to open. Looking for a large hospitality project in Curaçao? Contact us directly as we usually offer these through private sales.

Pros:

• Access to Financing: More ways to attract money. You can easily issue shares to raise funds.
• Public Financing: Issue shares? Check. Go public? Why not!
• All the Advantages of a BV!

Cons:

• Stricter Regulations: More rules than a game of Monopoly. Establishing an NV in Curaçao isn’t feasible for just one property. You must comply with many regulations.
• Complexity: This is the “expert” level in the real estate game.
• All the Disadvantages of a BV.

Buying a House in Curaçao through an SPF: Discreet and Tax-Free

Want to invest without the spotlight? An SPF (private foundation) offers privacy and tax benefits as attractive as a day at the beach.

Pros:

• Asset Protection: Your assets are safe in a vault, unseen by the world. Your wealth is shielded.
• Certain Taxes Not Applicable: A dream for any investor. Several possible situations:
  • No Significant Interest on Sale: When selling, there’s no ‘significant interest’ tax like with a BV. You simply appoint another beneficiary of the SPF, and voilà, there’s a new ‘owner.’
  • Avoid Inheritance Tax: (I hate to break the news, but everyone’s time on this world ends.) Make your children or other heirs beneficiaries of the SPF, and there’s no inheritance tax since they are already beneficiaries.

Cons:

• Limited Use: Not ideal for active entrepreneurs. More suitable for the ‘chill’ investor. You cannot actively conduct business. Renting out your house requires outsourcing everything.
• Transparency: Be aware that many tax authorities can see who the Ultimate Beneficial Owner (UBO) of an SPF is. For more information, check this with your local government or contact a Trust Firm for in depth advice.

This is not an exhaustive story. We are a real estate agency and provide general information about the possibilities. Whether you choose a private purchase, a BV, an NV, or an SPF, it’s essential to think about what fits your personal situation and future plans. Discuss this with your financial advisor or estate planner. Each option has its own pros and cons, and it’s up to you to decide which best aligns with your goals and desires.

Remember, you don’t have to decide definitively during negotiations and price determination. With the clause “or another named entity,” you have the flexibility to choose the most suitable entity later. The most important thing is to enjoy the process and ultimately find your piece of paradise in Curaçao.

Do you have any questions or want to discuss your options further? Feel free to contact us! We are ready to help you every step of the way to your dream house in Curaçao.

International Fine Living does its best to inform people who buy or sell a house in Curaçao as accurately as possible. However, our time is limited, and we may not always be able to publish the latest updates. We recommend verifying the provided information with the appropriate authorities or companies. No rights can be derived from the accuracy of the provided information. Other real estate agents on Curaçao, take note: all our texts are copyrighted. It is not allowed to copy texts or parts thereof. However, anyone is welcome to link to our blog.

Categorieën: Curaçao island, Curaçao Real Estate, News

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