A seemingly technical question about the calculation of transfer tax could have much broader financial implications for people who purchased real estate in Curaçao after January 1, 2014. If the legal basis for using the former “highest value” method disappeared when Curaçao introduced its property tax system, the question is not merely whether some buyers paid too much transfer tax. It is also whether the same valuation may have resulted in higher notarial fees.
At the heart of the issue lies one fundamental principle: taxes cannot be imposed simply because a particular calculation method has traditionally been used. There must be a legal basis for both the tax and the manner in which it is levied.
That principle is particularly important when legislation changes.
What changed in 2014?
Before January 1, 2014, Curaçao's Transfer Tax Ordinance contained a connection with the so-called “leggerwaarde,” or registered property value. Under that system, when the purchase price was below the applicable registered value, the higher value could be used in calculating transfer tax.
The argument now being raised is that the legal landscape changed with the introduction of the Landsverordening onroerendezaakbelasting, the Property Tax Ordinance, in 2014.
The definition relating to the former property register was removed, as was the provision that provided for automatic use of the higher registered value.
If that interpretation of the legislative change is correct, an important legal question follows: what statutory provision permitted the authorities after January 1, 2014 to continue using the higher of the actual purchase price and the former registered or OZB value?
That question cannot be answered by pointing to administrative practice alone.
The fact that a calculation may have continued to be used does not in itself create a legal basis for taxation.
Article 84 raises the stakes
The issue becomes particularly significant because of Article 84 of the Constitution of Curaçao, which establishes the principle that taxes must be levied pursuant to law.
That principle is one of the foundations of tax law. Government cannot create a tax obligation merely through administrative custom, an internal policy or continuation of a calculation method that previously had a statutory basis.
Therefore, if the statutory provision supporting the old “highest value” method was indeed removed in 2014, the decisive question becomes whether another provision took its place.
If another law, decree or legally valid tariff provision authorized the higher valuation, the calculation could still have had a proper legal basis.
If no such provision existed, continuing the old method becomes much more difficult to justify.
That distinction is crucial. The argument is not necessarily that every transfer-tax assessment issued since 2014 was incorrect. Rather, taxpayers are entitled to ask precisely where the authority to use a particular taxable value can be found.
The issue may extend beyond the Tax Inspectorate
There is another dimension that could make the matter considerably more important.
Real estate transactions in Curaçao are generally completed through a civil-law notary. The buyer's final settlement can include not only transfer tax but also the notary's professional fees and other charges.
Notarial fees are themselves governed by an applicable tariff framework. In property transactions, the amount charged can depend partly on the purchase price or value used for the calculation.
That creates the possibility of a domino effect.
Suppose, for example, that a property was purchased for Cg 400,000 but a higher value of Cg 500,000 was used for transfer-tax purposes. If that same Cg 500,000 was subsequently used to determine the notarial fee, the financial consequences could extend beyond the additional transfer tax.
A higher basic notarial fee could potentially also affect surcharges and taxes calculated on that fee.
The legal questions would nevertheless have to be considered separately. An incorrect transfer-tax valuation does not automatically prove that a notarial fee was incorrectly calculated. The legal basis governing the notarial tariff must also be examined.
Buyers should examine the settlement statement
This is why property owners who purchased real estate after January 1, 2014 may have reason to look beyond their original transfer-tax documents.
The notarial settlement statement could be equally important.
Three figures should be compared: the actual purchase price, the value used for calculating transfer tax, and the amount or value used to calculate the notarial fee.
If all three are identical, there may be little to investigate.
If the transfer tax and notarial fee were calculated using a value substantially above the actual purchase price, however, the next question should be straightforward: what was the legal basis for using that higher amount?
The answer should ultimately be traceable to the legislation and tariff rules applicable at the time of the transaction.
Can money paid years ago simply be reclaimed?
This is where the issue becomes more complicated.
Even if it were established that an incorrect value was used, that does not mean every buyer since 2014 could automatically demand repayment today.
Tax law has its own objection, appeal, assessment and refund procedures and deadlines. A tax assessment that could have been challenged years ago may have acquired legal finality. Whether there are nevertheless mechanisms to obtain a refund would depend on the particular circumstances and the applicable tax rules.
The position regarding notarial fees would have to be assessed separately.
Article 6:203 of Curaçao's Civil Code establishes the principle of undue payment: broadly speaking, something paid without a legal basis may under certain circumstances be reclaimed.
But here too, several questions arise. Was there actually no legal basis? Who received the disputed amount? Which tariff applied? When did a possible claim arise? Has the limitation period expired or been interrupted?
Those questions make an individual examination of each transaction essential.
Potentially much bigger than an individual dispute
If the “highest value” methodology was routinely applied after 2014 without an adequate replacement statutory basis, the implications could extend beyond individual property owners.
It would raise questions about how many transactions were affected, for how many years the method was applied, how much additional transfer tax was collected and whether notarial calculations were based on the same valuation.
It could also raise a broader governance issue: what happens when legislation changes but administrative practices built around the previous legislation continue?
That is precisely why the legal basis needs to be established before broader conclusions are drawn.
There is an important difference between identifying a potentially serious legal problem and establishing that unlawful taxation actually occurred. The text raising this issue makes a substantive argument about the 2014 amendments, but determining conclusively that taxes or notarial fees were unlawfully collected requires examination of the complete legislation, implementing provisions, tariff rules, subsequent amendments and relevant case law.
The government can resolve the uncertainty
The Tax Inspectorate and government could remove much of the uncertainty relatively easily.
They could publicly identify the exact statutory provision that authorized the taxable basis used for real estate transfers after January 1, 2014 and explain whether, and under what circumstances, an OZB or other assessed value could exceed and replace the actual consideration for transfer-tax purposes.
The notarial profession could similarly clarify which statutory tariff provision determines the value on which its fees for property transfers are calculated.
If there is a clear legal basis, citing it would settle much of the discussion.
If there is not, Curaçao could be facing a much more consequential question involving transactions stretching back more than a decade.
The central issue is therefore not whether the old method was convenient, familiar or administratively efficient.
It is whether it remained lawful.
Because when government collects a tax, “this is how we have always calculated it” can never substitute for the most important question of all:
Where does the law say that this tax may be levied on this value?