WILLEMSTAD – Property owners who live abroad can still be considered entrepreneurs for Curaçao turnover-tax purposes when they regularly rent vacation homes on the island, according to a ruling by the Court of First Instance of Curaçao.
The case concerned a Netherlands-based owner of three Curaçao villas that were offered to tourists through several online rental platforms, including Airbnb and Micazu.
The owner argued that he should not be regarded as an entrepreneur for turnover-tax purposes. The Court rejected that argument, ruling that a person who sustainably exploits an asset for the purpose of generating income can qualify as an entrepreneur under Curaçao’s turnover-tax legislation.
The owner acknowledged that the villas were rented to tourists whenever he or his family were not using them. The properties were also advertised through multiple vacation-rental websites.
Information obtained from Aqualectra concerning electricity and water consumption indicated that the villas were occupied during much of the period investigated.
For short-term residential rentals, the tax authorities applied a 7 percent turnover-tax rate to rental income and 6 percent to cleaning charges.
The tax inspector imposed additional assessments for 2019, 2020, 2021 and 2022, as well as parts of 2023 and 2024. Because the owner failed to respond adequately to information requests during the investigation, the burden of proof was reversed and increased.
That meant the owner had to convincingly demonstrate that the tax authority’s calculations were incorrect. The Court found that he had failed to do so and considered the estimates based on utility consumption and advertised online rental rates reasonable.
The Court also rejected the argument that the owner was not required to pay because he had allegedly not received turnover-tax return forms. According to the ruling, the obligation to pay the tax follows directly from the law and does not arise only after a taxpayer receives a return form.
While the assessments remained intact, the Court reduced the penalties. It took into account that part of the tax liability was established through estimates and that proceedings concerning the penalties had taken longer than was considered reasonable.
Penalties nevertheless remained for all periods investigated. The highest remaining penalty was XCG 2,003 for the first half of 2023.
The ruling sends a significant message to overseas property owners participating in Curaçao’s growing vacation-rental market: living outside Curaçao does not by itself shield rental activity on the island from Curaçao turnover-tax obligations.