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The Netherlands-Curaçao Tax Agreement: A Haven for Corporate Tax Avoidance

Background and Context

In 1978, the Netherlands and Curaçao negotiated a tax agreement known as the Belastingregeling Koninkrijk (BRK). This agreement had significant implications for both countries, particularly with regards to corporate taxation.

The Belastingregeling Koninkrijk (BRK)

• Key Provisions: The BRK allowed Curaçao to exempt dividend taxes at source while giving the Netherlands an emergency brake.
• Negotiations and Implementation: Despite concerns from American tax authorities, the BRK was established after over a decade of negotiations.

Opportunities for Corporate Tax Avoidance

The BRK created opportunities for corporate tax avoidance through:

• Use of Dutch Shell Companies: Multinational corporations used Dutch shell companies to avoid taxes.
• Financial Institutions: The BRK also facilitated the use of financial institutions in the Netherlands, allowing companies to concentrate dividend or royalty payments and send them tax-free to Curaçao.

Influence of Multinational Corporations

The outcome of the BRK was heavily influenced by multinational corporations such as:

• Unilever
• Royal Dutch Shell
• Philips
• C&A

These companies exerted pressure on the Dutch Ministry of Finance and the Curaçao government to ensure that their interests were protected.

Long-term Consequences

The BRK laid the groundwork for the Netherlands becoming a tax haven as well as boosting Curaçao’s status as an Offshore Financial Centre (OFC). This relationship benefited both countries by generating revenue for the Dutch legal, financial, and accounting sector while also facilitating corporate tax avoidance.