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Tax and the penshonado scheme: the two-month clock nobody knows about

Your accrued AOW (the Dutch state pension) travels to Curaçao in full — including the single person's rate. And for pensioners there's the penshonado scheme: 10% on your foreign income, provided you make the request within two months of registration and buy a home within eighteen months. Whoever misses the clocks pays the full rate.

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Written and checked by Auke on , against the sources at the bottom. Is something no longer right? Report it below and I'll fix it.

If you retire to Curaçao, the penshonado scheme lets you pay 10% on your foreign income. That scheme has made the island attractive to pensioners for decades. Curaçao also has a tax system of its own, and an arrangement of its own with the Netherlands against double taxation: the BRNC, a Kingdom act from 2015.

The main conditions for that rate:

  • You are 50 or older.
  • You submit the request within two months of your registration.
  • You have a home of your own of at least XCG 450,000 (Caribbean guilders) within 18 months.

Meanwhile your accrued AOW travels along in full, including the single person's rate.

The find on the Tax Administration's page is the flip side. If one of you takes a job on Curaçao, you or your partner, the scheme lapses for that year. Two years in a row means a definitive end.

The pitfall is the two-month clock. It starts at your Kranshi registration (your entry in the population register), in the middle of the busiest weeks of your landing.

Does my AOW travel along in full?

Yes. Outside the Netherlands the AOW (the Dutch state pension) is normally reduced to the married rate. But the law makes an explicit exception for whoever lives in Aruba, Curaçao, Sint Maarten or the Caribbean Netherlands. The implementing decree says that there you have "the right to old-age pension as if he lived in the Netherlands". If you still receive an AOW supplement for a younger partner, it stays too. That supplement was abolished in 2015. Only people who already had it keep it.

Accrual does stop on departure: the Caribbean part of the Kingdom counts as living outside the Netherlands.

What are the conditions of the penshonado scheme?

The scheme is meant for whoever comes from outside and is 50 or older, and the Tax Administration names the conditions precisely:

  • You are 50 or older.
  • You lived at least 60 consecutive months outside Curaçao; automatically true for a Dutch emigrant.
  • You make the request to the Tax Inspector to be designated a penshonado within 2 months of registration in the population register.
  • You own, within 18 months of registration, a home for your own use on Curaçao of at least XCG 450,000, which you do not let; or a protected monument of that value, which you may let for at most 4 months per 12 months.
  • You and, if married, your partner have no employment, independent profession or other work on Curaçao. Exception: an employment relationship with a company in which you hold at least 40% of the shares, or income as a supervisory director; those then fall under the ordinary rate.
Clock or requirement Deadline or amount From when
Request to the Inspector within 2 months registration at Kranshi
Own home of at least XCG 450,000 within 18 months registration at Kranshi
Rate on foreign income 10% on actual income, or notional XCG 500,000 at the ordinary rate the year of designation
Switch from 10% to notional only after 3 years the choice at the request
Local income (also your partner's) scheme lapses for that year; after 2 consecutive years definitively the year in which the income arises
Tax return within 2 months of the invitation; 2 years late or incomplete means lapse every filing round
Premiums bvz, AVBZ and, depending on age, AOV/AWW remain due registration

Rather have everything for Curaçao on one list?

Then we'll send you the departure checklist for Curaçao, with every step in order, and five mails about the pitfalls and the real costs. You can switch it off at any time.

We use your address, and your departure date if you fill it in, only for the checklist, the guide and the mails after it. You can unsubscribe under every mail.

Which income falls under it, and what is the notional amount?

Only income from outside Curaçao:

  • wages or pension from a (former) employment outside the island;
  • foreign real estate;
  • interest, dividends and substantial-interest gains (gains on a large shareholding) from foreign companies;
  • periodic payments from a foreign debtor.

Everything else falls under the ordinary progressive rate.

At the request you choose between two variants:

  • 10% on the actual foreign income;
  • a notional amount (a fixed, deemed income) of XCG 500,000 at the normal rate, whatever you actually received, but then without relief from double taxation under the BRNC.

Whoever chooses the 10% can only switch to the notional amount after three years.

And the scheme does not release you from premiums. The bvz (the basic health insurance), the AVBZ (the insurance for exceptional medical costs) and, depending on your age, AOV and AWW (Curaçao's national insurances for old age and for widows and orphans) remain due.

The two-month clock is the pitfall: it starts at your Kranshi registration, in the middle of the busiest weeks of your landing. Whoever wants the scheme therefore has the request to the Inspector ready before departure, not as an agenda item for later. And mind the flip side: the scheme doesn't tolerate local income, not your partner's either, and two years without or with incomplete returns means a definitive end.

What exactly does the BRNC divide?

The Kingdom act from 2015 works like a modern tax treaty. This is how it is divided:

  • Your private pension and annuity are in principle taxable on Curaçao. But the Netherlands as source country (the country the money comes from) may keep a levy of at most 15% on periodic payments, and on a lump-sum surrender that ceiling doesn't apply.
  • Your AOW may be taxed by the source country.
  • The government pension (ABP from government employment) also stays Dutch.
  • A let-out house in the Netherlands remains fully taxed in the Netherlands (article 6).
  • On dividends the Netherlands may withhold 15% (article 10).
  • Interest is exclusively for your country of residence (article 11).

The penshonado scheme governs what Curaçao levies, not what the Netherlands holds on to.

And without the scheme?

Then the ordinary Curaçao rate applies: progressive bands from 9.75% up to and including 46.5% on your worldwide income. You file the return online, within two months of the invitation. No paradise, no punishment: a normal system, with the BRNC governing which country may tax what.

The difference between qualifying and not qualifying runs into thousands of euros a year. One conversation with a tax adviser who knows the Caribbean part of the Kingdom, before your departure: that's the homework.

In Vertrekklaar this is phase 2 of 5 of the journey, step 2.3: the same steps, but for your situation — in your order, tickable, and with the deadlines watched. See the whole journey to Curaçao or go straight to step 2.3 in the open plan.

What this means for your numbers →

Want to know more about this?

Then we'll send you the departure checklist for Curaçao, with every step in order, and five mails about the pitfalls and the real costs. You can switch it off at any time.

We use your address, and your departure date if you fill it in, only for the checklist, the guide and the mails after it. You can unsubscribe under every mail.

What this rests on

The facts in this article come from these official pages. Rules change. When in doubt, go by the source, not this article.

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