Permanent Establishment, why and how to get PE in Curacao

Curacao offers great tax incentives to e-commerce companies looking to be based from the island. This means you pay 2% tax as apposed to 40% tax. Apart from the great tax incentive the island also offers a fantastic telecommunication infrastructure makinging it an ideal location to run an e-business. However, permanent establishment is required and this is what will influence certain aspects of your business.

What companies require Permanent Establishment?

In Curacao a local company can be given special status known as “E-Zone status”, this is a company operating from one of the local economic zones. The most popular types of comapnies being formed in Curacao are remote gambling companies who setup due to the affordable curacao gambling license. These companies are generally foreign owned and it is vitaly important that they adhere to PE rules in order to ensure they satisfy permanent establishment criteria.

Permanent Establishment and owning servers in Curacao

In terms of web hosting, in order to meet Permanent Establishment (PE) requirements you must own hardware (if you are runnin an E-Zone company). This means you must own a physical machine on the island and not use rented servers. For customers wanting to benefit from our cloud infrastructure and meet PE regulations at the same time, we have created an affordable colocation-cloud product. Essentially this means you buy a server and host it with us, and we offer a VPS as well as a shared hosting package as part of the deal.

Why can I not just rent a server?

The reason is that your new Curacao based E-Zone business must satisfy permanent establishment criteria and one of those criteria is to own physical property on the island. If not, your country of residence may claim your E-Zone company as a local company due to a lack of substance and apply local taxes to your business.

By owning infrastructure, having an office address, local directors, telephone numebrs and staff on the island etc. your E-Zone company is permanently established and legal requriments are satisfied. In this case, it would be hard to prove that your company is somehow not a CW E-Zone entity.