The penshonado scheme: a tax-friendly retirement in Curacao

By Niels van Vliet, Palmstone Real Estate

Curacao luxury real estate specialists, over twenty years of international experience | Last updated: September 2026

For international buyers over fifty, Curacao offers more than turquoise water and year-round sunshine. The penshonado scheme can turn the island into one of the most attractive places to hold foreign income, provided you own the right property and meet a specific set of conditions.

The rates, thresholds and conditions below are drawn from Curacao's tax authority and specialist advisors, sourced at the end of this article. Where we describe how Palmstone itself works with buyers, that reflects our own practice rather than a published source. Rules can change and every situation is different, so treat this as a starting point and confirm your own position with a qualified tax advisor.

The scheme is a long-standing arrangement for people aged fifty and over who move to the island and receive income from abroad. Under the right conditions, that foreign income is taxed at a flat rate of 10 percent [1]. For a Dutch pension, an American retirement account or income from foreign property, the difference compared with regular progressive rates, which run up to roughly 46.5 percent on Curacao-source income, can be substantial [2].

What the scheme actually offers

The penshonado scheme comes in two forms, and you choose the one that suits your situation. In the first, your actual foreign income is taxed at a flat rate of 10 percent. In the second, you declare a fixed notional foreign income of XCG 500,000 and pay the ordinary progressive rate over that amount, regardless of how much you actually received [1]. Retirees with more modest foreign income tend to prefer the flat 10 percent route, while those whose real foreign income comfortably exceeds XCG 500,000 often prefer the capped, fixed option.

Switching between the two is not fully symmetric. If you start on the flat 10 percent rate, the law only lets you move to the fixed option after three years [1]. There is also a treaty point worth knowing: choosing the flat 10 percent rate keeps the double-taxation protection under the tax arrangement between the Netherlands and Curacao (the BRK), while opting for the fixed notional income gives up that protection [1]. Switching back from the fixed option to the flat rate may be possible sooner; confirm the current timing with your tax advisor before relying on it.

The conditions you need to meet

The scheme is generous, but it is built around a clear set of requirements. To qualify you must:

• Be fifty years of age or older at the time you register in Curacao.
• Have lived outside Curacao for at least sixty consecutive months before moving.
• Submit a request to the Inspector of Taxes within two months of registering in the population register.
• Own a home for your own use on Curacao worth at least XCG 450,000 within eighteen months of registration. This property may not be rented out, with one exception: a protected monument of at least XCG 450,000 may be rented for up to four months in any twelve-month period [1].
• Refrain from local employment, a local profession or other local work. If you are married, the same applies to your partner. Two narrow exceptions exist: holding an employment relationship with a Curacao company in which you hold at least 40 percent of the shares, direct or indirect, or serving on the supervisory board of a Curacao-resident entity [1].

The property requirement is where the scheme and the real estate market meet. Your qualifying status depends on owning a home of the right value, so the purchase is not only a lifestyle decision but a fiscal one as well.

Which income qualifies

Only income earned outside Curacao falls under the favorable rate. That includes pensions and income from former employment abroad, income from foreign property, interest on foreign bank balances and claims, dividends from foreign companies and periodic payments from a foreign debtor [1]. Income earned on the island itself is taxed at the normal progressive rate.

A few things to keep in mind

The penshonado scheme lowers your income tax, but it does not remove your social contributions. You remain liable for premiums such as basic health insurance and, depending on your age, old age insurance [1]. Losing the qualifying home for more than six months, or filing incomplete or late returns for two consecutive years, can also end your entitlement [1]. None of this is difficult to manage, but it is worth planning for from the start.

Choosing between the two forms

A quick way to think about which route fits your situation:

Table 1: Flat rate versus fixed notional income

Discuss it with Palmstone Real Estate

The penshonado scheme rewards good preparation, and the home you buy sits at the center of it. As the international specialist in luxury property on Curacao with more than 20 years of experience, Palmstone Real Estate helps you find a residence that meets the value threshold and fits the life you have in mind, from the villas of Vista Royal to the resort living of Boca Gentil and Coral Estate. Our purchase your property service covers this guidance from the first viewing to the notary, and a valuation or appraisal report can help confirm a property meets the XCG 450,000 threshold before you commit. We work with trusted tax advisors and notaries so that your purchase and your penshonado application move forward together.

If ownership structure is also part of your planning, our overview of the Stichting Particulier Fonds (SPF) covers when that structure fits alongside a penshonado move. And if the numbers around a purchase are your next question, our guide on buyer's costs on Curacao walks through transfer tax, notary fees and what else to budget.

FAQ about the penshonado scheme

Can I rent out my qualifying home at all?

Generally no. The home you register under the scheme is meant for your own use. The one exception is a protected monument worth at least XCG 450,000, which can be rented out for up to four months within any twelve-month period [1].

Do I need a separate residence permit?

Yes. The penshonado scheme is a tax arrangement, not an immigration status. You still need to register in the population register and hold a valid residence permit; the penshonado application runs alongside that process, not instead of it.

What happens if I lose the qualifying home temporarily?

A short gap is generally not fatal, but if you are without a qualifying home for longer than six months, your entitlement to the scheme can end [1]. If you are selling and buying, it is worth timing the transaction carefully.

Can my spouse work locally while I hold penshonado status?

No, not as a rule. The restriction on local employment applies to both spouses if you are married, with the same narrow exceptions around significant shareholding or supervisory board roles [1].

About the author

This article is written by Niels van Vliet of Palmstone Real Estate, drawing on the firm's experience guiding international buyers, including retirees, through property purchases on Curacao. Palmstone Real Estate has more than 20 years of experience in the international real estate market and works with a team of economists, legal experts and tax advisors.

A word on accuracy

The rates, thresholds and conditions referenced above, including the 10 percent tax rate, the XCG 500,000 notional income figure, the XCG 450,000 property threshold and the qualifying conditions, were verified against the sources listed below at the time of writing. Tax rules can change, and your personal situation, including your nationality, income sources and marital status, affects how the scheme applies to you. This article is intended as general information and not as tax advice. Always confirm your position with a qualified advisor before relying on it.

Sources

1. Belastingdienst Curaçao, official tax authority, "Penshonadoregeling," official description of the two forms of the scheme, all qualifying conditions including the monument rental exception, qualifying foreign income, employment exceptions, conditions under which entitlement lapses and social contribution obligations.

2. STERKin.com, fiscal advisory firm, "Fiscale aandachtspunten bij investeren in onroerend goed op Curaçao," progressive tax rates on Curacao-source income for comparison.