When the words “tax haven” are uttered, the Cayman Islands are one of the first locations that come to mind. The Caymans are one of the most well-known tax havens on the planet.
[NOTE: This article is a chapter in our
Comprehensive Guide to Tax Havens.]
Table of Contents
The Tax-Free Caymanian Life
Tax Laws in the Cayman Islands
The Cayman Islands have no income taxes, no property taxes, no capital gains taxes, no payroll taxes, no withholding taxes, and they also have no corporate taxes. All of these tax advantages have not only made the Caymans a tax refuge for wealthy individuals and a favored base of operations for hedge funds, they also have made them a prime location for multinational corporations to establish shell companies as subsidiary entities through which to channel their profits to shield corporate income from taxation. Instead of taxes, offshore corporations pay licensing fees to the government of the Caymans based on the maximum amount of share capital a company is permitted to raise (its authorized share capital), an arrangement that most often is massively less expensive than paying the corporate tax rate in the United States or many other foreign nations.
Beyond this, the Cayman Islands are attractive as a place to live because of the quality of life there. Not only are the islands beautiful and temperate throughout the year, but with two international airports, travel to and from the Caymans is convenient, and they have outstanding local services, excellent transportation and communication on the islands, world-class shopping and dining, first-class private hospitals, and excellent schools and educational opportunities for families. Beyond this, their banking and financial services industries, and the infrastructure built around them, are as good as you will find anywhere in the world.
Of course, all of this comes at a price, and it’s not a small price either. The cost of living in the Cayman Islands is quite high and (as we will discuss momentarily) so is the cost of obtaining residency there. The government of the Caymans gets revenue from fees related to tourism, work permits, financial transactions, and import duties. The import duties on goods imported into the islands are very steep, ranging from 22% to 27%. A handful of items are duty free—baby formula, for instance—while premium items like luxury cars are subject to a duty tax as high as 42%. When most of the goods you purchase are marked up to this degree, the cost soon adds up. For this reason, unless you are quite wealthy and the extra expense is unimportant, the Caymans may function better for you as an offshore banking center without considering the possibility of residency.
- International Tax Highlights: Cayman Islands 2021 (Deloitte)
- Cayman Islands Legal and Regulatory Environment
- Cayman Islands Corporate Financial Reporting Requirements and Schedule
- Cayman Islands Department for International Tax Cooperation
- Cayman Islands International Tax Reporting Standards Update – April 15, 2021
- Cayman Islands List of Reportable Jurisdictions 2021
- Cayman Islands Customs and Tariff Laws
How to Get Cayman Islands Residency
Obtaining residency status in the Cayman Islands is a very straightforward procedure. What it is not, however, is inexpensive. Citizenship-by-investment in other Caribbean tax havens—like St. Kitts and Nevis, or Dominica—is just as straightforward and much more economical. But these other tax havens lack the amenities and culture that characterize the Caymans. If money is no object for you, the Caymans may be a reasonable choice, otherwise, no.
Temporary Permits for Persons of Independent Means
The standard way to obtain a Cayman Islands residency is to apply for a temporary (25 year) residence permit as a person of independent means. While coming in with a work permit procured by a sponsoring company that enables you to live in the Caymans legally for the 8 years required to be able to apply for residency is the least expensive route and in theory possible, it’s a lot harder than dropping a ton of cash to have the red carpet rolled out for you (although see the discussion of the Global Corporate Citizen Program below).
So what are the ton-of-cash options? Aside from being able to demonstrate that you have an annual income, derived from outside the Cayman Islands, of at least $120,000 per year in Cayman Island dollars ($1 CI = $1.20 U.S.), you’re going to have to open and maintain a bank account with at least $400,000 CI dollars in it and invest an additional $1,000,000 CI in the Caymans, at least $500,000 CI of which must be in real estate. If you don’t mind living on Little Cayman or Cayman Brac rather than Grand Cayman, you can get by with proving you have a $75,000 CI annual income from outside the islands and by investing $500,000 CI in the Caymans, at least half of which must be in real estate.
Beyond this, if you meet the criteria to apply, the application process is simple: fill out the application form and pay the $500 CI application , then, if you’re accepted, pay $100,000 CI for the permit to be issued and $1,000 CI to renew it every year after that. A fee of $1,000 CI must also be paid for each of your dependents.
Certificates of Direct Investment
If you want to be able to earn money within the jurisdiction of the Caymans while being a resident there, you have the option of pursuing a Certificate of Direct Investment. This certificate is available to anyone who is willing to put $1,000,000 CI into developing a business in the Caymans that creates jobs, and who is also willing to run that business and can demonstrate prior competence in managing businesses of that nature. The business in question must also (without special exception) have at least 30% Caymanian employees. Like the residency permit for persons of independent means, the Certificate of Direct Investment entitles you to reside in the Caymans for 25 years and can include your spouse and dependents.
Residency Certificates through Substantial Business Presence
Applying for residency through a substantial business presence is appropriate for those who either invest in or are employed in a senior management position in an approved category of business. The application is open to those who already reside in the Caymans or those who wish to do so. There are two ways to be eligible. One way is that a person must intend to be legally resident in the islands at least 90 days each calendar year and own, or propose to own, a minimum of 10% shares in the business in question. The other way is to be able to prove that you are, or will be, employed in a senior management position in an approved category of business within the islands (in which case you must also pay an annual work permit fee of at least $20,925 CI).
Part of the evaluation of the application by the Chief Immigration Officer will be a determination of whether physical presence for the business has been established in the islands by the purchase or lease of commercial real estate. The evaluation will also consider whether the business employs or will employ four full-time employees who legally reside in the Caymans at least 9 months each calendar year.
The eligible categories of business are as follows: (1) actuarial services; (2) brokerage services; (3) captive insurance or reinsurance management services; (4) companies exempt under section 164 of the 2011 revision of the Companies Law; (5) family businesses; (6) financial trading (including forex, securities, and derivatives); (7) fund administration; (8) hedge fund incubation; (9) insurance claims management; (10) investment and fund management services; (11) investment banking; and (12) reinsurance underwriting.
The holder of a Residency Certificate through Substantial Business Presence is entitled to live and work in the Cayman Islands in the business of which he or she is an owner or senior management employee. The holder is also entitled to be accompanied by his or her spouse and children. Where children are concerned, the right to live in the islands ceases upon completion of tertiary education or reaching 24 years of age, whichever comes first, unless the Chief Immigration Officer determines that there are special circumstances.
The fee to apply for a Residency Certificate through Substantial Business Presence is $1,000 CI. If the application is approved, there is in an issue fee of $5,000 CI plus $1,000 for each dependent included under the Certificate. The holder must then pay an annual fee equivalent to that of a work permit holder in the same occupation (at least $20,925 CI, as already mentioned).
The Global Citizen Concierge Program (GCCP) and
the CEC Global Corporate Citizen Program
If you wanted to try things out to see whether you like living in the Caymans, the Global Citizen Concierge Program, which allows persons who are employed outside the Caymans and who have the financial means to work remotely to relocate and live in the Caymans for up to two years, is something you could consider. To be eligible, you need an annual income of at least $100,000 CI if applying individually, $150,000 CI if applying with a spouse, and $180,000 CI if applying with a family. The full range of application criteria are detailed in the link below.
It is important to realize, however, that time spent in the Caymans under the Global Citizen Concierge Program does not count toward permanent residency in the islands. If you want your time in the Caymans to have the possibility of counting toward permanent residency and citizenship, then you should consider the Global Corporate Citizen Program.
The Global Corporate CItizen Program is an initiative arranged through Cayman Enterprise City (CEC) that allows the owner of a global business to operate from within the Cayman Islands. The program permits complete foreign ownership under a business license called a Zone Trade Certificate that allows foreign businesses to be located in the Caymans and benefit from the neutral corporate and personal tax platform that the islands offer. With a 5-year Zone Employment Certificate, which is a work/residency visa, the business owner will be considered a resident of the islands. At the end of five years, these visas are renewable for another 4 years. After being in the Caymans for a total of 8 years, the business onwer is eligible to apply for citizenship.
- Cayman Islands: Special Economic Zones
- Special Economic Zone Work Permit Grant/Renewal
- GCCP and the Global Corporate Citizen Program (CEC)
The Cayman Islands is a self-governing British Overseas Territory (BOT). As such, it has no citizenship unique to itself but instead a kind of citizenship common to all these territories, namely, British Overseas Territory Citizenship (BOTC). Being Caymanian is a status that is distinct from having BOTC; one can be the latter without being the former and vice-versa. People who have resided in the Cayman Islands for eight years can apply for permanent residency. If permanent residency is granted, then it is possible to apply for naturalization as a British Overseas Territory Citizen, to acquire Caymanian and British passports, and eventually apply for the right to be a Caymanian.
- Cayman Resident
- Immigration to the Cayman Islands
- Routes to Residency in the Cayman Islands
- Instructions to Apply for Permanent Residency in the Cayman Islands
- Fee Schedules for Visas and Residency Permits in the Cayman Islands
[NOTE: This article is a chapter in our
Comprehensive Guide to Tax Havens.]