Without a doubt, one of the most essential parts of your tax, business and lifestyle strategy is choosing where you want to actually live.
You can move to Asia to make your money go further, or if you want to live in the European Union (EU), you are free to choose from a range of residence through investment options and get a Golden Visa in countries such as Portugal, Spain, Greece and Cyprus.
In some of these countries, you can avail yourself of incentives like flat-tax regimes or non-dom status, but you will pay some tax.
However, if you want to reduce your tax burden to zero (or close to it), your residency options are more limited – particularly if you want to live in a country with no income tax.
Therefore, becoming a resident of the Cayman Islands is an interesting option for high-net-worth individuals seeking to lower their tax bill.
The Cayman Islands is a well-known tax haven where you can establish residency without much hassle, and as a British Overseas Territory, it offers high-quality legal services, health care and education.
What are the benefits of living in the Cayman Islands? How do you get a Cayman Islands residence permit? Who is it a good option for?
If you’re interested in learning more about getting a tax-friendly second residency, check out these articles:
- 15 Easy Second Residency Programs Anyone Can Get
- 10 Factors to Consider with Any Second Residency
- Our Guide to Second Passports
The Benefits of Living in the Cayman Islands
With plentiful natural beauty, excellent infrastructure and legal services, a high level of tax-friendliness and attractive lifestyle options, the Cayman Islands is an excellent place to consider for your second residence.
Tax-Friendliness
The main reason the Cayman Islands gets so much attention in offshore circles is the country’s tax-friendly policies – there is no income, property or company tax. Therefore, you could feasibly move to the Cayman Islands, get a residence permit, become a tax resident and reduce your tax burden to zero.
Live The Caribbean Lifestyle
The Cayman Islands is a visually stunning country with beautiful island landscapes. Its warm climate year-round makes it an ideal getaway if you want to escape long winters.
The Cayman Islands attracts plenty of wealthy vacationers and expats, so services on the island tend to cater to those communities. On the islands, you’ll find high-quality private hospitals and schools, as well as excellent local shopping, entertainment and dining options.
Unlike more remote islands like Vanuatu, it’s relatively easy to travel to and from the Cayman Islands. In fact, the Caymans are only an hour away from Miami by plane.
With two international airports, getting to the Cayman Islands and the rest of the Americas is easy. If you need to return to the US or Canada every now and then, you won’t need to worry about long, expensive flights.
British Overseas Territory Status
As a British Overseas Territory, the Cayman Islands offers residents and citizens political, economic and legal stability that can be difficult to find in similar jurisdictions.
The Cayman Islands are highly developed and offer world-class healthcare, education and other services. Its currency, pegged to the US dollar, is highly stable, and the local government takes extra care to protect its citizens’ and residents’ assets.
The legal system in the Cayman Islands is also solid and stable. While things can occasionally move on island time, you won’t have to deal with the bureaucracy of other parts of the Caribbean.
Combined with the Cayman Islands’ tax-friendliness, this stability has enticed a number of banks and Fortune 500 companies to establish bases there, which testifies to the Islands’ reputation as a haven for business and wealth.
How to Get Cayman Islands Residence
If moving to the Cayman Islands sounds appealing to you, then we have good news – getting a Cayman Islands residence is pretty straightforward.
However, while becoming a resident of the Cayman Islands isn’t too difficult, it comes at a significant cost. If you want to move there and become a resident, be prepared to spend over US$1 million.
While getting Cayman Islands residency is certainly not cheap, it can be worthwhile for some. The most popular ways to obtain residence by investment in the Caymans are through company formation or by investing in the purchase of real estate on the island.
It’s possible to qualify for residence, which can offer a path to naturalisation and eventual citizenship by:
- Forming a company in the Cayman Islands and employing yourself
- Purchasing a property in the Cayman Islands worth at least US$1.2 million
- Purchasing property worth at least US$2.4 if you want a path to citizenship.
So, let’s explore these options in more detail.
Residence by Real Estate Investment
There are two real estate residency by investment options in the Cayman Islands. The first, an investment of US$1.2 million, qualifies the applicant for a 25-year residency certificate.
However, this option does not permit the right to work in the Caymans or the path to citizenship by applying for naturalisation.
With this investment route, there is a low physical presence requirement and you are only required to spend a minimum of 30 days there each year.
The second option, an investment of US$2.4 million in local real estate, qualifies you for permanent residence. This also allows you to apply for the right to work and, after five years, become naturalised and apply for a British Overseas Territory passport.
As a British Overseas Territories citizen, you have visa-free access to 150 countries worldwide and can visit the United Kingdom for up to six months without a visa. However, this status does not confer the automatic right to live or work in the UK.
With the real estate option, there are no annual property or capital gains taxes, and you can acquire more than one property to meet the investment amount.
The Cayman Islands regime is notably more relaxed than other residence-by-investment programs with stricter rules. Best of all, the property purchased can be rented out to another resident without paying a tourist tax.
Expect to pay vendor fees of 0.45% of the purchase price and a government fee of US$1000.
Residence by Company Formation
Starting a company in the Caymans grants permanent residence that can lead to citizenship.
The benefit of this option is that no specific investment is required. However, there are legal and incorporation fees and government fees for a work permit.
The process of setting up a company takes about five weeks and there is no requirement to be physically present in the Caymans. A Caymans company must have at least one employee but this can include the owner. So essentially, it is possible to employ yourself.
After forming a company, you must apply for a work permit. Incorporation is done through a local attorney or corporate services provider, followed by an application for a trade licence and work permit through an online portal. You are also required to register with a local health insurance and pension provider.
A company owner is not required to spend time in the Caymans, and employees, including yourself, can be based on the island or in any other country.
The primary benefit of company formation in the Caymans is that there is no direct taxation there – no corporate tax, capital gains tax, profits tax or wealth tax. Its legal system is based on British law and is internationally recognised. On top of this, it has a robust compliance regime and world-class infrastructure.
One-off company formation costs start at around US$15,000, and maintenance fees will set you back around US$6000 a year. Depending on your needs, various types of business entities can be formed.
Cayman Islands Residence through Substantial Business Presence
When you invest in a Cayman Islands business or are employed in senior management, you may be eligible to apply for a Cayman Islands Residency Certificate through Substantial Business Presence.
To establish a Substantial Business Presence, you must own (or propose to own) at least 10% of the shares in a business in an approved industry. These approved industries primarily include financial and legal services.
Alternatively, you can establish a Substantial Business Presence if your employer proves that you work in a senior management position.
People who meet the criteria for this certificate will receive a 25-year renewable residence permit as well as the right to work in the Cayman Islands.
However, this residence permit also comes with a physical presence requirement. To qualify and maintain your permit, you must intend to reside in the Islands for at least 90 days per year.
When you submit your application for your Cayman Islands Residency Certificate, you will pay a US$1,220 application fee and a US$6,100 activation fee for your residence permit. You will pay an additional US$1,200 per dependant, and you will also need to pay any annual work permit fees, which vary by industry and employment capacity.
Getting Cayman Islands Citizenship
When deciding whether or not to get a second residency, one issue you should always consider is whether you will eventually be able to obtain citizenship in that country.
In the Cayman Islands, you can obtain British Overseas Territories Citizenship if you acquire permanent residency first. Other qualifications include:
- Living in the Cayman Islands for the majority of the past five years
- Not leaving the Islands for more than 90 days at a time
- Having a clean police record.
Therefore, if you’re willing to establish permanent residency and live in the Cayman Islands for five years, then you can become eligible to apply for citizenship by naturalisation. However, depending on your chosen route, this can come at a substantial cost.
Cayman Islands Residence by Investment: FAQs
Through our recommended option of investing in real estate, the costs begin at US$1.2 million, rising to US$2.4 if you want citizenship. For entrepreneurs, starting a Cayman company can grant residence with fees in the region of US$15,000 plus annual maintenance of US$6,000.
Generally speaking, no. By purchasing real estate, you are only required to spend 30 days a year there. If you form a company, there is no requirement for physical presence. That changes if you wish to pursue citizenship with uninterrupted time living there necessary.
The company formation residence by investment option in the Caymans offers an attractive zero-tax regime for foreign corporations. Its business-friendly environment offers quick incorporation, excellent financial services and a supportive infrastructure.
To the extent that you become a tax resident of the Caymans, you will not pay income tax, property tax or capital gains tax on income earned there. To be a tax resident in the Cayman Islands, you must be there for at least 183 days in a calendar year or 30 days during a year if you have a permanent home there.
Its convenient location, high standard of living and modern infrastructure, as well as the potential for tax-friendly real estate investment and company formation, are all great benefits. Residence can also lead to citizenship and acquiring a British Overseas Territory passport.
Yes. If you become a permanent resident and then acquire citizenship, the Caymans will grant you a British Overseas passport and allow you to retain any other nationality.
Will Cayman Islands Residence Work for Me?
Cayman Islands residency has a number of desirable benefits, and the process of becoming a resident is relatively straightforward. However, it’s not always the best option for most people.
The most obvious reason is the price tag.
Even for the seven- and eight-figure entrepreneurs, a cool million plus for a residence permit is on the high side.
In addition to the high cost of residency, the cost of living in the Cayman Islands is also relatively high. Since most goods need to be imported, you’ll quickly find that the price of almost everything is higher than you pay back home.
Therefore, many people tend to opt for cheaper second-residence options. Getting a passport on other Caribbean islands can be a tenth of the cost of Cayman Islands residence, or if you’re open to Asia or Eastern Europe, you can get a second residency for less than US$100,000 and save on your living expenses.
However, if you can afford Cayman Islands residency, you shouldn’t rule it out.
If you’re a US citizen who makes most of your money through passive investments, for example, then becoming a resident of the Cayman Islands could be an essential part of a larger strategy to renounce your US citizenship and lower your tax bill.
As always, whether Cayman Islands residency is a good choice for you will depend on your needs and circumstances. While island life is tempting, there may be better choices out there.
Whatever you decide, you’ll need to plan it carefully, and that’s where Nomad Capitalist comes in.
We help seven- and eight-figure entrepreneurs and investors create bespoke strategies using our uniquely successful methods. These strategies allow you to keep more of your money, create new wealth faster and be protected from whatever happens in just three steps.
At Nomad Capitalist, we have a worldwide network of lawyers, estate agents, accountants, and tax and company formation specialists. All that expertise and real-world experience come together when we advise on your holistic, bespoke action plan. Discover how we do things here.
