The Caribbean, a vibrant and captivating region, encompasses a tapestry of diverse cultures, stunning natural beauty, and a rich historical legacy. With its turquoise waters, palm-fringed beaches, and lush tropical landscapes, the Caribbean beckons visitors to indulge in its idyllic paradises.
From the rhythmic beats of reggae to the tantalizing flavors of jerk cuisine, the Caribbean offers a harmonious blend of relaxation and excitement. It’s, therefore, no surprise that a lot of expats are looking to relocate to this stunning part of the world.
What’s more, expats have identified the Caribbean as a tax haven, making the region an attractive place to set up home. In this article, we explore how expats can become tax residents of the below-listed Caribbean countries and provide an overview of the tax benefits of each island.
What is a tax haven?
A tax haven refers to a jurisdiction or country that offers favorable tax benefits and financial incentives to individuals and businesses. These locations normally have low or no income tax, minimal reporting requirements, and strict privacy laws attracting individuals and companies who want to minimize their tax liabilities.
Tax havens often provide offshore financial services, such as banking, asset protection, and company formation, making them attractive for wealth management and tax planning purposes. While legitimate reasons exist for utilizing tax havens, such as international business transactions, they have also been criticized for facilitating tax evasion, money laundering, and illicit financial activities.
The Cayman Islands
The Cayman Islands are a captivating British Overseas Territory nestled in the Caribbean Sea. They are renowned for their pristine beaches, crystal-clear waters, and thriving marine life. With a rich blend of luxury resorts, water sports, and a welcoming atmosphere, the Cayman Islands offer a tropical paradise for both relaxation and business endeavors.
Beyond its natural beauty, this Caribbean tax haven attracts international businesses and investors with its robust financial sector, sophisticated infrastructure, and favorable tax policies.
The Cayman Islands offers a variety of benefits to pay taxes that make it an attractive destination for expats and businesses and those who want to decrease their tax liability:
- There is no income tax imposed on individuals, so residents can enjoy tax-free earnings.
- There are no capital gains taxes, inheritance taxes, or wealth taxes in the Cayman Islands, meaning people can keep more of their income and wealth.
- For businesses, the absence of corporate income tax and capital gains tax makes the Cayman Islands an appealing place for establishing offshore companies and conducting international business activities.
- Through a strong legal and financial infrastructure, these benefits on taxes contribute to the Cayman Islands’ reputation as a prominent offshore financial center.
The most common way to get Cayman Islands residency for expats is through the Person of Independent Means route. Although this permit is temporary, it extends for 25 years and allows the inclusion of a spouse and dependents. However, it does not allow expats to work on the island.
To qualify, applicants must demonstrate an annual income of approximately $150,000 from sources outside the Cayman Islands. They must also maintain a local bank account with around $500,000 and invest $1,200,000 in the country, with a minimum of $610,000 directed towards real estate, particularly for those wishing to reside in the Cayman Islands.
Panama is a country located in Central America and is a captivating blend of natural wonders and modern marvels. Renowned for its iconic Panama Canal, this vibrant nation offers a unique fusion of tropical rainforests, stunning beaches, and a booming urban landscape. With a rich cultural heritage, Panama invites visitors to explore its history, indulge in diverse cuisine, and embark on thrilling adventures in both its cities and nature.
Living in Panama offers several benefits on taxes that make it an attractive destination for individuals and businesses:
- The country follows a territorial tax system, which means that only income earned within Panama is subject to taxation.
- Foreign-source income is generally tax-exempt.
- Panama also offers various incentives for retirees, providing tax exemptions on various sources of income.
- There are no capital gains taxes, inheritance tax, or wealth tax in Panama, making it a favorable environment for financial growth and wealth preservation.
Panama offers three main pathways for obtaining residency: through an investment-based residence visa, a retirement visa, or a visa for friendly nations. Rich investors may qualify for an expedited permanent residence process, which can take a month or less. After maintaining continuous residency in Panama for five years, expats can apply for citizenship through naturalization.
The Bahamas, an archipelago of stunning islands in the Atlantic Ocean, is a tropical paradise renowned for its pristine beaches, clear blue waters, and vibrant coral reefs. With a warm and welcoming culture, this Caribbean nation offers a blend of relaxation and adventure, where expats can soak up the sun, explore underwater wonders, and experience vibrant local traditions.
The Bahamas offers attractive benefits on taxes for individuals:
- There are no income taxes, capital gains taxes, or inheritance taxes in the country, meaning residents enjoy tax-free earnings and investment returns.
- There are no taxes on wealth or dividends, creating a favorable financial environment for tax residents.
The Bahamas offers two options for Residence by Investment programs. One option involves investing a minimum of $500,000 in business activity to get an annual resident permit. However, the more attractive option is the real estate program, which provides permanent residence and a potential path to citizenship.
To qualify, you must invest at least $500,000, with investments over $1.5 million receiving faster consideration. The real estate program can be particularly appealing to American individuals who want to live tax-free. It’s important to note that this requires ten years of legal residence to be eligible for naturalization as a Bahamian.
The British Virgin Islands
The British Virgin Islands are a breathtaking archipelago in the Caribbean Sea and are synonymous with tranquility and natural beauty.
With powdery white-sand beaches, secluded coves, and crystal-clear waters, the British Virgin Islands are a haven for water sports enthusiasts and beach lovers alike. Its laid-back atmosphere and unspoiled landscapes make it a true tropical paradise.
Benefits on taxes of living in the British Virgin Islands include the following:
- There are no income taxes, capital gains taxes, inheritance taxes, or wealth taxes.
- Residents can enjoy tax-free earnings, investment returns, and wealth accumulation.
- The British Virgin Islands offer privacy and confidentiality in financial matters, attracting individuals seeking asset protection and wealth management opportunities.
The British Virgin Islands don’t have a formal Residence by Investment Program, but they do offer annual resident permits for individuals wishing to stay on the islands. The “Residence without Work” permit allows a one-year stay, with limitations on working except for managing personal assets.
The Self-Employed category permits individuals to operate their own businesses on the islands. Both programs have a straightforward approval process and offer a swift timeline.
Dominica, also known as the “Nature Isle of the Caribbean,” is a captivating island nestled in the Eastern Caribbean Sea. Renowned for its untouched rainforests, pristine rivers, and stunning waterfalls, Dominica offers an unparalleled living experience.
With a rich cultural heritage and warm hospitality, it invites expats to explore its natural wonders and immerse themselves in its vibrant local traditions.
Dominica’s tax benefits are as follows:
- Only income earned within Dominica is subject to taxation.
- There is no capital gains tax, inheritance tax, or wealth tax.
- Dominica offers attractive tax incentives for individuals who obtain its Citizenship by Investment program.
- Interest on off-shore bank accounts is not taxed, and information about account holders is not shared with foreign tax authorities.
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To be eligible for tax residence in Dominica, you have to fulfill certain criteria, such as living in Dominica for at least 183 days in a tax year, establishing a permanent home in the country, and demonstrating the intention to live there long-term. Other aspects, such as economic ties, employment, or business ownership in Dominica, may also contribute to tax residency.
Saint Kitts and Nevis
Saint Kitts and Nevis, a hidden gem in the Caribbean, are tranquil and picturesque islands nestled in the Leeward Islands. With their exceptional white-sand beaches, lush rainforests, and charming colonial architecture, Saint Kitts and Nevis offers a serene and idyllic escape. From historical sites to outdoor adventures, these island paradises beckon visitors to relax, explore, and embrace their laid-back Caribbean charm.
Saint Kitts and Nevis offers some attractive benefits on taxes:
- Financial privacy by maintaining confidentiality regarding the owners and directors of offshore companies.
- Incorporating a company in Saint Kitts and Nevis requires only one director and one shareholder, allowing for a streamlined process.
- Saint Kitts and Nevis Trusts are not subjected to stamp duty on transactions.
- There are no local taxes on income earned outside of Saint Kitts and Nevis.
- Offshore companies and their owners are exempt from withholding taxes, capital gains taxes, estate taxes, corporate taxes, and local taxes on income generated outside of Saint Kitts and Nevis.
Becoming a tax resident in Saint Kitts and Nevis is similar to Dominica. You’ll have to spend a substantial amount of time in Kitts and Nevis, typically at least 183 days per year. You’ll also have to show that you’ve got economic ties, such as owning property or having a local job or business.
This serene island is famous for its dreamy beaches, turquoise waters, and luxurious resorts. With its tranquil atmosphere and unspoiled landscapes, Anguilla is another paradise known for relaxation and rejuvenation. From water sports to exquisite cuisine, this idyllic place in the Caribbean is ideal for expats to unwind and indulge in pure tropical bliss.
Anguilla offers the following tax benefits:
- There are no personal income taxes, real estate taxes, capital gains taxes, or inheritance taxes.
- There are no wealth or property taxes.
Anguilla offers two Residence by Investment schemes, which provide potential workarounds for individuals with some level of wealth. The Residency by Investment option involves investing $750,000 in island real estate or making a one-time gift of $150,000 per application to Anguilla’s Capital Development Fund, supporting public sector initiatives.
Alternatively, the High-Value Resident Program has requirements such as paying $75,000 in annual income taxes to the Anguilla Treasury and owning a property worth over $400,000. However, this program may not provide the most favorable tax residency benefits.
Costa Rica is a haven for nature enthusiasts and adventure seekers. With its lush rainforests, majestic volcanoes, and stunning beaches, Costa Rica offers unparalleled ecological diversity. From thrilling outdoor activities to sustainable ecotourism initiatives, this vibrant nation invites expats to explore its natural wonders and experience its nature-loving lifestyle.
Costa Rica offers some enticing tax benefits for business owners:
- Costa Rican businesses have the flexibility to conduct business both domestically and internationally.
- Revenue generated by companies that operate solely outside the jurisdiction is not subject to local taxes.
- Costa Rica offers eight-year tax exemptions to many corporations, and for corporate entities that are subject to taxes, the rates are significantly lower, and they generally enjoy exemptions on interest, capital gains, and dividend income taxes.
- Costa Rica is popular for offshore bank accounts, low real estate taxes, corporate tax and generally low tax liability
- Offshore companies in Costa Rica don’t have to submit financial reports to the local tax authorities, and the owners’ identities are not required to be disclosed to the registrar of companies, ensuring privacy.
- The country places a strong emphasis on protecting the privacy of offshore banking, enabling unrestricted transfers of money or financial assets without limitations on amounts or the need to disclose the source of funds
Costa Rican tax residence can be obtained via the following routes:
- Residency through the Investor Visa ($150,000 bank deposit or real estate investment)
- Pensioner visa ($1,000 monthly income)
- Rentista Visa ($2,500 monthly income)
- Company formation
Belize is an exceptional country in Central America and is much loved by explorers and nature lovers. With its pristine Caribbean coastline, vibrant coral reefs, and lush rainforests, Belize offers a paradise for diving, snorkeling, and wildlife encounters. Its rich cultural heritage and Mayan ruins add a touch of history to this tropical haven.
Belize has some great tax benefits on offer and is one of many fantastic Caribbean tax havens:
- Opportunities for offshore banking and the convenient establishment of offshore companies, trusts, and foundations.
- Offshore businesses incorporated in Belize enjoy tax exemptions on foreign income.
- Belize-incorporated companies and trusts are not required to pay stamp duty.
- Offshore bank accounts in Belize are not taxed on earned interest and are not subject to repatriation or capital gains taxes.
- The country’s banking legislation ensures strict confidentiality for offshore banking.
Although Belize does not have a citizenship by investment scheme, the immigration restrictions are generally flexible, and it is not difficult to become a resident. Although the country’s Department of Labor must first approve a work visa application, the fastest way to get one is to enter on a tourist visa.
You can apply to have it renewed every 30 days until you have had it for 50 weeks (you are not required to be in Belize during this time), and then apply for permanent residency. The entire procedure, including evaluation and acceptance, might take up to a year.
If you’re over 45, another and even simpler option is to apply for a retired residency visa. If your dependents are under the age of 23, they may also be included on this visa. Simply proving that the retiree makes at least $2,000 a month, which is more than enough to live comfortably in Belize, is all that is required. After five years as a permanent resident, you can apply for citizenship
Barbados is a beautiful island renowned for its stunning beaches, vibrant culture, and warm hospitality. With its coral reefs and lush landscapes, Barbados offers a tropical paradise for sun-seekers and water sports enthusiasts.
From its UNESCO World Heritage sites to its flavorful cuisine, this island gem offers a delightful blend of relaxation and exploration.
About Barbados’ tax benefits:
- Barbados is not considered a pure Caribbean tax haven.
- It is known for being a highly favorable tax environment for offshore corporations.
- Taxes on offshore company profits in Barbados typically range from 0 percent to 5.5 percent, with the tax rate decreasing as profits increase.
- Offshore companies are exempt from paying import duties on machinery and business equipment.
- It also offers the advantage of no withholding taxes or capital gains taxes.
- Barbados has established double taxation treaties with several countries, including Canada and the United States
Similar to many other Caribbean countries, to become a tax resident, you need to do the following:
- Spend at least 183 days in Barbados.
- Have a permanent home and economic ties in the country.
The Caribbean has a plethora of options for expats seeking a profitable place to see their wealth grow without paying a huge amount of taxes. Whilst each country stipulates the requirements for becoming a tax resident, a lot of the countries have very similar rules.
If the Caribbean sounds like the perfect place for you and you’d like to find out more, then schedule a non-binding call with one of our expert advisors. Global Citizen Solutions is a specialized consultancy firm in the field of investment migration. Our expertise lies in assisting clients who seek to secure their future and become global citizens through residency or citizenship through investment programs.
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Frequently Asked Questions about the Top 10 Offshore Caribbean Tax Havens
What Caribbean countries are tax havens?
Several Caribbean countries are known for their reputation as tax havens, including the Cayman Islands, Bahamas, British Virgin Islands, Dominica, Nevis, Anguilla, and Barbados. These jurisdictions offer favorable tax regimes and financial privacy for individuals and corporations seeking to optimize their tax obligations.
Which Caribbean island has the lowest taxes?
This varies depending on specific tax categories and structures. However, several islands, such as the Cayman Islands, Bahamas, and Barbados, are often considered to have favorable tax environments with relatively low tax rates for certain types of entities.
Are the Bahamas a tax haven?
Yes, the Bahamas is often considered a Caribbean tax haven due to its favorable tax regime, which includes no income taxes, no capital gains taxes, and no inheritance tax. It offers financial privacy and a range of offshore services, making it attractive to individuals and businesses seeking tax optimization and asset protection.
Is Turks and Caicos a tax haven?
Turks and Caicos has no income tax, no capital gains taxes, and no inheritance tax. It also offers opportunities for individuals and businesses to optimize their tax obligations and enjoy financial privacy. It’s therefore considered a Caribbean tax haven.
Is St Maarten a tax haven?
St Maarten is not typically considered a Caribbean tax haven. It imposes taxes on personal income, corporate profits, and capital gains. However, it does offer some tax incentives for businesses, such as exemptions for certain industries, which can make it attractive for investment purposes.