Cayman Islands

The Cayman Islands are a British Overseas Territory consisting of three islands in the western Caribbean. As one of the world’s most reputable offshore financial centres, the jurisdiction is widely used for fund formation, asset protection, and international corporate structuring. Cayman’s legal system is based on English common law, and the territory maintains a high level of regulatory compliance aligned with FATF and OECD standards.

Key Tax Advantages and Characteristics

• 0% corporate income tax
• No personal income tax, capital gains tax, inheritance or gift taxes
• No VAT or withholding taxes
• Fixed annual government fees instead of tax (based on capital)
• High level of confidentiality: directors, shareholders and UBO details are not public
• Fully OECD white-list compliant

Main Corporate Structures in the Cayman Islands

Exempted Company

Limited Liability Company (LLC)

• Hybrid structure based on Wyoming model (since 2016)
• Members not disclosed in the registry
• Full flexibility in internal governance (Operating Agreement)

Economic Substance Regime

Companies performing “relevant activities” (e.g., fund management, banking, IP holding, shipping) must:

• Be directed and managed from the Cayman Islands
• Maintain physical office and adequate staff on the Islands
• Generate core income from Cayman-based operations
• File annual Economic Substance Return with the Tax Information Authority (TIA)

Exemptions: Investment funds, pure equity holding entities, companies tax-resident outside Cayman, Cayman partnerships and certain exempted trusts.

Cayman Tax Regime

Who Should Use Cayman Structures

• Hedge funds, private equity, and family offices
• Holding structures and IP management vehicles
• Asset protection using common law trusts or LLCs
• International investment structures (e.g. for real estate or securities)
• Tax neutral platforms for multinational group structures

How to Set Up a Company in the Cayman Islands

1. Choose legal structure (Exempted Company or LLC)
2. Propose two name options for approval
3. Provide KYC documents for directors and shareholders
4. Engage local Registered Agent and office
5. Incorporate and obtain Certificate of Incorporation
6. Register with Tax Information Authority
7. (Optional) Economic Substance compliance, bank account setup

Incorporation timeframe: 5–7 business days

Summary

The Cayman Islands remain a gold standard for offshore corporate structuring. With no corporate or personal income tax, high confidentiality, and alignment with global transparency standards, Cayman is ideal for funds, holdings, and IP vehicles. Economic substance requirements apply only to certain activities, and compliance is manageable with local support.