Cayman New Resident
Sinclairs Business Banner
Heritage Holdings
The definitive guide to living and working in the Cayman Islands
Apr 20, 2015 

Investing

Last updated: 8th January 2015

This chapter provides information about wealth management in Cayman and includes details on investment opportunities on Grand Cayman from asset management to off-shore banking and property investment in the Cayman Islands. We also provide details of private banking and brokerage services to help you with your investment portfolio. Services range from hedge funds, equities, interest accounts, currency transactions and other investment vehicles in Cayman. Additionally we provide details of investing and saving tax considerations and alternative investment opportunities like annuities and property investment in the Cayman Islands.

The Cayman Islands is widely perceived internationally as a tax-free jurisdiction for both individuals and businesses. A more accurate description, however, would be to call Cayman tax-neutral. Although taxes are not levied on income or profits earned locally, an expatriate working in Cayman is obligated by the tax laws of their home country. In Cayman, tax is not due on wages earned locally or on profits and capital gains from investments; moreover, there are no sales, goods and services taxes, or VAT, and many luxury goods are either partially or completely duty free. Lastly, there are no death or inheritance taxes. However, as is common in all countries, governments need to raise revenue to meet their expenditures. In the Cayman Islands, the Government brings in income by relying primarily on customs duties, fees for work permits issued to expatriates, a variety of business licences, tourist accommodation tax and various fees imposed on financial services and tourism, the key industries here. Typically, import duty is 22% on any item* imported into the Cayman Islands, although the levy will vary on certain goods including vehicles, wines, spirits and some food items. Work permit fees range between CI$100 to CI$32,400 per permit per year and these fees, along with those collected from Residency fees, raised a total of CI$71.6 million in 2013. Company trade and business licensing fees also bring in a great deal of revenue with category ‘A’ bank and trust companies paying an annual fee of up to CI$1 million, and class ‘B’ banks (depending on their assets) paying between CI$60,000 and CI$100,000 every year. Stamp duty on the purchasing of property also raises revenue as do a multitude of other fees, which have ensured that residents do not need to pay tax on their income.

*Please note that new residents importing their used household and other personal belongings will not be subject to import duty within six months of their arrival on the Island.


Wealth Management 

There are compelling reasons for engaging the services of an investment advisor based in the Cayman Islands, either through the local office of a global firm or the asset management group of a local financial institution; expert investment guidance can be obtained in the resident's time zone and on a personal basis. The local advisor will be familiar with the asset allocation and types of investments that are appropriate given the resident's new tax status.

Most of the retail banks in Cayman have a full range of financial services and there are an increasing number of specialised financial institutions that advise individuals who are looking for private banking or wealth management facilities. Brokerage firms in the Cayman Islands offer a wide range of client accounts and a full suite of products. For example, there is ready access to the full spectrum of offshore hedge funds and funds-of-funds, with choices ranging from low volatility funds to those which are aggressive and specialised. There is access to a wide range of interest bearing securities, structured notes (including equity-linked notes), step-up bonds and Eurobonds denominated in multiple currencies.

Investment accounts that are designed to receive monthly contributions are not very common because deferred tax planning is generally not necessary. However, a number of the larger retail banks and brokerage firms can structure traditional brokerage accounts to receive monthly contributions and to invest those contributions in a portfolio of mutual funds.

Some of the leading organisations in the Cayman Islands offering wealth management solutions are listed here:

Butterfield Bank (Cayman) Ltd.
Butterfield House, 68 Fort Street
PO Box 705, Grand Cayman KY1-1107
Tel: (345) 949 7055 Fax: (345) 949 7004
investments.cayman@butterfieldgroup.com
www.butterfieldgroup.com

Services offered: Private banking, asset management, trusts and estate planning, custody services and lending solutions.

Caledonian Global Financial Services Limited

Caledonian House, 69 Dr. Roy’s Drive
PO Box 1043, Grand Cayman KY1-1102
Tel: (345) 949 0050 Fax: (345) 814 4862

cayman.investorservices@caledonian.com

Cayman National Corporation Ltd.
200 Elgin Avenue, George Town
PO Box 1097, Grand Cayman KY1-1102
Tel: (345) 949 4655 Fax: (345) 949 7506

cnb@caymannational.com
www.caymannational.com

Services offered: Private banking, wealth structuring, portfolio management, fiduciary services, trusts and investments.

CIBC FirstCaribbean International Bank
FirstCaribbean House, George Town
PO Box 68, Grand Cayman KY1-1102
Tel: (345) 949 7300 Fax: (345) 815 2292

www.cibcfcib.com
Services offered: Private banking, financial and wealth management. 

Fidelity Bank (Cayman) Ltd.

Cayman Financial Centre, Dr Roy’s Drive
PO Box 914, Grand Cayman KY1-1103
Tel: (345) 949 7822 Fax: (345) 949 6064
info@fidelitycayman.com
www.fidelitycayman.com

Services offered: Private banking, asset protection, financial planning, competitive pension plan and lending solutions.

RBC Wealth Management
Royal Bank House, 4th Floor
PO Box 1586, Grand Cayman KY1-1110
Tel: (345) 949 9107 Fax: (345) 945 7256
timothy.mccarthy@rbc.com
www.rbc.com 
Services offered: Investment advice, management, custody and brokerage, private banking, fund administration and trust services.

Sackville Bank
The Grand Pavilion, 802 West Bay Road
PO Box 30444, Grand Cayman KY1-1202
Tel: (345) 749 6100 or (345) 749 6102
www.sackvillebank.com
Sackville Bank is an independent, financially strong, private, boutique bank, regulated by the CI Monetary Authority. They provide full fiduciary, trust, corporate, credit and custodial services together with strategic investment management solutions and oversight designed to protect and grow your assets.

Scotiabank & Trust (Cayman) Ltd.
Scotia Centre, George Town
PO Box 689, Grand Cayman KY1-1107
Tel: (345) 949 7666 Fax: (345) 949 0020
scotiaci@candw.ky
www.scotiabank.com/ky
Services offered: Private banking including customised lending solutions and financial planning, investment advice and management, wealth structuring including private trusts, foundations, private investment and custody.

Brokerage Services

There are a number of regulated wealth management firms based in the Cayman Islands that offer securities brokerage along with investment advisory and discretionary management services. In general investors need to make an initial investment of US$100,000-$250,000 or more to open an account with a full service provider such as Butterfield Bank, Cayman National Securities, Royal Bank of Canada or Scotiabank. Currently, OneTRADEx is the only fully licensed broker in Cayman that offers discount online trading to investors. A minimum deposit of US $5,000 is required to open an account with OneTRADEx.




OneTRADEx Ltd.
4th Floor Cardinal Plaze, 30 Cardinal Ave
PO Box 12177, George Town
Grand Cayman, KY1-1010
Tel: (345) 943-3212 Toll-free 1 (800) 381 1026 Fax: (646) 688 3541
info@onetradex.com
Services offered: Online discount securities trading from a regulated brokerage account for offshore residents and expat investors, including non-resident U.S. Citizens.

Saving & Investing in Cayman

Working in the Cayman Islands, especially in financial services and tourism, is about being in a first-world environment while enjoying the year-long tropical climate, white sand beaches and warm, crystal-clear sea. Working in Cayman is also particularly rewarding as earnings and any savings or income and gains from investments are tax-free. Nevertheless, as the Cayman Islands is a tax-neutral jurisdiction, it is strongly recommended that all new residents taking up employment here take the following steps:
  1. Seek tax advice in your home country. The tax authorities in Canada, the UK and the US treat income differently when their residents are physically working outside of the country. All newcomers to the Cayman Islands should determine if it is advantageous to transfer savings and investments to Cayman or keep them at home. It is also very important to determine how long you need to be a non-resident before securing tax-free benefits, if it is possible at all. Tax legislation is continually changing, so it is imperative to have the latest information before making decisions on investing. For example, in the UK you have to be a non-resident for one full tax year in order to avoid tax on income. US citizens are liable to be taxed on worldwide income, irrespective of where that income is physically earned, although you may be eligible for a foreign earned income exclusion, which is adjusted each year based on the inflation rate. Canadian citizens have to prove that they have severed ties with Canada to avoid paying tax. 
  2. As soon as is practical after arrival in the Cayman Islands, a local bank account should be established. This will enable you to have a cheque book, a debit card and to use ATMs. A note regarding chequing accounts: most local banks impose significant monthly and transaction fees on chequing accounts unless fairly significant average balances are maintained. Butterfield Bank (Cayman) for example, points out to new customers that the bank maintains the payment details of several hundred local merchants and service providers. This, together with easily accessible online banking, can mitigate the need for having a chequing account, since bills may be paid electronically. In this instance, customers are granted savings accounts in either US$ or CI$. Funds maintained in these accounts are fully liquid at all times and the accounts can be readily accessed online or at ATMs. (Note - banks in Cayman are strictly regulated by the Government-run Cayman Islands Monetary Authority (CIMA), which has the regulatory and oversight functions of a central bank, but there is no equivalent in Cayman to Federal Deposit Insurance in the US, which means that deposits are not protected if a bank should be declared bankrupt).
  3. Consider the establishment of an investment account. This will enable new residents to take advantage of some of the other services that banks offer, such as investment advice, brokerage services and, for those with significant assets, discretionary investment management. 
  4. Arrive prepared to meet local requirements for establishing banking and investment relationships. Local due diligence calls for having readily available (original) documents that confirm the personal identity and other particulars of an applicant. The requirements vary with each institution, but generally include two forms of identification, confirmation of residential address, a bank reference, professional reference (both addressed to the bank in Cayman) and evidence of the source of funds. For a full and detailed list of requirements see the Money and Banking section of the Settling In chapter. 
  5. Consider future plans. If planning to return to a country that is not US dollar denominated, consider converting CI$ or US$ denominated earnings to the home country currency on a regular basis. If all of your savings are in CI$ and you only convert it upon returning to the home country, it is possible that exchange rates could move adversely and negatively impact the value of your savings once converted into your home currency. Converting funds on a regular basis will tend to mitigate this.
  6. Factor into investment planning an eventual return to the home country. At that time, it would not necessarily be advisable to liquidate all investments held locally and repatriate the funds. To make the appropriate decision at that time, it is very important to be fully aware of your individual tax situation and what you are legally allowed to do. Whilst in Cayman, it may be advantageous to establish a Cayman-registered company or trust to own investments; these could potentially provide tax advantages upon returning to the home country. Most local banks have a trust department that can provide expert guidance and they will advise on the best strategy based on each client’s personal situation. However, please see the Domicile & Tax section on our website before establishing a trust as you might trigger inheritance tax if it is done too soon.

Investing in Cayman Property

The dynamics of the local property market have evolved and the Cayman Islands are embracing this new forward-thinking climate. Since the global recession, we have all been forced to rethink and reengage the approach to our respective industries in order to survive, if not excel. Over the past few years the Cayman Islands have had to deal with more of a confidence crisis than a liquidity crisis, and to this end Cayman has embarked on a multitude of projects, developments and public-private-partnerships all of which are designed to cater to growing demand but also help reignite the confidence and popularity of investing in what is frankly a beautiful, safe and clean destination. Cayman is being propelled further into being the most sought after destination for real estate and life style in the Caribbean.

These projects range from the world-class Health City Cayman Islands which, with phase one completed, currently accommodates 140 beds and offers technologically advanced excellence in Cardiac Surgery. Future phases are Oncology, Orthopedics and Pediatrics, not to mention the University research centre. This is an extraordinary product to have in the Cayman Islands that provides the very latest in healthcare to international, regional and local patients. The crumbs alone that fall from this table already are showing long lasting and positive effects on the country’s economy.

Ironwood – An Arnold Palmer Golf Resort is underway in Frank Sound. It will include an 18-hole championship golf course, hotel, shopping boutiques, sports facility, practice range and a golf school. As a result of Health City, Ironwood, and the construction of a well-known all-inclusive beach resort brand, the eastern districts will have an extension of the East-West arterial road piercing into Frank Sound and then into East End. This brings town 15 minutes closer to these districts.

Cayman Enterprise City has also become a major confidence booster as it creates an easy way for multinational companies to efficiently and cost effectively set up offices with local staff in Cayman. This helps companies have a genuine offshore physical presence while generating active business income in the Islands. These international companies, in return, are sending employees and their families to live and operate in Cayman.

The ForCayman Investment Alliance has also been a major confidence contributor by improving and redeveloping the Seven Mile Beach area with much-needed infrastructure. This redevelopment includes the introduction of the luxury-brand Kimpton Hotel which is currently being built; the reconfiguration of the Public Beach with sporting facilities, an extended children’s play area and in due course bike paths, and of course, the beautifully landscaped highway extension into West Bay.

Other projects include the completion of Oceana and WaterColours, two high-end condominium projects, and an extraordinary flurry of other projects such as the Intercontinental Business Hotel and another very exciting Seven Mile Beach development just breaking ground, the ultra-exclusive SMB Residences.

The Chamber of Commerce with the Government are encouraging, promoting and facilitating the revitalization of downtown George Town which will revitalize the experience for residents and tourists alike. The extension on the Airport runway was recently given the green light and this development will accommodate larger planes coming from further away. This will increase the number of air travelers, hotel occupancy and overall tourism revenue. This is part of a larger 20-year redevelopment plan for all of Cayman’s airports. Finally, there are ongoing talks about what to do about the lack of a pier for cruise berthing - an option the country is still considering.

There are many, many investment properties and opportunities in the Cayman Islands for both local and international investors no matter your budget. International investors see Cayman as a profitable opportunity with no strings attached and, depending on your needs, the local CIREBA real estate, legal and banking professionals can help you structure the right vehicles as they suit your specific needs.

Local real estate benefits include: no annual property taxes, no restrictions on foreign property ownership and investment, no requirements for immediate development on purchased land, no direct taxation, no capital gains, no death or inheritance taxes and no sales taxes. Visit PropertyCayman.com or CIREBA.com for more invaluable information. A casual review will show the diversity of land and properties available for sale and it would be safe to say that the market has something to offer to anyone who has an interest in property ownership, with future gains.

Copyright 2015 The Resident Magazine 2015. All rights reserved.
Acorn Publishing Co, PO Box 31403, Grand Cayman KY1-1206, Cayman Islands,
Managed by Netclues!