The definitive guide to living and working in the Cayman Islands
Aug 24, 2016
|Last updated: 25th September 2015
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
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 brought in a total of CI$65.8 million in 2014. 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
Services offered: Private banking, asset management, trusts and estate planning, custody services and lending solutions.
Cayman National Corporation Ltd.
Peter A. Tomkins Building, 200 Elgin Avenue, George Town
PO Box 1097, Grand Cayman KY1-1102
Tel: (345) 949 4655 Fax: (345) 949 firstname.lastname@example.org
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 2292www.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
Services offered: Private banking, asset protection, financial planning, competitive pension plan and lending solutions.
International Financial Planning (IFP)
Grand Pavilion, West Bay Road
PO Box 1968, Grand Cayman KY1-1104
Tel (345) 769 5352
IFP provides a wide range of financial planning services, with an exclusive selection of premium savings products, investment solutions and retirement programmes. Some retirement programmes start as low as $300 while others are geared to high net worth individuals. From nest egg savings to offshore retirement strategies, IFP will get you there.
Scotiabank & Trust (Cayman) Ltd.
Scotia Centre, George Town
PO Box 689, Grand Cayman KY1-1107
Tel: (345) 949 7666 Fax: (345) 949 0020
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 ServicesThere 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.
5th Floor Anderson Square
PO Box 2168, George Town
Grand Cayman, KY1-1010
Tel: (345) 943-3212 Toll-free 1 (800) 381 1026 Fax: (646) 688 3541
Online discount securities
trading from a regulated brokerage account for offshore residents and
expat investors, including non-resident U.S. Citizens.
Saving & Investing in CaymanWorking
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
- 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.
- 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$. Funds maintained in these accounts are fully liquid at all times and the accounts can be readily accessed online or at ATMs. (Note - banks in Cayman are strictly regulated by the Government-run Cayman Islands Monetary Authority (CIMA), which has the regulatory and oversight functions of a central bank, but there is no equivalent in Cayman to Federal Deposit Insurance in the US, which means that deposits are not protected if a bank should be declared bankrupt).
- Consider the establishment of an investment account. This will enable new residents to take advantage of some of the other services that banks offer, such as investment advice, brokerage services and, for those with significant assets, discretionary investment management.
- Arrive prepared to meet local requirements for establishing banking and investment relationships. Local due diligence calls for having readily available (original) documents that confirm the personal identity and other particulars of an applicant. The requirements vary with each institution, but generally include two forms of identification, confirmation of residential address, a bank reference, professional reference (both addressed to the bank in Cayman) and evidence of the source of funds. For a full and detailed list of requirements see the Money and Banking section of the Settling In chapter.
- Consider future plans. If planning to return to a country that is not US dollar denominated, consider converting CI$ 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.
- 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 PropertyThe property market in the Cayman Islands has undergone a transformation that is quickly positioning Grand Cayman as the ‘Monaco’ of the Caribbean. High-end properties have flooded the Seven Mile Beach (SMB) corridor in recent years from WaterColours, 60 private residences boasting unobstructed sea views and lavish amenities to the quiet decadence of Salt Creek, an exclusive residential neighbourhood developed by the Dart Group replete with Camana Bay-style influences that incorporate beautiful endemic flora and architectural vernacular. Conversely, the Cayman Islands will always have diversified offerings. Bodden Town, the fastest growing district in Cayman, has many opportunities, from more affordable residential homes to luxury properties that are cropping up along the rugged coast of Beach Bay. For a more comprehensive overview of residential areas see the Finding a Home chapter. Below are some highlights building investor confidence in the Cayman Islands’ future:
Go East to Health City Cayman, a 140-bed advanced cardiac hospital that was completed in 2014. This product provides the very latest in healthcare to international, regional and local patients. The hospital received international accreditation in 2015, paving the way for medical tourism. Many are anticipating that new opportunities will be created as the hospital expands and attracts more international patients. In fact, the Dart Group reported that they are positioned to react to any new demands in the market, having already purchased property on the eastern side of Grand Cayman. Ironwood, an Arnold Palmer Gold Resort and residential neighbourhood will round out the eastern offerings, with the expansion of the East-West arterial road into Frank Sound and East End.
Go West as there are many new developments breaking ground along the SMB corridor. A new subdivision called Clipper Bay is being developed by the NEXT Development Group who specialise in modern LEED builds. The new neighbourhood is located between Snug Harbour and Canal Point. Construction on Boggy Sands, ocean-front condominiums just north of famed Cemetery Beach will begin soon. SEE AD PAGES 68 & 151 Nestled on the North Sound, Crystal Point North by the NCB group, is a new gated development that will break ground very soon. Various living options are available with clubhouse and marina.
The Dart Group is creating a wide range of opportunities from their exclusive Salt Creek neighbourhood for those seeking quiet luxury to Camana Bay’s vibrant commercial centre. Their sophisticated Kimpton Hotel will be completed in 2016 and their new green commercial space, 18 Forum Lane, is now available for lease.
Capital Developments by the Government will kick off in 2015 with the expansion of the Owen Roberts International Airport and finally the much-talked about revitalisation of Cayman’s capital, George Town. It is hoped that the revitalisation of the capital will invigorate existing businesses, stimulate new growth and create new and exciting commercial and residential opportunities. New residential opportunities, are feverishly anticipated by many real estate watchers, as George Town has one of the most stunning coastal vistas to enjoy the ‘live-work-play’ lifestyle in the Cayman Islands.
Copyright 2016 The Resident Magazine 2016. All rights reserved.
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