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Cayman Islands

Foundation Company

The Cayman Islands introduced in 2017 the foundation company, a new type of non-profit corporate vehicle governed by The Foundation Companies Law, 2017.

A Foundation company may be limited by shares or by guarantee, with or without share capital.

It is a separate legal entity with the capacity to file lawsuits and be sued and to hold title to properties and provides limited liability to its members, but unlike a corporation, it cannot pay dividends.

A foundation company may be formed for any lawful object which need not be beneficial to other persons and may be for commercial, charitable/philanthropic or private purposes, or any combination of these.

A Foundation company may not have ownership or beneficial interest constraints, being useful as an SPV vehicle in corporate transactions, to hold the shares of a private trust company or use it as a protector of enforcer of a trust or for use in Cayman STAR trust structures.

The flexibility of a Foundation company avoids the need to set up a separate structure to carry out charitable/philanthropic purposes, as these can be combined with commercial purposes.

Foundation companies are also an attractive alternative to trusts, as they will be more easily recognized in civil law jurisdictions.

They can be used for estate planning, as it is a company but with the flexibility of a trust. Forced heirships laws of a foreign jurisdiction may not be applicable under the jurisdiction of the Cayman Islands.

It can also be an attractive vehicle to hold higher-risk, less diversified assets since interested persons will owe their duty to the Foundation company, and not to any potential beneficiaries.

Furthermore, a beneficiary of the foundation company has no powers or rights relating to the foundation company, its management or its assets and is not considered an interested person.

Although a foundation company may not distribute dividends to members, they can receive benefits as beneficiaries of the Foundation company, they can receive reasonable remuneration as a director or officer, indemnified or reimbursed for expenses or liabilities incurred in relation to the Foundation company, benefit from a loan or other transaction or relationship entered into with the Foundation company or may receive benefits disposing of surplus assets on its winding-up.

Foundation companies are exempt from taxation and may obtain a tax undertaking certificate from the Cayman Islands government guaranteeing no change to their tax status for a period of up to 50 years from the date of the undertaking.

A Foundation Company does not require anyone to have a formal role as a founder as such, it is incorporated on the instructions of the person(s) promoting it in the same way as any other Cayman Islands company.

It may be formed by one or more members, who may be either individuals or juristic persons and of any nationality. Cayman Foundation can cease to have members at any time, and the cessation will not affect the Cayman Foundation’s existence, capacity or powers provided that it continues to have one or more supervisors. Supervisors are interested persons who have the right to attend and vote to general meetings.

All foundations companies are required to have a Cayman Islands’ qualified secretary licensed under the Companies Management Law.

All in all, Cayman Islands’ foundation company is a flexible corporate vehicle that may be used as a special purpose vehicle for finance transactions, investment holding, wealth management, succession planning, private trust company structures, protectors or enforcers (in relation to other trusts or fiduciary structures), charity and philanthropic purposes, and as an alternative to a trust.

Taxes

Cayman Islands does not levy income taxes. In addition, a Foundation Company may obtain a Certificate of up to 50 years tax exemption against any future Cayman Islands taxation.

Other taxes - There is no personal income tax nor capital gains nor corporation tax nor value added tax. The only existing taxes in Cayman Islands are:

  • Stamp duty on the lease of the property from 5 to 20% of the annual average rent.
  • Stamp duty on the lease of a land, 5% of the value of the property if the term is more than 30 years, or 5% of the average annual rent, if less than 30 years.
  • Tourist Accommodation Tax: 10% of the income obtained by renting tourists or USD 10 per day for each room occupied in timeshare properties
  • Stamp duty on the transfer of a property of 7.50% on its value.
  • Import duty tariffs between 22% and 27%.
  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 0% Offshore Income Tax Rate
  • 0% Corporate Tax Rate
  • 0% Capital Gains Tax Rate
  • 0% Dividends Received
  • 0% Dividends Withholding Tax Rate
  • 0% Interests Withholding Tax Rate
  • 0% Royalties Withholding Tax Rate
  • 0 Losses carryback (years)
  • 0 Losses carryforward (years)
  • 0% Personal Income Tax Rate
  • 0% VAT Rate
  • 0 Tax Treaties

Country details

Cayman Islands
KYD
George Town
North America
e n - K Y
44270

The Cayman Islands is a British overseas territory dependent on the United Kingdom and located northwest of Jamaica between the island of Cuba and the coast of Honduras in the waters of the Caribbean Sea. The Cayman Islands is a member of the CARICOM single market.

The 264-square-kilometer (102-square-mile) territory comprises three islands, Grand Cayman, Cayman Brac and Little Cayman, where about 69,000 people live, 55,000 of which live in its capital, George Town (Grand Cayman).

Its official currency is the Cayman Islands Dollar (KYD), pegged to the US dollar at a 1,227:1 ratio.

The Cayman Islands are a British overseas territory, designated by the UN Decolonization Committee as one of the last Non-Self-Governing Territories. The fifteen representatives who compose the Legislative Assembly are elected by the people every four years, they are in charge of managing the internal affairs. Of the elected members of the Legislative Assembly, five are elected to serve as ministers in a Cabinet headed by the Governor. The head of government is the Prime Minister.

The governor is appointed by the King/Queen of the United Kingdom on the advice of the British Government to represent the monarch.

The Cayman Islands has a solid economy, with one of the highest per capita income worldwide. Being also the one of the most expensive place to live, since most products are imported and are subject to high tariffs.

Its main sectors are luxury tourism for its pristine beaches, scuba diving and high-end gastronomy, and offshore financial and insurance services, with hundreds of licensed banks, which handle about $500 billion in assets.

Cayman Islands is one of the 5 largest financial centers in the world by deposits and the world’s largest financial center for investment funds, with the presence of the global largest financial institutions.

Main financial services available in the territory are private banking, hedge fund formation and investment, trust services, structured finance and securitisation, captive insurance, and international business company services.

Services

We can help you incorporate a Foundation Company in Cayman Islands.
Please, contact us to request a free, no obligation consultation.

Disclaimer

Although we use our best efforts to keep the information of this site accurate and up-to-date, we make no representations or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this website. We disclaim any warranties expressed or implied, merchantability, or fitness for any particular purpose. We shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. The contents of this website are just for illustrative purposes and are NOT to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc., and any associated company, is not engaged in the practice of law or tax. If you wish to receive a legal opinion or tax advice on the matter(s) in this website please contact our offices and we will refer you to an appropriate legal practitioner. Use of our websites FlagTheory.com, Incorporations.io, Residencies.io, Passports.io, is subject to our terms and conditions.

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