Daniel Altneu: That's something which really took off during the pandemic was this idea that we had people moving here and many clients have moved here to run their global businesses from their home in the Cayman Islands because they realized that they don't need to be in busy cities anymore and they prioritize quality of life for themselves and their families. And then, of course, they can still travel to New York, Toronto, Miami, etc. We have direct flights every single day to each of those cities. So it's been very popular in the last few years.

Salman Siddiqui: Welcome to the Investment Immigration podcast by you Uglobal.com, with weekly in-depth interviews with the world's leading investment immigration professionals. Welcome to another episode of the new Uglobal Investment Immigration show. Today we are going to focus on the Cayman Islands program. Now, the Cayman Islands don't offer a purely citizenship by investment program, but as a British overseas territory, its permanent residents become eligible for a Cayman Islands passport after living there for a certain number of years and a British passport eventually. That's also a possibility. But applicants seeking either permanent residency there or the processes that is involved there may sound a little complicated, but it's actually a straightforward process. But there are certain developments happening there in those islands. And to help us unpack the developments there, we have a special guest today. His name is Daniel Altneu. He's the managing associate at Bedell Cristin. He's actually based in Georgetown, the capital of Cayman Islands. Welcome to the show, Daniel.

Daniel Altneu: Thanks very much and great to be here.

Salman Siddiqui: Daniel, please lay out for our audience how do the residency options in the Cayman Islands work and how do they differ from other programs in the region?

Daniel Altneu: Yeah, in terms of how they work, you know, there's three principal options when it comes to persons of independent means acquiring residency in the Cayman Islands. And, you know, happy to go through those. Going to your question about the citizenship by investment programs, as you alluded to yourself in the introduction, we don't have direct citizenship by investment programs here in Cayman, but through two of the three residency programs that I'll discuss, there are options to eventually acquire both Cayman Islands and British passports, as well as the right to be Caymanian or what's often termed as Caymanian status.

Salman Siddiqui: Great. And that's what most people don't understand; the special relationship that the Cayman Islands has with the UK. So if you could just elaborate on that relation and also tell us how this is an advantage for an investor looking to gain residency in the country.

Daniel Altneu: Yeah, of course. The relationship between the Cayman Islands and the UK has always been a special one. Cayman is now of the self-governing British overseas territories, largely managed from the UK and remains one of the UK's 14 overseas territories that's under British jurisdiction and sovereignty. A lot of people take comfort from the fact that there is oversight in the Cayman Islands, and our legislation has origins based on legislation from England and Wales. So whilst we're a dependent territory, we're largely independent and ultimately people take a lot of comfort also from the fact that the ultimate court of appeal is the Privy Council. Certainly, you know, in terms of sort of independence or cause for independence, there haven't been any currently. And frankly, it's evident that it hasn't maybe gone particularly well for some of our neighbors. So the way British politics has gone recently is lessened that a lot. And if the UK was to get a far left extreme government, that may put some strain on the relationship, but we certainly don't see that as imminent or a concern. So comparatively, Cayman looks like a very safe place for lots of families to relocate their assets and structures. And there's empirical evidence that people are coming to that conclusion themselves.

Salman Siddiqui: Right. And a lot of people want to know if the Cayman Islands route is one of the routes that one can take to gain eventually a British passport. A lot of people have that in their mind. Or is that the case with your clients as well?

Daniel Altneu: Yeah, very much so. I mean, a lot of clients, I would say historically when I first started handling these applications, so about 11 years ago, it was mainly a case of retirees looking for somewhere idyllic to reside with a slow pace of life. They typically purchased a condo in one of the beachfront complexes and a corresponding 25 year residency certificate for retirees that did not lead to citizenship nor an ability to seek employment in the islands. But certainly in recent years, in my practice, there's been a significant shift towards wealthy families with young children acquiring certificates of permanent residence. And for many this is seen as the ultimate option because not only does it provide a lifetime grant to reside in the Cayman Islands, it also gives them the ability to work should they wish to do so, but most importantly, provides the entire family with a pathway to Cayman Islands and British citizenship without any obligation to surrender existing residences or citizenships. And so really, I would say the vast majority of my clients are now pursuing that route and obtaining Cayman Islands and British passports and eventually citizenship or Caymanian status here in the islands.

Salman Siddiqui: But it does take a lot of time to eventually get that British passport along with the Cayman Islands passport, isn't it? Or is the time frame within five years?

Daniel Altneu: It's five years. So if you acquire the certificate of permanent residence, which is one of the three options that I'll talk about today because this option has no expiry. It qualifies the holder provided certain other criteria are met to become eligible to apply for naturalization as a British overseas territory citizen. Once they have been legally and ordinarily resident in the islands for five years. So typically what happens is they acquire their certificate of permanent residence after a period of five years. They apply to be naturalized. Now, once they've been naturalized in that process, it might take 2 to 3 months to determine if they can immediately apply for a Cayman passport; what we call a British Overseas Territories Cayman Islands passport. Then immediately upon receipt of that passport, they can apply to register as a full British citizen with all the privileges and rights that entails, including obtaining a British passport.

Now it's the same for their dependent spouses and children. They may also be eligible for that route, but really it's a case of the holder of the certificate has to go first in each circumstance. So the holder gets naturalized, then the spouse and the children can get naturalized or registered if they're under 18; same with getting the passport. You know, the holder would go first and once they have their passport, the others can apply, both from a Cayman Islands and British perspective. So I typically say to clients, provided the applications are submitted in a timely fashion, their consideration is not protracted either locally or in the UK. The entire family can acquire British passports within six years of the initial grant of the certificate of Permanent Residence.

Salman Siddiqui: What is the success rate of applicants to acquire both of these passports? And has the situation changed since Brexit and the other political developments that are happening in Europe? Or does that not affect the Cayman Islands in any way at all?

Daniel Altneu: It hasn't affected the islands or that process at all. The success rate for us is very, very high. I can't think of any that have been refused. There have been some which were more additional information or additional questions have been asked of us and our clients, especially in relation to the residence requirements and the minimum on the prima facie residence requirement in the islands in order to be able to apply for naturalization. But no, I mean typically they've been very successful and a lot of that comes down to the fact that the vast majority of our clients are actually acquiring residency in order to reside here full time or to spend more time here than they do elsewhere. So we do very little of what you might term kind of Plan B planning of people who just acquire residences but don't actually end up utilizing them very often. You know, the vast majority of the clients that we have actually physically relocate to the islands and bring their families here and set up here, whether it's purely for a residence purposes or for business purposes. And of course, you know, with children, they have them in in school full time all year round.

Salman Siddiqui: If you could give us a brief overview of the kind of clients you've seen over the years. Are there coming from particular parts of the world? Has that shifted? Do you see, for example, even Americans coming to the islands to settle there? If you could just share some trends with our listeners…

Daniel Altneu: Yeah, absolutely. That's a great question. I mean, as I mentioned before, sort of 11 years ago, it was mainly a case of retirees, you know, coming here and looking for somewhere idyllic to reside with a slow pace of life. But that has certainly changed in recent years. And it's really a case of wealthy families with young children is the kind of the typical client that I'm assisting at the moment. Now, in terms of where they're coming from, you're right to raise the sort of American interest because that's been something which has really increased in the last few years. If you asked me that question five years ago, I'd say the bulk of our clients still emanate from Canada in the UK, but now there's certainly a lot of Americans looking to take up residency here. You know, notwithstanding that, the tax benefits for them versus Canadians or British people, they're not as obvious exiting Canada or exiting the UK. You know, a system where tax is based on residence, there's obviously significant advantages to taking up residence in a tax neutral jurisdiction like the Cayman Islands. But for Americans, it's definitely more of a lifestyle play and a lot of it has emanated from it could be the increase in crime, for example, in the States and the fact that the Cayman Islands has one of the lowest crime rates in the Caribbean.

The education a lot of clients came during the pandemic when we didn't have restrictions on the island, when it came to schooling or wearing masks in schools. And so the alternative of having your children zoom-schooled was something which drove a lot of people's desire to come here from places like the US and of course the political situation. You know, I hear it almost daily on calls with new clients. It's become very divisive and it's something which they're keen to distance themselves from. So there's a lot of different reasons why the offering in America has changed somewhat in recent years. And sometimes that move is also prompted by a desire to renounce their citizenship. And we work very closely with advisors, mostly in the US on these issues whereby they came in residency piece kind of ties into a wider mandate about exiting the US, renouncing their citizenship, their possibly acquiring a second citizenship somewhere else in the Caribbean if they don't already have one, and pairing all of that with a Cayman Islands residency option.

Salman Siddiqui: That's a very interesting trend. I didn't realize that so many people are now from the US are considering the Cayman Islands as one of their top destinations. But it makes sense. The political situation there and the crime situation there that you mentioned, the lifestyle choices that the Cayman Islands offers is a big plus for many people. But I also want to understand the impact of the pandemic on the country's program. How much has that impacted the increase in the applicants post-pandemic and pre-pandemic? Did you see any difference?

Daniel Altneu: We saw a distinct increase during the pandemic, and a lot of that reason was, as I alluded to, the fact that we actually had no COVID here for a period of about 18 months whilst our borders remained largely closed and whilst those coming in had to had to quarantine initially - that was a government mandated residence. So, you know, some of the hotels like the Ritz, for example, and various places like that were taken over to offer that quarantine. And thereafter there was quarantine at residence program that was really well run by our government and included provision of phones and tags and all sorts of kind of technologies like geo fencing. And that enabled the rest of the country to remain safe. And that was something which was really attractive to people during that time. They came to the islands and they ended up staying, acquiring residency. And a lot was also driven by our Global Citizen program, which has since closed at the end of last year, but it was a program that sort of digital nomad type programs that brought people here for a relatively low fee and gave them permission to reside in the islands for a period of up to two years.

What we then saw was a vast majority of clients who then look to convert from that global citizen program into one form of extended or permanent residence. And the great thing about that program was that coming back to the five year period I was discussing about naturalization, the two years spent under that program did count towards their legal and ordinary residence such that when they transitioned over to permanent residence, for example, the time that they'd spent in the islands was already building up their clock towards naturalization and their passports and citizenship route. So it was if they had acquired permanent residence from, you know, the first day that they stepped foot in the islands.

Salman Siddiqui: Right. And it's also important to mention that program was shut down. So if you could also shed some light on the global citizens program and why was it closed down? And do you agree like, should it have been shut down or you think it was a bad decision?

Daniel Altneu: The program itself essentially involved having an overseas employer and the application process was not particularly stringent in terms of the documents required, you know, versus the sort of the documents that are required and the process to acquire extended or permanent residence. So it was all done online. It was an online system. You could upload your documents; you could get a decision within a few weeks if you were successful. It was $1,500 for the applicant plus one dependent and any other dependents. On top of that, it was an additional $500 and this this was per year; relatively low entry requirements. And the way they did it was based on your annual income. So if you were an individual, you had to earn at least $100,000 in your salary. The more dependents you added to that, the more the figure increased up to a point of about $200,000. So it still attracted a certain type of applicant and hence why many of them then came here, decided it was a wonderful place to live.

Maybe they only thought about coming here temporarily; a lot of the ones we helped, it was part of an overall or a longer process, but in a way for them it provided a really great opportunity to live on the island for two years - not prejudice their ultimate citizenship route pathway, get a feel for the island, get a feel for the places they might want to live, possibly the type of real estate they might want to purchase before making that decision to invest for the purposes of their residence. So I thought it was a fantastic program. We were, of course, disappointed that it closed because it provided an excellent entry point for a lot of our clients. And, you know, we were hoping that would continue. But the government very much saw it as as it had served its purpose for the time during the pandemic and, of course, for that time in our lives. And I appreciate that. We're now back to our pre-existing residents options.

Salman Siddiqui: Do you think a new kind of program is on the cards from the government side, something which we would be close, like the digital nomads programs that we see in so many other countries?

Daniel Altneu: From my discussions with them, I'm not aware of anything that is on the horizon currently. But that's not to say that won't change.

Salman Siddiqui: Okay. Thank you. Thank you for clarifying that and sharing your information with us. Now let's talk about the options that are currently available. And if you could share with our listeners that what is the residency certificate for persons of independent means, the permanent residency for persons of independent means program. And the minimum investment threshold for these programs is quite high, isn't it? It's like $2 million. So if you could just talk a little bit about this.

Daniel Altneu: . Yeah, of course; there are two [options]. So we'll start first with the two residency options by way of a real estate investment. And you know, you correctly alluded to the fact that the permanent residence option. So this is to acquire permanent residence. It requires a minimum investment in developed real estate of at least 2 million Cayman Islands dollars. So it's about 2.4 million USD. Now, it must be invested in developed real estate. There's not much flexibility there. Yes, it can be residential or commercial or a mixture of the two, but it's not there's not sort of scope to invest in other categories like there is under the 25 year certificate that I'll talk about in a moment. But before we sort of get into the two programs in a bit more detail, it's worth just bearing in mind a few general points in relation to their flexibility, you know, and our government's accommodating approach. So both require real estate to be purchased, both required developed real estate to be purchased. Now that property can be registered in the applicant's name in joint names with their spouse in the name of a limited liability company for asset protection reasons. And that's popular with clients who intend to rent the property either on a long or short term basis because there's actually no obligation currently under our programs that you have to reside in the property that you purchase for the purposes of these applications, so you can treat them purely as investment properties.And when you come to the islands to satisfy your residency requirements, you could stay somewhere else; you could stay in one of the hotels, you could stay in another Airbnb type property. There's no restrictions as to how many properties make up the minimum threshold. So ordinarily it would be one. But for example, I've recently dealt with an application where there were five properties that made up the threshold so there's sort of flexibility there, albeit we do have local licensing laws which prohibit the rental of more than two units of property unless certain licenses have been obtained. So that's something to bear in mind if a client's going down that type of route. And similarly, there's no specific residency by investment properties, you know, unlike certain citizenship by investment programs. And so applicants have no limitations on their choices. So yeah, with the permanent residence option, as I said, it's a minimum investment of at least 2 million Cayman Islands dollars in developed real estate. And ordinarily the clients will invest that just simply in the home that they wish to purchase for the purposes of residing here. But there is some flexibility now with the 25 year certificate, 25 year residency certificate for persons of independent means.

Daniel Altneu: They all have similar titles, which is a bit confusing, but talk about them in terms of the permanent and the 25 year option. Now this by virtue of it having an expiry date, as I mentioned, doesn't provide the holder with the right to work and doesn't put them on any pathway to citizenship. And by its very nature, it requires a lower threshold of minimum investment of 1 million Cayman Islands dollars to about 1.2 million USD. Now, of that threshold, at least 50% must be invested in developed residential real estate. So call it’s at least 600,000 USD that must be invested in developed residential real estate. I'd say for the majority of cases, the entire investment is invested in developed residential real estate because the clients will invest the money in the home they wish to purchase. But it does offer some flexibility in the event the applicant wishes to also purchase some land or pre construction property or to make another local investment. So to give you an idea, for example, I'm currently working with a multi-family office from the UK that are proposing to purchase one $6 million investment property such that each of the ten families satisfy that minimum $600,000 develop residential real estate requirement, and they'll treat that as an investment property that's rented all year round. Then what they'll do is deposit the other 600,000 with one of our well-known brokerages and it's going to be invested in portfolios that contain internationally listed equities. So there's a lot of flexibility there.

Other examples that have been successful in the past for other clients who made up the minimum investment threshold where there's been a shortfall, let's say in the real estate investment through the purchase of Cayman companies. So whether those are local companies or they may be utilities companies. So our Caribbean utilities company, QC, it provides our electricity here and power they trade on the Toronto Stock Exchange. Our water company consolidated Water trades on Nasdaq so they can buy shares in these companies. Notwithstanding that, those shares are usually held within existing kind of external brokerage accounts, and those can be accepted from an immigration perspective. So the 25 year certificate offers a lot more flexibility in terms of the type of investment, although kind of, as I said, you know, nine times out of ten, the whole $1 million is invested in real estate. But, you know, it does offer some flexibility if people are looking at different types of proposals like the multifamily office that just.

Salman Siddiqui: Right and thank you so much for explaining in detail the kind of options you have, especially in the real estate and also clarifying that it's not just real estate. You can also buy shares in different companies. So you have to explain to me what is preferred by the ultra-high-net-worth-individuals when they are applying for residencies in Cayman. Is it common for them to, like you just mentioned, and you gave us an example of somebody setting up an office there for business associates - do they want to set up their businesses there or do they just want to buy properties there? And which of the two that you just mentioned is more popular; the 25 year residency option or the permanent residency option, which has a higher threshold?

Daniel Altneu: So on the real estate side, it's very much the permanent residency option. I'd say the vast majority of applications deal with on the residency by way of real estate investment type applications for permanent residency because of the fact that they want the progression of citizenship, they want an ability to work locally, you know. And so that's where there's been a significant shift in recent years when it comes to businesses and the setting up of businesses. This is where the third option for residency comes in. And this is one which doesn't have a corresponding requirement for a personal real estate investment. What it does have is a slightly higher minimum residence requirement each year at 90 days. But this is a residency certificate by way of what we call substantial business presence. Now, this is something which was developed by our government to encourage businesses and family offices to come to and thrive in the islands by providing their key players with a clear and reliable pathway to residency. Now, this certificate is also valid for 25 years, like the other 25 years. It's renewable and there are sort of two separate pathways within this one. I'll touch on the sort of the requirements for each and then give you an idea of the types of clients I've assisted with these options over the years. So a lot depends on the size of the proposed business or family office because the first category is somewhat more onerous. And I have to admit I've only ever done a handful of applications under this subcategory. This requires you to own a minimum of 10% of the shares in the business and to show substantial business presence by purchasing or leasing commercial real estate and to employ at least full, full time workers who themselves are resident for at least nine months in each year.

So the vast majority are under the second subcategory, which doesn't have any of those requirements. What it does is it simply necessitates that the holder must be employed in a senior management capacity, which means one that attracts an annual work permit fee at a certain level or a minimum level. It's about 25,000 USD within an approved category of business. So for new ventures, that's what I'll see. The applicant will incorporate an exempted company, which is a company that's carrying on its business outside the islands. It sets themselves up as the sole shareholder, sole director of that company and then seeks permission to employ themselves in that company. So this route has been very popular over the years with investment managers, financial traders, just clients who generally want to transfer their business to Cayman Islands but are happy to work from home. That's something which really took off during the pandemic was this idea that we had people moving here and many clients have moved here to run their global businesses from their home in the Cayman Islands because they realized that they don't need to be in busy cities anymore and they prioritize quality of life for themselves and their families. And then, of course, they can still travel to New York, Toronto, Miami, etc. We have direct flights every single day to each of those cities. So it's been very popular in the last few years.

We also see this used for family offices. So to give you an idea, we recently worked with a local trust company on the transfer of a family office of a European billionaire and the migration of numerous kind of underlying companies from around the world. So we incorporate the exempted company to be a vehicle. It happened to be a foundation company, this one to be the vehicle through which the family office was created. We submitted applications for all its directors under this option, and all of them have since relocated to Cayman and are conducting the day to day management and establishing the hub of the family office from within the Cayman Islands. So in my view, the attractiveness of that certificate is the simplicity and certainty that it's granted for 25 years; there is no renewal applications. And should someone only require it for, let's say, five years or ten years, they could renounce the certificate at that point and there's no obligation to keep paying the annual fee each year. So a lot of clients have decided, well, I might as well move from Toronto. I'm paying $25,000 a year for the certificate, but of course, I'm paying significant more in tax in my home jurisdiction and also get all the ancillary benefits of living in the Cayman Islands.

Salman Siddiqui: Speaking of tax, now, let's talk about it. How does the tax neutrality of the Cayman Islands appeal to wealthy individuals in light of global tax increases? What are the benefits of tax neutrality for wealthy individuals in the Cayman?

Daniel Altneu: Well, to give you some background on our tax neutrality, we have no income, capital gains, property, estate, inheritance, wealth sales or corporate taxes, and no restrictions on foreign ownership of real estate. So such tax neutrality is proven even more appealing. You know, in recent years and at times at a time when governments across the globe are already beginning and have increased taxes to pay for COVID economic stimulus packages. And of course, you know, for many of our clients who are focused on wealth preservation, they're reasonably assuming that they're going to be the ones targeted when it comes to those increases. So that's really driven their desire to look further afield to economically stable countries like the Cayman Islands as a place where they can acquire residency and live here year round or on a part time basis. Now, just last week, the government published figures to demonstrate that they ended 2022 with a $47 million operating surplus, which was $28 million more than what was projected and was as a result of their revenues for the year, reaching just over $1 billion. Now, that is how we operate, very much a consumption based model in the Cayman Islands whereby if you purchase property, you'll pay stamp duty. If you import goods from overseas, you'll pay import duties. Our financial services industry is what contributes mostly to our revenue, our government's revenue in the work permit fees that exist for any expats working here. And they range anywhere between $500 a year, up to $40,000 a year, depending on what role they're filling. That's what I was talking about, the $25,000 fee for the substantial business presence. These are all fees which are collected by the government and are utilized for the benefit of the residents and everyone living here. So yeah, often Cayman's portrayed negatively in the media, but it's simply not accurate because of this efficient system that we have based on consumption. And as a result, the government spends so much money on its infrastructure. And this is often why we are described as seen as the Singapore Monaco of the Caribbean.

Salman Siddiqui: That's exactly what I wanted to touch about in the next question, is the portrayal of the Cayman Islands in the media as a tax haven for wealthy individuals, basically for anyone to avoid paying taxes in their home countries. So if you could talk a little more about what is wrong with that perception in your view?

Daniel Altneu: Well, I mean, the phrase tax haven is pejorative and it's simply not accurate. We are not a tax haven. We're a tax neutral jurisdiction. And we've demonstrated year on year with our operating with our fiscal surplus that we're running an extremely efficient way of collecting tax, if you like. Whilst it's not called tax, it's called duties. And that's something which has really appealed to a lot of people looking at the Cayman Islands as somewhere they might take up residency. They want to ensure that it's an economically stable jurisdiction and Cayman is becoming ever more economically stable year on year, notwithstanding whatever's happening in the rest of the world. So it's a very inaccurate picture, and it's something which everyone in the Cayman Islands has worked very hard to dispel.

Salman Siddiqui: And does that make your job harder because of this perception when you're trying to convince clients or clients are so easy to come? And that's never been a problem.

Daniel Altneu: It's never been a problem. And in fact, I can't even recall having that conversation with any of our clients because they're intelligent enough to know that isn't actually the case. They do their own research. Of course, they're very savvy people with this level of wealth. They fully understand what's on offer in the Cayman Islands, and it's not something which ever really enters into their mind. Of course as I said, you know, minimizing tax in their home jurisdiction is often a reason for looking to an offshore jurisdiction. But the actual decision that they make to move here is based on so many other factors as well.

Salman Siddiqui: Right. And before I let you go, I would also like to know your view about the advantages that Cayman Islands offers compared to other similar programs in other countries in the region. What are the benefits that Cayman Islands has over other programs, in your opinion?

Daniel Altneu: I wouldn't want to talk too much about other programs in the region because I'm very much an expert on the Cayman Islands offering. And I don't want to suggest that ours is better or worse than anyone else's then any of our neighbors. What I can talk about is, of course, what I think is the unique offering in the Cayman Islands. We are an English speaking British overseas territory. We're located an hour from Miami by flight, in addition to our preeminence as an international financial center and our very high concentration of financial industry professionals. We boast one of the highest GDPs and standards of living in the world generally. And due to our traditional values of community and privacy, a government and private sector that's committed to a strong financial services industry and the fact that it is a safe and secure place to live with one of the lowest crime rates in the Caribbean. These all provide reasons why Cayman is a permanent home to many high-net-worth and ultra-high-net-worth international individuals. They're also attracted by its beauty, well-developed infrastructure, strong rule of law, stable government, elite health services and education, and our cosmopolitan outlook. You know, we have 75,000 residents here currently frp, 135 different nationalities. We have direct accessibility from 20 to 25 major cities in the US and Canada and 55 weekly nonstop flights and 110 weekly flights overall in peak seasons. So all of these things combined, the fact that we're also referred to as the culinary capital of the Caribbean, most of my reasoning will be about why Cayman as opposed to why not somewhere else.

Salman Siddiqui: Thank you so much for your time, Daniel. It was very insightful and I'm sure a lot of our listeners would want to know more about your country's program, and I'm sure you'll get a lot of calls by the end of our episode. So thank you so much for sharing that. With that, we've come to the end of our show and in the end I would like to just shout out to our listeners that please stay tuned. We'll be having more episodes from around the world talking about the countries’ programs and the various residency options that they offer. Thank you, you've been listening to the Investment Immigration podcast by Uglobal.com. Join us again soon for more in-depth conversations exploring investment immigration opportunities from around the world.

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