Two pathways to residency in the Cayman Islands

By Daniel Altneu 

The Cayman Islands is an English-speaking British Overseas Territory, an hour's flight from Miami to the western Caribbean Sea. 

Every year, more individuals from different jurisdictions take advantage of the territory’s unique tax neutrality, high GDP, and high living standards. They are also attracted to its natural beauty, modern infrastructure, stable government, strong rule of law, position as a leading international financial center, health services, education, low crime rate, and cosmopolitan vibe. 

Foreign investors interested in obtaining residency in the Cayman Islands have two definite options: either through a real estate investment or by establishing a substantial business presence. 

WEALTHY INDIVIDUALS CAN OBTAIN PERMANENT RESIDENCE THROUGH REAL ESTATE INVESTMENTS 

Over a decade ago, most applicants were retirees looking for somewhere to reside with a slow pace of life. Applicants typically purchased a condominium in one of the beachfront complexes and a corresponding 25-year Residency Certificate that did not lead to citizenship nor an ability to work in Cayman. 

In recent years, there has been a notable trend of affluent families with young children obtaining permanent residency through investment (RBI) Certificates of Permanent Residence for Persons of Independent Means (PR) and relocating to Cayman. 

The PR program provides the holder and spouse with lifetime permission to reside in Cayman and the ability to work for a minimum investment of $2.44 million (KYD 2 million) in developed real estate. The Certificate also opens a pathway to Cayman and British Citizenship without any obligation to surrender existing residencies or citizenships. 

The first stage of that process requires each family member to obtain naturalization as British Overseas Territories Citizens on account of their legal and ordinary residence in Cayman during the relevant five-year period following their grant of RBI. Once naturalized, each family member must apply for British Overseas Territories (Cayman Islands) passports. Upon receipt, the third stage requires each family member to apply for Registration as a British Citizen with rights and privileges, including a full British passport. 

Provided their citizenship applications are submitted on time and consideration is not protracted, those three stages can be achieved within one year; an entire family could acquire full British passports within six years of the RBI's initial grant. 

SETTING UP A BUSINESS TO OBTAIN EXTENDED RESIDENCE IN CAYMAN 

A more recent addition to Cayman's residency options, Residency Certificates by way of a Substantial Business Presence (SBP), provide the individuals involved in businesses and family offices a more straightforward and clearer pathway to residency. 

The SBP program provides the holder and family with a 25-year permit to reside in Cayman to enable the holder to work in a senior management capacity in an approved category of business. This option attracts an annual occupation fee payable to the government of at least $25,000 (KYD 20,925). 

Typically, applicants first incorporate an exempted company (carrying on business mainly outside of the jurisdiction), set themselves up as the sole shareholder and director of the firm, and then apply for SBP to obtain the requisite permission to employ themselves. 

The SBP route has been very popular over the years with investment managers financial traders, and many individuals who wish to transfer their global businesses to Cayman and work from a home office. It is also a preferred option for transferring family offices and as a mechanism enabling directors to conduct the day-to-day management and establish the hub of the family office from within Cayman. 

The attractiveness of SBP lies in its simplicity and certainty. There are no renewal applications or associated licensing requirements. There is no requirement for any personal or commercial real estate investments or a need to lease commercial premises. 

The fact that this route also offers a defined pathway to British citizenship provides further appeal, albeit the timeframe involved is slightly longer than that of the PR route. After eight years, the family can apply for permanent residence under a points system. This application process involves points being awarded based on criteria relating to employment, qualifications, community contributions, investments, financial stability, and demographics.  

Once granted, and after a further period of one year, each family member can embark upon the three-stage application process to acquire full British passports within ten years of the initial grant of SBP. 

CANADA AND THE U.S. STILL AT THE FOREFRONT OF RBI APPLICATIONS IN THE CAYMAN ISLANDS 

Based on our client data, five years ago, most applicants were from Canada and the United Kingdom. These nationalities continue to be well represented, but applications for investors from other jurisdictions have increased. 

Over the past few years, broadly speaking, out of every ten applicants, four come from Canada, two from the UK, two from the United States, and two from other parts of the world (families relocating from Hong Kong, Switzerland, Singapore, Dubai, Monaco, Brazil, Israel, Australia, and the UAE). 

Another recent trend is the number of inquiries we regularly receive from U.S. citizens interested in obtaining residency in Cayman. However, unlike existing Canadians or British citizens, they would not receive the same level of associated tax neutrality benefits (although they often save themselves significant U.S. state and property taxes). Usually, it is a lifestyle play for U.S. citizens, but, on occasion, the move could be prompted by a corresponding desire to renounce U.S. citizenship. In these circumstances, investors must know about onshore tax and wealth structuring issues to ensure the Cayman residency piece fits into the broader mandate. On occasion, this can include applicants first obtaining second citizenship from another jurisdiction, usually in the Caribbean 

The attractiveness of these RBI programs in Cayman is further enhanced by the opportunity they provide for foreign investors to obtain British citizenship and work in Cayman. 

As the world becomes wealthier and more mobile, and the desire to live genuinely offshore continues to grow, so does the trend towards obtaining an alternative right of residence (and, in some cases, citizenship) in places like the Cayman. 

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