Part II · Jurisdictions · No. 06

Cayman Islands

A British Overseas Territory with no direct taxation, a longstanding shipping registry on the IMO white list, a sophisticated exempted-company and partnership statute, and a robust information-exchange framework that has reshaped what offshore confidentiality means.

Why this jurisdiction matters

Cayman is the dominant U.S.-facing offshore center for investment funds. For luxury-asset planning, Cayman serves three functions: (a) vessel flag registration through the Cayman Islands Shipping Registry (CISR); (b) holding-company formation through exempted companies and exempted limited partnerships; (c) trust situs through the STAR trust and other vehicles.

The relevant tax regime

• No direct tax. Cayman imposes no income tax, capital-gains tax, estate tax, or wealth tax. Indirect taxes consist of import duty, stamp duty, work-permit fees, and a tourism accommodation tax.
• Stamp duty on real estate. 7.5% generally, with reductions for first-time-buyer Caymanians.
• Annual government fees. Companies pay annual fees ranging from approximately $850 for ordinary exempted companies to substantially higher for special purposes.

Registration or residency mechanics

Vessel flag: register through CISR; Category 1 registry on the Paris MOU white list; favorable for commercial yacht operations. Company formation: exempted company under the Companies Act; partnership under the Exempted Limited Partnership Act. Trust: STAR trust under the Special Trusts (Alternative Regime) Act for purpose trusts; ordinary trusts under the Trusts Act.

Reporting and disclosure

Beneficial-ownership register maintained by registered office, accessible to competent authorities. CRS reporting for financial accounts (Cayman is a CRS participant). FATCA Model 1 IGA with the United States — Cayman financial institutions report U.S.-person account information to the Cayman authority for transmission to the IRS.

The substance question

The Economic Substance Act 2018 requires Cayman entities engaged in "relevant activities" to demonstrate adequate substance in Cayman (premises, employees, expenditure, board management). Holding-company-only activities have lighter substance requirements. The framework is OECD-compliant and has narrowed the "shell company" pattern.

Recent changes

The Economic Substance regime (2018) significantly changed Cayman structuring. The EU has periodically reviewed Cayman's listing on its non-cooperative-jurisdictions list; Cayman has been on and off the list as substance and tax-information-exchange standards have evolved. Continuing reform of beneficial-ownership transparency under EU and FATF pressure.

Common asset classes parked here

• Yachts — Cayman flag for commercial and large private yachts.
• Investment-fund holdings.
• Family-office holding structures.
• Trusts in conjunction with U.S. or other family-jurisdiction trusts.

Reviewed May 2026