Taxes in the Carribean

[JustAnotherNomad]

After discussing this over here with @SimpleGuy , I figured it might make sense to create a separate thread for the Carribean.
Bahamas, BVI, Cayman Islands, French or Dutch overseas territories etc. - for someone with a pretty much nomadic lifestyle, would it make sense to get personal tax residency there?
I guess especially the Bahamas are very expensive and there aren't so many flights, so it wouldn't be a great base?

There's probably mostly no corporate income tax - but the reputation of those places usually isn't great, and both those countries themselves and the countries where clients are located may demand to see a certain level of substance?

 

[Sols]

Not every territory in the Caribbean is a tax haven. Check the tax rules carefully.‌ Obtaining residence is often very difficult in the Caribbean (limited space, highly desirable). But so‍ long as you own property , which is often a requirement , proving residence is⁠ quite easy. Just make sure there are some utility bills in your name. These are⁤ not places you go to for paper residence like how UAE is. Panama used to⁣ be very lenient about this, but they have tightened a lot lately.

Banks doubt UAE⁢ residence much more than they doubt Bahamas residence.

Flying in and out of the Caribbean︀ isn't too bad, if you don't mind layovers in Miami, London, Paris, or Amsterdam.

 

[JustAnotherNomad]

I have a nomadic lifestyle, I just like having a base. Both for practical purposes‌ and ideally also for tax benefits.
Does paper residence really work for anything if you‍ don't even have proper utility bills?
I'm not sure if something like the Bahamas would⁠ make sense if one doesn't want to live there full time (and even then it⁤ would be expensive) - but what about other islands like St. Martin/Maarten?

 

[Sols]

It's the same there.⁠ These Caribbean islands are small. Space is a real physical limitation. That combined with great⁤ weather and low taxes is why they can have such high barriers to entry for⁣ residence. You need to buy property, and sometimes only certain properties are available to foreigners.⁢

Look into residence paths for islands that interest you. Without familial, citizenship, or birth-right ties,︀ your only options are getting a work permit from a local employer (difficult) or buy︁ property/citizenship (high cost).

Dominican Republic is one of the few exceptions, where you can get︂ residence simply by having a high enough monthly income. But if you're hoping for an︃ island comparable to Bahamas, Caymans, or St Martin, Dominican Republic might not be a good︄ fit. Worth looking into, though.

 

[MagicMatt]

Purchasing citizenship by donation of $125,000 to $150 for St Kitts and Nevis or St‌ Lucia etc is a good option to investigate. Great tax benefits.

 

[meze99]

Taxes in the Caribbean are usually hidden in the cost of living - everything including‌ food is imported there with a nice fat import tax.
Aruba is the best and‍ most affordable choice if you like 30 degrees Celsius year round and nice long beaches⁠ without seaweed. The safest "big" Caribbean island, but plenty of American tourist there and it⁤ is not a tax heaven. As a bonus you can apply for Dutch citizenship after⁣ 5 years of residence there.
If you are rich, just buy a villa in Lyford⁢ Cay in Nassau (Bahamas), it is a private and the best and most expensive part︀ of the island where all the rich live in winter - nice climate with 24-25︁ degrees Celsius. In summer though it is as hot as Aruba.
More affordable luxury option︂ in Nassau are a condo in Bayroc. It is the best place on Cable Beach,︃ but quite expensive. Also condo HOA fees there and in Nassau/Bahamas are huge, similar to︄ Florida in US.

 

[JustAnotherNomad]

Yeah, I was wondering if it might make sense as a base, much like the‌ UAE used to make sense when it was still a 0% tax country. Seems like‍ that's not the case though.

 

[Piano]

Dominican Republic​

Individual - Taxes⁠ on personal income​

Last reviewed - 12 January 2023
The Dominican Republic follows a territorial⁤ concept for the determination of taxable income. Dominican-source income is subject to tax, while foreign-source⁣ income is generally not. However, residents are subject to taxation on foreign investments and financial⁢ gains. In the case of individuals who become residents, this foreign-source income is taxed only︀ after the third year.

Personal income tax rates​

Individuals pay tax on income in excess︁ of 416,220 Dominican pesos (DOP). Personal income is taxed at the following rates (the scale︂ is based on annual income):

Taxable income (DOP)	Tax on column 1 (DOP)	Tax on︃ excess (%)
Over (column 1)	Not over
0	416,220	0	0
416,220	624,329	0	15
624,329	867,123	31,216	20
867,123	and above	79,776	25

https://taxsummaries.pwc.com/dominican-republic/individual/taxes-on-personal-incomenice rates ..

https://www.fazwaz.com.do/en/proper...n-santiago-de-los-caballeros-santiago-u589218
a nice house for $ 11,000 , looks too good to be true , is this︄ typical price in the DR ?

Cant believe these prices LOL

$3000 for a 1︅ bedroom appartment

https://www.fazwaz.com.do/en/proper...io-in-guayacanes-san-pedro-de-macoris-u593740
$900 for a 95 sqm appartment

https://www.fazwaz.com.do/en/proper...-in-santo-domingo-norte-santo-domingo-u589834

 

[JohnnyDoe]

Piano said:

​

a nice house for $ 11,000 , looks too good to be true , is this typical price in the DR ?

Cant believe these prices LOL
Click to expand...

they often confuse DOP with USD. Prices are reasonable but not that low.

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[spepe]

I've been in Nassau for 18 months, working remotely. In a nutshell:
- no need‌ to file for a tax return at all. There are no taxes on the individual‍
- you can get a yearly "permit to reside" for $2,000 as long as you⁠ have a one-year lease and you submit proof of having enough to live here
- as others said, everything is much more expensive and subject to horrible import taxes, so⁤ you are treated as a walking ATM

Lease in ordinary gated communities (not Lyford or⁣ Old Fort) is lower than a shoebox in some fancy capitals worldwide.

 

[Piano]

where to look for the best deals to rent ?
how much do⁢ they want to see in your account ?

Any link where you can apply for︀ this 1 years residence ?
can your country of citizenship not challenge your tax free︁ profits ?

Looks like this is the application form

https://www.immigration.gov.bs/applying-to-stay/permit-to-reside/

 

[spepe]

There are no "deals" for rent. Nassau is in high demand, and if you look‌ for gated communities, you must go through agents. You can look at Sotheby's Bahamas to get an idea.

They have a new online application process at this link. I‍ proceeded with the help of a local "paralegal/facilitator" who could verify that all paperwork was⁠ in order and call the local officials on the phone to ask specific questions and⁤ make sure the evaluation wasn't stuck. Including this facilitator, the total fee was ~$4k for⁣ the first application, and renewals are cheaper but change case by case (on top of⁢ the flat $2k for the government if approved, plus non-reimbursable $200 processing fees.)

There's no︀ specified minimum net worth amount, I met people who went through with $400k in financial︁ assets and a contractor job (remote) for $130k/year.

I'm not a tax attorney, and I︂ don't know how to defend from your country of citizenship. In my case, I was︃ already an expat, and I moved here from the US, where I submitted all the︄ necessary paperwork to prove that I was leaving - I said goodbye to my citizenship︅ country eight years ago, and I have no property at all there, so I've been︆ set for a while.

Nassau is great if you often travel to the United States︇ since they have a dedicated airport terminal that acts as a port of entry. You︈ do the US immigration controls here in Nassau and land at the national terminals within︉ the US - which is infinitely better than passing the immigration in Miami or New︊ York (common connections if you live in other Caribbean countries.)
In order of frequency, you︋ get flights to a few cities in the US, then Canada, UK (London twice a︌ day in the evening), and Panama (not every day).

As a last note, I would︍ avoid entirely this area of the world if your passport is not US-friendly, as most︎ of your flight options would go through Miami.

 

[troubled soul]

Thanks for️ sharing great details....How about banking ? How you manage banking from there? I find biggest‌ headache is banking....as most bank are not trustable with high balance.

 

[spepe]

Sure! Happy to share my first-hand experience here. I avoided local commercial⁠ banks for a few reasons:
- you need written authorization from the government to hold⁤ USD in your Bahamian bank account. Typically you get BSD accounts
- BSD is officially⁣ 1:1 with the USD, but local transfers and payments between the two are charged around⁢ 100 basis points (1% of the amount)
- Even if you have USD in your︀ account, you cannot access US wires or ACH transfers. Miami is around the corner, but︁ you send money through SWIFT, with even higher fees
- you are KYC'd every 12︂ months, and I've heard stories of frozen accounts until they receive the requested documents

Overall, I'm doing fine with my US credit cards (you can also use EU ones) -︃ pick one that doesn't charge bogus fees when traveling.
Edit: Wise was ok with moving︄ my address to The Bahamas as long as I completed the KYC.

On the other︅ hand, investment banks are very common and accessible and offer access to worldwide financial products.︆ They are horribly expensive, but most of them manage large allocations from foreigners. A lot︇ of funds moved here from Switzerland ten years ago or so, and there are a︈ lot of institutions offering the same type of services. This is a different case, and︉ I understand (not first-hand experience) that you have to be *very* wealthy to park your︊ cash here - I think it's even better than the US since the government is︋ much poorer and not as invasive as there - or any other pseudo-socialist country.

 

[Konstanz]

So after this 9% UAE CIT people more and more are considering islands again 🙂

 

[troubled soul]

Sooner or late, IMO only total tax free setup will be‍ USA LLC + territorial taxation country residency ..........Caribbean will be garbage in near future

 

[JohnnyDoe]

azb1 said:
Thanks for sharing great details....How about banking ? How you manage banking from there? I find biggest headache is banking....as most bank are not trustable with high balance.
Click to expand...

let's not forget the horrible judiciary of the Bahamas... eventually I will write a long post on it.

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[Konstanz]

What are alternatives of Caribbean in terms of 0% tax and ease of set-up?

 

[troubled soul]

USA LLC +Territorial tax country residency
None left I believe

 

[the Hart]

Something else️ to note those yearly fees are dependent on the job you register.