Cayman Islands
A British Overseas Territory with no direct taxation, a longstanding Category 1 Red Ensign Group shipping registry, 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 on Grand Cayman, with exemptions or reductions for qualifying Caymanian first-time buyers.
- Annual government fees. Exempted companies pay annual registration fees scaled by authorised share capital, set in the government fee schedule and revised from time to time; regulated funds and other licensed entities pay considerably more.
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 trusts (for persons and/or purposes) under Part VIII of the Trusts Act, which absorbed the original Special Trusts (Alternative Regime) Law 1997; ordinary trusts under the Trusts Act.
Reporting and disclosure
Beneficial-ownership information is held under the Beneficial Ownership Transparency Act, 2023 (in force 31 July 2024). The Legitimate Interest Access Regulations, in force 28 February 2025, allow access by competent authorities and, on application, by persons with a legitimate interest such as journalists, academics and AML-focused civil-society bodies. The register is not fully public. 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 International Tax Co-operation (Economic Substance) Act (2018, as revised) requires Cayman entities engaged in "relevant activities" to demonstrate adequate substance in Cayman (premises, employees, expenditure, board management). Pure equity holding entities face a reduced substance test. The framework is OECD-compliant and has narrowed the "shell company" pattern.
Recent changes
The Economic Substance regime (2018) significantly changed Cayman structuring. Cayman was added to the EU list of non-cooperative jurisdictions for tax purposes in February 2020 and removed in October 2020. It was on the FATF grey list from February 2021 until October 2023. The Beneficial Ownership Transparency Act 2023 and the 2025 legitimate-interest access regime were the latest transparency reforms. Status as of October 2026.
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.
Primary Sources
- Cayman Islands Companies Act.
- Cayman Islands Exempted Limited Partnership Act.
- Cayman Islands Trusts Act (Part VIII, STAR trusts).
- Beneficial Ownership Transparency Act, 2023; Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024.
- International Tax Co-operation (Economic Substance) Act, 2018 (as revised).
- FATCA Model 1 IGA between the U.S. and Cayman Islands.
- Cayman Islands Shipping Registry — cishipping.com.
Reviewed October 2026