By EB5 Investors Magazine Staff
The Cayman Islands might not be the first place that springs to mind when you think about Caribbean immigration investment opportunities — and that’s just the way locals like it.
“We aren’t going for a mass market, citizenship-for-sale type of thing, and I don’t think we ever would,” says Nicolas Joseph, a partner with HSM Chambers in Grand Cayman. “We’re fairly quiet about what we do.”
The Cayman government doesn’t go out of its way to promote its residency-by-investment offerings, industry experts say, and only a few dozen investors apply for residency each year. The territory’s immigration service processed just 29 applications for its core investment-based residency programs in 2016, roughly the same as the previous year, according to government data.
This May, officials sought to cool the market still further, introducing new rules that effectively doubled the cost of residency for some investors. So far, though, things are ticking along quietly, much as they ever were.
“It’s business as usual,” Joseph says. “They’ve upped the price of membership. But it doesn’t seem to have deterred those who’re hoping to avail themselves of the opportunity.”
Cayman offers a multi-track residency-by-investment program, with the main two tiers both referred to as residency “for persons of independent means.” The flagship program, available to investors who purchase CI$2 million in real-estate (up from CI$1.6 million before the rule-change) and pay a CI$100,000 fee, confers permanent residency, and after five years of Cayman residency allows the successful applicant to qualify for a British passport.
“If Cayman has a downside, it’s that it doesn’t lead to instant citizenship,” says Andrew Miller, the Cayman-based head of Walkers’ Global Wealth Structuring Group. “You do actually have to be resident here for five years before you get your citizenship.”
For investors who aren’t seeking a new passport, Cayman also offers a renewable 25-year residency permit, available to investors who invest CI$1 million in the Cayman Islands, including at least CI$500,000 in real estate. That’s double the previous minimum, in a move that Joseph says was likely intended to keep market for mid-price housing from overheating.
“The last thing the government would want to do is to get its population in a bidding war with wealthy foreign investors,” he says. “That may have been part of the motive to raise the threshold.”
Investors seeking the 25-year residency permit must show that they are independently wealthy, typically by demonstrating that they have an annual income of CI$120,000 or more. This year’s overhaul also allows investors to prove wealth by maintaining a balance of at least CI$400,000 with a Cayman bank — potentially useful for cash-rich investors who lack a steady income in addition to their assets, Joseph points out.
Joseph estimates that about a third of residency applicants seek permanent status, despite the higher cost, while the rest — mostly “snowbirds” and retirees — are happy with a 25-year permit.
“If you’re 80 years old, and you just want to come and retire, a 25-year certificate will more than likely be sufficient for you,” agrees former Cayman legislator Cline Glidden, now an associate with Ogier. “If you’re a 45-year-old investor looking to bring your children here to live, then the certificate of permanent residency is going to be more beneficial.”
Given the low numbers of applicants, it’s hard to tease out meaningful trends in terms of where investors come from, Glidden says, but the Cayman Islands certainly draw a cosmopolitan crowd. “We’ve represented clients from around the world — the US, Canada, Central and South America,” he says.
Most come to Cayman to settle down, but some use the islands as a base while traveling to the US or elsewhere for business. One important consideration for globe-trotting investors, Glidden points out, is that the permanent visa also allows holders to spend as little as one day a year in the Cayman Islands, while the 25-year visa requires a 30-day annual presence.
Business owners are theoretically expected to leave Cayman to conduct their professional affairs, since neither permanent nor renewable visa-holders are automatically eligible to work in Cayman. In practice, however, permanent residents can seek a variation allowing them to work in a designated job, such as a self-owned business.
Entrepreneurs also have the option of obtaining renewable residency permits by investing at least CI$1 million investment in a business that employs Caymanian workers, or by holding a senior management position or at least a 10 percent stake in a Cayman business with at least four full-time employees.
Coupled with Cayman’s attractive tax laws, that can be a beneficial option for businesspeople, says Daniel Altneu, an associate with Solomon Harris, one of the territory’s top immigration firms. “The Cayman Islands has no income, property, estate or corporate taxes,” he points out. “The Government is particularly receptive to inward investment and the Cayman Islands are increasingly being recognized as an ideal tax-neutral hub from which to conduct international business.”
There’s no denying that taxes are a big draw for HNWIs, Miller agrees. “Certainly, not having any of those taxes is a major advantage,” he says.
Still, Miller points out, many Americans move to the Cayman Islands despite being obliged to continue paying US taxes once they arrive, suggesting that new arrivals aren’t coming to Cayman solely to reduce their tax bills. “I think it’s a factor, but, you know, I think there’s far too much negative focus on that side of things in the press,” he says.
What really draws people to the Cayman Islands, Joseph says, is the territory’s laid-back lifestyle, high-end infrastructure and amenities, wonderful weather, and proximity to the rest of the Americas. “The reality is, we’ve found a sweet spot in the global marketplace,” he says.
The islands’ exclusivity is a part of its charm, Joseph acknowledges, and that’s something the government’s low-key approach to investment immigration is designed to maintain. “We have the luxury of being quite selective about who we welcome,” he says. “The people who are already here, and the people who want to come here, are quite reassured by that.”