St Kitts & Nevis in Offshore
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Company Formation St Kitts & Nevis
One of the more popular Caribbean destinations, St Kitts & Nevis is a balance between cost and reputation if an offshore solution is needed.
The tax regime in St Kitts & Nevis is generous and follows the familiar IBC model, with no personal or corporate tax on foreign income or assets, and with no inheritance tax, capital gains tax of gift tax.
The main financial product is St Kitts & Nevis Economic Citizenship which is essentially the ability to acquire a second passport. This can be done only through a Licensed Agent and allows the user to live on the islands, as well as in any of the other CARICOM juristictions. It is not necessary to reside in the Caribbean, and the passport itself is well respected internationally allowing movement within the Schengen area and the United States.
Wealth Planning Solutions
Trust Registration In Nevis
Nevis General Information
Government And Political Structure
Nevis is an independent parliamentary democracy. It is part of the federation of St. Kitts and Nevis, although it may elect to leave the federation by a two-thirds majority in a public referendum. Recently a referendum on secession was defeated. The Federation is an active member of the British Commonwealth. Nevis is a vigorous democracy based upon the British Parliamentary system with an elected local assembly.
Nevis is politically stable and has been declared by the Freedom Foundation in the United States to be one of the ten freest nations in the world.
From the 17th Century until 1967, Nevis along with its sister island were governed by England as part of the colony of the Leeward Islands, and later, the West Indies Federation. In 1967, St. Kitts and Nevis along with Anguilla became a governing state with Great Britain. In that same year, Anguilla seceded from the Federation.
In 1983, St. Kitts and Nevis achieved full political independence. Consequently, the Federation ceased being an Associated State and attained the status of a Sovereign and Democratic Federal State, which is an independent participant of the British Commonwealth. Under this sovereign status, Nevis has adopted the British Parliamentary System of government. It has its own unicameral legislature and government that has the authority to formulate its own economic decisions. The Federation also has its own representation at the United Nations.
Since attaining independence in 1983, the Federation has had a history of political stability based upon the Westminster model of government and continuity of national policy. The Federation has also been consistently adjudged to be among the world's freest nations by Freedom House, an independent and highly respected research organization in the USA.
The 1983 Constitution provides for a federal parliament headed officially by the governor-general. A cabinet in Nevis is led by the Premier as leader of the majority party in the House of Assembly. The legal system in the island is based upon English common law. Served by a High Court of Justice and a Court of Appeals. There is a Court of Appeal and High Court of the Eastern Caribbean Supreme Court, with all final appeals made to her Majesty's Privy Council in London, England.
Currency And Exchange Control
The official currency used on the island is the Eastern Caribbean Dollar (ECD) which is shared by eight states throughout the Eastern Caribbean and controlled by the Eastern Caribbean Central Bank (ECCB). The ECD is pegged to the United States dollar (USD) and fixed at ECD 2.70 per dollar of the United States of America. The USD is generally considered to be a second currency and is freely accepted and interchangeable throughout the island. The exchange rate versus other currencies fluctuates according to world money markets. All major credit cards are readily accepted throughout the island.
The principal provisions affecting offshore operations and transactions are contained in the following:
Confidential Relationship Act 1985
Income Tax Act
Nevis Business Corporation Ordinance 1984 < /p> Nevis International Exempt Trust Ordinance 1994
Nevis International Exempt Trust (Amendment) Ordinance 2000
Nevis Limited Liability Company Ordinance 1995
Nevis Offshore Banking Ordinance 1996
Nevis Offshore Banking (Amendment) Ordinance 2000
The Proceeds of Crime Act, 2000
The Intelligence Unit Act.
The Financial Services Commission Act.
Anti-Money laundering Act.
The Federation of St. Kitts and Nevis is party to double taxation treaties with Denmark, Norway, Sweden, Switzerland, the United Kingdom and the United States of America (limited to social security benefits).
The St Christopher and Nevis (Mutual Exchange of Information on Taxation Matters) Act, 2009 provides for the mutual exchange of information on taxation matters between St. Kitts and Nevis and other jurisdictions.
The bill marked another step in the Federation’s efforts to comply with OECD standards following its pledge on December 31, 2005 to adhere to the OECD principles of transparency and tax information exchange.
In October 2010, St. Kitts and Nevis signed its 18th Tax Information Exchange Agreement, with Germany. Other jurisdictions with which St. Kitts and Nevis has signed a TIEA include (with signature dates) Aruba, Iceland, Australia, Liechtenstein, Belgium, Monaco, Canada, Netherlands, Curacao, New Zealand, Denmark, Norway, Faroes, Portugal, Finland, Saint Maarten, France, Sweden, Greenland, United Kingdom and Guernsey.
Nevis taxes income on a source basis. Income earned outside Nevis is not taxed in Nevis. There is no Nevis income tax for individuals.
Corporations incorporated under the Nevis Business Corporation Ordinance 1984 do not have to submit annual returns and are exempt from Nevis tax. Corporations incorporated under the Companies Act 1885 are subject to a profit tax levied at a rate of 50%. Such companies may qualify for a tax holiday of up to 15 years for an approved project, as well as for exemptions on customs duty on imported goods.
Limited liability companies incorporated under the Nevis Limited Liability Company Ordinance 1995 are fully exempt from corporate tax, income tax, withholding tax, stamp duty, asset tax, or other taxes on income originating outside Nevis.
There is no capital gains tax or withholding tax in Nevis. Nevis nationals pay a social services levy of 2% and a social security tax of 5%. There are import duties on certain goods, and there is a land tax that is based on the rental value of buildings and land.
Disclosure Of Information Secrecy Of Information
Secrecy of information is governed by the Confidential Relationship Act 1985. This act prohibits the disclosure of any information obtained in the course of business, and applies to banks, and professionals as well as Government officials. The act provides prison sentences for violation of secrecy provisions and insures complete confidentiality where foreign authorities seek private banking and financial records. Nevis has not entered into any exchange of information agreements.
Banking secrecy is governed by the Nevis Offshore Banking Ordinance 1996.
Disclosure In Company Formation And Trust Settlement
Disclosure of beneficial ownership is not required on incorporation of a company.
Confidentiality is governed by the Confidential Relationship Act 1985.
Companies are not required to be audited, but they must have a local registered office. The name and address of the person or entity forming the company must be kept at the local office.
A trustee is not required to register the beneficiaries of a trust. Moreover, a company or trustee wishing to open a bank account need not disclose the beneficial owner or beneficiaries. This provision applies to limited partnerships as well.
Establishment Of Trust
Analysis Of Trust Laws
Nevis International Exempt Trust Ordinance, 1994
The use of international trusts has rapidly expanded as both corporations and individuals apply this mechanism to fuel and facilitate a wide range of activities. Their use has become increasingly imaginative and prolific and remains an integral element in estate planning and asset protection. In recognition of this trend, and of the contribution that international trusts would make to the international financial services sector, the Nevis International Exempt Trust Ordinance was passed by the Nevis Island Assembly in 1994.
The Ordinance governs the establishment and operation of international trusts and is an amalgamation of the progressive international trust legislation of various jurisdictions combined with innovative provisions to form a totally unique product. When combined with an NBCO, users can create powerful asset protection vehicles.
The Trust Ordinance provides for the creation of charitable, spend-thrift and protective trusts. It also includes special provisions tailored to make Nevis a preferred jurisdiction for the establishment of asset protection trusts (APTs).
Creation, Establishment And Administration Of Trusts
To qualify as an international trust under the Nevis International Exempt Trust Ordinance, the following criteria must be met:
1) at least one trustee must be either a trust company doing business in Nevis or a company incorporated under the NBCO;
2) the settler and beneficiaries must at all times be non-residents of Nevis; and:
3) the trust property must not include any land situated in Nevis or its sister island, St. Kitts.
Other features of the trust are that the trust assets and income deriving from the corpus of an international trust are exempt from all exchange controls and estate, corporate, gift, income, inheritance, withholding, succession and stamp taxes in Nevis.
Under the Nevis International Exempt Trust Ordinance, the international trust can be created with only one trustee and the Settlor or trustee of the trust may also be named as a beneficiary.
The proper law of the trust is the Law of the jurisdiction expressed by the terms of the trust as proper law, with which the trust at the time it was created had the closest connection; or failing either, the proper law of the international trust shall be the law of Nevis.
Duration Of Trusts
The rule against perpetuities does not apply. A Nevis international trust may continue for one-hundred years from the date of commencement of its existence and forced heirship rules cannot invalidate the trust.
Asset Protection Provisions
An Important feature of the Ordinance relates to fraudulent dispositions. A creditor seeking to set aside a transfer to an International Trust is required to establish beyond reasonable doubt that the transfer constituted a fraudulent disposition. The Nevis Ordinance expressly states that "a trust settled or established and a disposition to such trust shall not be fraudulent as against a creditor of a Settlor:
(a) If settled, established or the disposition takes place after the expiration of two years from the date that such creditor's cause of action accrued; or
(b) Where settled, established or the disposition takes place before the expiration of two years from the date that the creditor's cause of action accrued, and that creditor fails to commence such action before the expiration of one year from the date such settlement, establishment or disposition took place."
Furthermore, every creditor, before bringing any action or proceeding against any trust property shall first post and pay a bond with the court as a security deposit.
The Ordinance specifically provides for the appointment of a Protector. The role of the Protector is to monitor the major acts of the trustee. The Protector is not a Trustee but rather the "watchdog" of the Trust. This provision gives an added protection feature in that the Protector has a fiduciary duty to the beneficiaries of the trust or to the purpose for which the trust was created. This provides an additional safety mechanism within the framework and workings of the trust.
Taxes And Other Exemptions
The assets and earnings of a Nevis International Exempt Trust are exempt from all exchange controls and all forms of taxation and stamp duty in Nevis.
Where an offshore company is a trustee of an international trust, its registered office in Nevis may be the trust's registered office.
The confidentiality and the privacy of international trusts are ensured by legislation. Though a trust register is maintained, it only records the name of the trust and the date of settlement and is not a public document available for inspection. The only exception is where a trustee of a specific trust gives written authorization to a person allowing the inspection of the entry of that trust on the register. The Ordinance provides that all non-criminal judicial proceedings relating to the trust shall be heard in private and that no details may be published without leave of the court.
The Nevis Exempt Trust (Amendment)
The Nevis International Exempt Trust Ordinance is widely admired by persons wishing to structure offshore trusts, whether for asset protection purposes or for estate planning purposes. However, as always, Nevis has undertaken dynamic action and improved on its trust law by enacting amendments to its Ordinance. These amendments enacted on 15 September, 2000 further enhance the attractiveness of the Nevis trust law. The changes cover three areas, namely:
1) Clarifies the registration requirements, including the introduction of the new concept of the qualified foreign trust;
2) Strengthens and clarifies the fraudulent conveyance provisions; and
3) Affirmatively prohibits the use of international trusts to further criminal activity.
The major aspects of these changes are delineated in the following paragraphs.
Registration Of Nevis Trusts And Foreign Trusts
The first change addresses the misinterpretation of some users that registration of a trust may be delayed for many years after formation until a cause of action arises, or that trusts formed under English common law may obtain the benefits of the Ordinance notwithstanding the failure to register. The amendment makes it clear that trusts formed under the Ordinance may claim the benefits of the Ordinance only if they are properly registered under the Ordinance within 45 days of the creation. Such a provision would preclude trusts formed under the statutes of another jurisdiction from ever migration or fleeing to Nevis. By definition, these trusts are not Nevis trusts and could not be expected to be registered in Nevis as a Nevis trust until it migrated in long after creation.
To address this issue, the Amendment provides that a foreign trust for which future migration might be a possibility should register with the Nevis registrar as a foreign trust, thereby becoming a “qualified foreign trust' (QFT). In so doing, it preserves the trust's ability to make such a move in the future if and when the need arises.
A trust formed to be Nevis trust is a trust that is registered with the registrar and for which the law of Nevis is the proper law of all or any aspects of the trust under section 4 of the Ordinance. This trust must be registered with the registrar within 45 days of the date in which the trust is created, settled or established. The application must be in the form specified by the registrar and shall be accompanied by the prescribed fee, a notice of the name and registered office of the trust, and a certificate from a trustee company licensed in Nevis or a barrister or solicitor licensed to practice in Nevis. This certificate must certify that:
1) the trust will be an international trust as defined in the Ordinance; and
2) the date the trust was created, settled or established, as applicable.
As long as these requirements are met and the annual renewal fees are paid no later than 90 days after the current registration, the trust will be governed by the provisions of the Ordinance.
A foreign trust is a trust that provides for the law of a jurisdiction other than Nevis to be the governing law of all aspects of that trust. In order to be a QFT and be provided with the opportunity in some future date to migrate to Nevis and thereby obtain the full benefits of the Ordinance, the foreign trust must be registered with the Nevis registrar within 45 days of the date the trust is created, settled or established in the foreign jurisdiction.
As with the Nevis trust, the QFT application must be in the form specified by the registrar and shall be accompanied by the appropriate fee, a notice of the name of the registered office of the trust and a certificate from the trustee company licensed in Nevis or a barrister or solicitor licensed to practice in Nevis. However, in this case, the certificate must certify:
1) that the trust will be a qualified foreign trust s defined in the Ordinance;
2) the date the trust was created, settled or established in the foreign jurisdiction; and
3) the law under which the trust was settled.
In some cases, where good reasons are established by a trustee company, barrister or solicitor for delays beyond the 45 day registration period, the registrar has the discretion to extend such periods as needed. In effect, the amendments to the Nevis International Exempt Trust require timely registration of:
1) a Nevis trust in order to qualify as a Nevis International Exempt Trust;
2) a foreign trust to qualify as a QFT in order to preserve its ability to become a Nevis trust at some future date; and
3) a QFT that is in the process of migrating to Nevis.
Changes To The Fraudlent Conveyance Provisions
The new amendment to the fraudulent conveyance provisions as set out in Section 24 of the Ordinance accomplishes the following:
1) Limits the claims of a creditor alleging fraudulent conveyance to the property transferred in an alleged fraudulent transfer.
2) Defines a cause of action for purposes of starting the limitations time period as the earliest cause of action capable of assertion by the creditor against the Settlor.
3) Requires the creditor who wishes to allege fraudulent conveyance in the Nevis judicial proceeding to make all possible claims against all possible parties, including possibly the trust beneficiaries, at the time when the claims are first made, or risk being unable to raise such claims in future proceedings involving any such parties with a material interest.
4) Expands the definition of creditor for these purposes to include not only those persons who allege a cause of action, but also any judgment creditor or assignee of a creditor.
Prohibition Of Using Nevis Trusts To Further Criminal Activity
To prevent the use of Nevis trusts by those involved in criminal activities, this Amendment provides that the trust shall be invalid and unenforceable if any part of the trust assets are the proceeds of a crime for which the settler is convicted.
Charitable trusts are allowed to have more than four trustees [Nevis International Exempt Trusts Ordinance '34] and to continue in existence indefinitely [Nevis International Exempt Trusts Ordinance '5]. To be considered charitable, in general, trust purposes must be for the benefit of the community or a substantial segment of the community in Nevis or elsewhere. Charitable purposes are specifically defined as being for the relief of poverty, advancement of education or religion, protection of the environment, advancement of human rights and fundamental freedoms, and other purposes that are beneficial to the community [Nevis International Exempt Trusts Ordinance '7].
Domestic charitable purpose trusts are recognized in Nevis and their trustees are accorded the same powers as those of other trusts [Trustee Ordinance, '53].
A trust can be created for non-charitable purposes if the purposes are specific, reasonable, and capable of fulfilment, and not immoral, unlawful or contrary to public policy. A non-charitable purpose trust must have a protector. The Minister of Finance will appoint a protector if there is none or the protector cannot or will not act [Trusts Act, '8]. Purpose trust may exist indefinitely [Nevis International Exempt Trusts Ordinance '5].
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