Offshore Company Types
There are various types of Barbados offshore companies that can be registered under Barbadian law. These business structures allow investors to benefit from tax incentives, facilitate international tax planning and wealth management.
International Business Companies (IBCs)
The International Business Company (IBC) is the most popular type of company and as such is the typical structure that most people think about when they hear the term “offshore”. IBCs are involved in a wide variety of business activities including international trade, commerce and manufacturing.
The IBC is taxed at 2.5% of income down to 0.5% of income depending on taxable profits.
The tax rates are applied as follows:
Taxable Profits in US Dollars Tax Rate
Under $5 million 2.5%
$5 million to $10 million 2%
$10 million to $15 million 1.5%
Over $15 million 0.5% (2012), 0.25% (2013)
Societies with Restricted Liability (SRLs)
Societies with Restricted Liability (SRL) have the features of a Limited Liability Company. They also have the added benefit of being treated as a partnership in the U.S. which means that U.S. citizens can claim disregarded entity status, which enables them to claim individual tax treatment for their share of the company.
SRLs offer limited liability to the owners and there is no requirement to have a physical presence in Barbados although they must have a registered agent acting on their behalf and a registered office. SRLs are taxed as IBCs and share many of the same benefits.
Barbados offshore insurance companies serve captive insurance and international reinsurance needs and can take two registered forms:
Exempt Insurance Companies (EICs)
Exempt Insurance Companies (EICs) are exempt from taxation and are only required to pay an annual fee of US$2,500. To qualify, EICs must insure risks from outside of Barbados and the insurance premiums must also be paid by sources outside the country. There is a low minimum capital requirement of US$125,000 which makes the country an appealing jurisdiction.
Furthermore, there is a solid legal and regulatory framework for captive insurance companies in place under the country’s international insurance laws.
Qualifying Insurance Companies (QICs)
A Qualifying Insurance Company (QIC) is similar to an EIC except there are slight modifications to the qualifying standard which advises that at least 90% of the risks insured must come from outside the CARICOM region and at least 90% of their premiums must also come from outside the region.
International or Offshore Banks may be registered in Barbados and are subject to the same low tax rate structure as IBCs. To qualify, the international bank must deal with international transactions that may include the acceptance of foreign deposits, the sale of foreign debt and bonds, and any other activities that involve foreign money and securities.
Minimum capital requirements are US$500,000 for banks that do not accept third party deposits and US$2 million for banks that accept third party deposits. Further requirements state that at least one director must be a citizen of Barbados and the bank must file audited financial statements annually with the Central Bank of Barbados.
Offshore banking is also available to high net worth individuals through many of the reputable and well recognized banks that offer these services. These individuals can benefit from tax credits that drastically reduce the taxes that a non-domiciled resident pays on the foreign portion of his income. In addition, there are no capital gains or inheritance tax.
Barbados Offshore Trusts offer asset management and protection for their internationally situated beneficiaries. To qualify, the beneficiary must be a non-resident of Barbados at the time the trust is created and the trust must not hold Barbados real estate. International trusts must have no Barbadian sourced income and must not have foreign income that is being derived in Barbados.
Non-resident beneficiaries of the international trust are not subject to income tax on the amounts paid to them from the trust and the trusts are regarded as being domiciled outside of the country, meaning that they are not taxable.
Many Offshore Business Vehicles Available
Barbados offers non-residents many offshore options to suit their varying needs. There are IBCs for trading companies, international trusts for asset protection and business structures for captive insurance companies.
These vehicles may serve a wide array of functions but there are generally many similarities in terms of the benefits granted by using them. These include low Barbados offshore tax rates as well as exemptions from withholding taxes on dividends, interest and royalties and total freedom from exchange controls.
To benefit from these structures, businesses generally need to be international in nature and trade outside of Barbados. Domestic trading and local income generation are generally prohibitive factors in establishing an offshore company.
The many international treaties mean that residents of foreign countries have a well regulated means to benefit from the attractive options that registering a Barbados offshore company presents.