Societies with Restricted Liability
Barbados Societies with Restricted Liability (SRL) are designed especially for U.S. taxpayers to take advantage of the tax benefits of registering a Barbados offshore company. What makes a SRL unique is that it allows U.S. taxpayers to classify it as a partnership and therefore claim individual tax treatment for their share of the company in the U.S. At the same time, it is classified as a corporation in Barbados, qualifying if for attractive benefits on the island and offering it the benefits of a Limited Liability Company worldwide.
Features of a SRL
SRLs have the following features:
• Limited liability status
• The legal rights and powers of an individual
• A lifespan of 50 years
• Automatic dissolution, as in partnership, on death of a partner
• Quotas (the owners’ share in the company), have transfer provisions that limit the rights of the transferee to participate in the SRL without the agreement of all members
Exempt and Non-Exempt SRLs
An Exempt SRL, also known as an International Society with Restricted Liability (ISRL), conducts international transactions and receives advantageous Barbados offshore tax benefits highlighted below in the Benefits section. Its status, including benefits and restrictions, are very similar to International Business Companies (IBCs). One of the major restrictions of an Exempt SRL is that it cannot conduct business with Barbadian and CARICOM residents, or own land on the island.
A Non-Exempt SRL is allowed to conduct business in Barbados and CARICOM. It is subject to the normal corporate tax rate (25%). In addition, Barbadians and CARICOM residents are not limited to 10% ownership share as is the case with IBCs and ISRLs.
• An attractive tax rate of only 2.5% of taxable income down to 0.5% according to the tax table below:
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)
• No capital gains tax
• No withholding taxes
• Eligible for a foreign tax credit on taxes paid outside of Barbados to reduce taxes payable, once it does not reduce total tax payable to less than 0.5%
• Exempt from taxes and duties on materials, machinery, plant and equipment intended for business use
• Not subject to exchange controls on foreign currency
• No minimum capital requirements
• Incorporation is inexpensive and convenient
• Privacy is protected and there is no need to publicly file financial statements
• No investment restrictions
• Does not require a physical presence in Barbados, but must have a local registered agent and office
• Accounting records may be kept outside of Barbados and in foreign currencies
• All benefits and exemptions are guaranteed for a minimum of 30 years
• Full corporate mobility
A SRL must adhere to the following requirements and rules, including:
• Must be registered in Barbados and have local registered agent and registered office
• Must elect a manager annually and have at least two members
• An annual license fee of US $425
• Must file annual financial statements locally
• Audited statements are required for companies with revenues and assets over US $1 million
• Exempt SRLs must not conduct business trading goods and services nationally within Barbados or within the CARICOM region
• Exempt SRLs may not conduct business under other offshore incentive legislation
The annual costs for a SRL are very low. The following are the estimated costs involved:
• Registration fee – US $425
• Incorporation costs/legal – Approximately US $1,500 to US $5,000
• Annual license fee – US $425
• Corporate secretary fee – US $2,500
• Annual audit fee – US $5,000
• Registered agent fees and rent – Approximately US $12,000 to US $50,000
The SRL – Unique Status, Special Advantages
The SRL’s unique status as a Barbados offshore vehicle provides the benefits of a Limited Liability Company while allowing taxpayers to use its partnership status for individual tax treatment, making it a powerful international tax vehicle.
The SRL is an attractive option for businesses conducting international transactions as the tax rate on profits is very low. In addition, the SRL is free to operate without any restrictions on exchange controls, making it the perfect vehicle for international business.
The costs of maintaining a SRL are extremely low as only a registered agent and registered office are required on the island. This eliminates the additional costs of relocating a management team or having to hire new personnel locally.
SRLs provide great benefits while allowing the business owners to maintain maximum flexibility.