Hunte's Gardens Photo: Andrew Hulsmeier
Barbados combines Caribbean charm with an uncynical sophistication to create a superlative quality of life. Discerning travellers holiday here so that they can drink in the exquisite natural beauty, bask in the sunshine that characterises a near-perfect climate and relax in beautifully appointed accommodation. The island’s attraction is further enhanced by its rich cultural heritage, wide array of recreation and sports and a glittering entertainment and social scene.
Until very recently non-Barbadians without connection to the island through parentage or marriage were granted entry only for the limited duration of either a visitor’s visa or a work permit. BIBA has a vision for Barbados to grow and diversify beyond current capacity as an international financial centre into a wealth management hub for the discerning. In this connection BIBA welcomes the recently introduced immigration policy that provides for a special entry permit ( SEP) regime geared to facilitating residence arrangements in Barbados for high net worth individuals (HNWIs).
Under the new regime individuals with a minimum net worth of US$5 million are eligible for a Special Entry Permit (Permit) to reside in Barbados indefinitely. Applicants may be:
- over 60 years and retired;
- under 60 years and retired;
- over 60 years, to be employed or to operate a global business from Barbados; and
- under 60 years, to be employed or to operate a global business from Barbados.
Changes in the status of a Permit holder from retired to employed and vice versa are permitted. Applicants must prove their source of wealth and applicants and their spouses and dependents must satisfy the requisite security and background checks and demonstrate adequate health insurance coverage. Successful applicants’ spouses may also apply for Permits in their own right and dependents will be given corresponding status.
Permits and renewed Permits would each be of ten year’s duration for applicants under 60 and of indefinite duration for applicants over 60. Fees range from US$3,500 – $5,000. Additional fees are payable for permission to work. For an indefinite work permit the fee is paid once and ranges between US$15,000 and US$20,000. A one-year permit costs between US$1,500 and US$2,000.
As if the new privilege of special entry and long term status in an island paradise were not enough, Barbados offers other important advantages for HNWIs. The ability to utilise the foreign currency tax credit (FCTC) is one such. Persons resident but not domiciled in Barbados are only subject to tax on income derived in Barbados and income derived overseas but remitted to Barbados. Further the FCTC may be claimed in relation to income, which is foreign sourced if such income is transferred to Barbados through the banking system. Depending on the percentage of foreign currency earned in relation to total earnings taxable in Barbados, the potential tax credit can amount to 93 per cent of the income tax that would otherwise be payable in Barbados. It is therefore possible to enjoy an effective tax rate as low as 2.45 per cent in relation to foreign sourced income brought into Barbados. In respect of income earned in Barbados by the person or through their domestic company, the FCTC would also be available; and in situations where all of the income was denominated in foreign currency the credit would bring effective personal and corporation tax rates down to about 1.4 per cent and 1.8 per cent, respectively.
Real estate investment opportunities are also wide open to HNWIs. No restrictions exist on the ownership of real estate by foreign nationals and no permits or licenses are required for the acquisition of real estate. Quality residential and commercial real estate is in good supply, so living and office space can be readily obtained. Moreover the sector has consistently proved to be a solid investment, faring well notwithstanding global economic crises. Regarding estate planning, HNWIs need not be concerned that such property will be subject to inheritance or other estate taxes in Barbados. Further, disposals of real estate (or indeed any other asset) do not trigger capital gains tax as there is no capital gains regime in Barbados. HNWI’s are also free to enjoy their wealth in Barbados without the burdens of a wealth tax.
Looking more widely at the overall environment: Barbados is a politically stable, appropriately regulated jurisdiction built on a tradition of transparency. Its cadre of highly qualified and experienced professionals is complimented by an ample well–educated labour pool. Barbados also benefits from a modern ICT environment with related disaster contingency capability, and reliable local utilities. The banking system is sound, with the Barbados dollar having been tagged to the US dollar at 2:1 for over four decades. Several global investment and retail banks, as well as established private banks, operate here. International travel is well facilitated by a modern airport, with multiple daily flights to and from London, Manchester, New York, Toronto, Miami and several Caribbean islands. Europe feels close, especially in the winter season when as many as four direct flights daily are operated between Barbados and England. A recent addition is a weekly direct flight to Sao Paolo.
Barbados, with its unparalleled lifestyle, attractive wealth planning opportunities and new SEP regime, may be the best news yet for HNWIs considering their options for a home away from home.