Cayman Islands: the financial centre strengthens its transparency

The Cayman Islands apply no direct taxation: the level of taxation is 0%¹. There is no income tax, no corporate tax, no capital gains tax and no inheritance tax.

This absence is long-standing and inherent to the territory's economic model, which is financed by customs duties, registration fees and taxes on property transactions.

The certificate of residence for persons of independent means requires an investment of KYD 1,000,000², or roughly about $1,200,000³, and a reference annual income of about $146,000⁴.

This certificate is issued for 25 years⁵, making it one of the longest-lasting permits in the world. An absence from the territory beyond 30 days⁶ does, however, require discretionary leniency from the authorities.

The length of the certificate deserves emphasis, as it has no equivalent among comparable schemes. Whereas most residency by investment permits are renewed every two to five years, this one covers a quarter of a century, offering rare visibility for a long-term wealth plan.

Under international pressure, the territory has adopted a set of transparency rules: registers of beneficial owners, economic substance requirements for entities carrying on certain activities, and participation in the automatic exchange of information.

These substance requirements are the most far-reaching change. An entity domiciled in the Caymans that carries on a relevant activity must have staff, premises and genuine expenditure there, and show that its decisions are taken there.

In other words, the letterbox company no longer works. What remains is a jurisdiction without taxation, but one that requires a real presence in order to benefit from it — exactly as the Emirates have done for their free zones.

We do not publish the list of activities subject to the substance requirements, the applicable thresholds or the timetable of these reforms: they do not appear in the official sources we have been able to verify.

The territory has also been added to and then removed from European lists of non-cooperative jurisdictions as these changes unfolded. Such listings have concrete consequences for banking relationships and for the reporting obligations of counterparties.

The absence of local taxation does not end French tax domicile. As long as the household or the centre of economic interests remains in France, Article 4 B of the Code général des impôts continues to apply.

There is no tax treaty between France and the Cayman Islands to settle a case of dual residence. The only protection lies in an effective and documented severance of ties.

A move to the territory also triggers the exit tax above more than €800,000⁷ in securities, and the deferral is not automatic: it requires guarantees and a tax representative, applied for at least from 90 days⁸ before the transfer.

Finally, holding assets or shareholdings in a jurisdiction of this kind entails specific French reporting obligations, failure to meet which is heavily penalised, even where no income at all is received.

• The absence of direct taxation is real and long-standing: 0%¹.
• Substance requirements have put an end to structures with no real presence.
• The certificate of residence requires an investment of KYD 1,000,000² and a high reference income.
• There is no tax treaty with France.
• The cost of island living there is very high, as everything is imported.

The Cayman case illustrates a general trend: jurisdictions without taxation have not disappeared, they have stopped being accessible from a distance. What they offer today is aimed at those who genuinely settle there, and the entry ticket — investment, income, cost of living — strongly filters that population. The difference from the previous decade is not fiscal: it is practical, and it is considerable.