For those who spend an inordinate amount of time researching offshore structures, offshore strategies for international structuring, and offshore asset protection schemes, Nevis keeps coming up. Why? Because Nevis offers a range of statutory tools for international structuring and asset protection. However, the suitability of these tools for any given structure depends on several factors, including the structure itself, the assets at issue, and the laws of all countries involved.
Many nations have now imposed enhanced international regulatory requirements concerning anti-money laundering (“AML”) legislation, enhanced Common Reporting Standard (“CRS”) reporting requirements, the increased scrutiny of funds by banks and other financial institutions, and the requirement for enhanced due diligence to be applied in relation to all new customers, in addition to existing customers.
Today, offshore structures set up in Nevis are no longer confined to protecting client confidentiality. Most offshore structuring in Nevis is focused on creating a structure that attempts to insulate its owners from liability and enables them to conduct their international business and long-term wealth management in the most effective manner while attempting to obtain banking facilities worldwide and comply with relevant international requirements.
Key Takeaways
- For cross-border business and wealth planning, we set up Nevis companies and trusts. But one such Nevis company is usually not sufficient to protect the assets and liabilities of the founder(s) of such a company.
- In general, an LLC is considered separate from its members. A trust, on the other hand, is essentially a collection of assets intended to be held by a single entity (trustee and/or group of managers) to benefit certain people (the beneficiaries) or to try to meet particular goals and/or objectives. Indeed, a trust can be a member of an LLC.
- Any proper structure with all available legal protections will extend to that structure and to all interests in it, regardless of whether it was set up as a non-citizenship country structure—in this case, Nevis.
- It is also worth noting that even though a Nevis entity may be considered private as to its owners and other parties who are stakeholders in said entity, in certain cases the beneficial owners of an entity may be required to be disclosed for reporting purposes under the Common Reporting Standard (CRS) as well as for Anti-Money Laundering/Knowledge to Customer (AML/KYC) purposes.
- Your local tax situation should not be impacted by an overseas structure or structures. All income from around the world must be reported by you, and all such income is typically subject to taxation by your country of residence and also the country in which the income was earned.
- The structure was planned to minimize risk and achieve tax and wealth-planning objectives.
- After forming an offshore structure, we will manage all subsequent wealth and tax planning matters for our clients using their Nevis companies and other structures.
What Is Nevis and Why Is It So Popular Offshore?
Nevis is a small Caribbean island. It is the other island of the two-island country of the Federation of St. Kitts & Nevis, a relatively new offshore center that has been rapidly developing over the last thirty years or so.
Nevis allows many different types of international financial services to be established as a corporation, trust, or other type of entity. While most offshore jurisdictions allow formation of corporations, Nevis structures are asset protection structures. In practice, corporate registration in Nevis is effected within the Federation of Saint Kitts and Nevis.
However, a sound long-term structure for asset protection is typically built on top of the individual’s existing cross-border structure, and the special tax laws of Nevis do not aim at establishing a corporate structure in Nevis for tax purposes.
Is Nevis Still Considered a Tax Haven?
Other benefits and features of offshore companies, in addition to their tax-exempt status, are that most countries, including Nevis, are considered to be “tax havens." New company and LLC regimes are currently under consideration, which will replace the tax-exempt status of companies and LLCs currently in place. Under the new regimes to be established for companies and LLCs, they will be taxed as separate entities from their owners. An offshore company can be managed from anywhere in the world. An offshore company can conduct all types of businesses and earn all types of income from anywhere in the world. An offshore company is treated under the relevant tax laws as if it were a separate corporation (i.e., a company, LLC, or trust). For many years, trusts have been treated as separate entities for tax purposes. This remains the case today under the offshore company reforms of the FSRC, as outlined on this webpage, and section 96 of the LLC Ordinance.
Thus, the confidentiality of the company formation process in Nevis does not fully extend to its activities after incorporation. As above, disclosure of information concerning beneficial owner(s) must be made, and all companies, locally incorporated or offshore, must report under the tax laws of other countries worldwide.
The typical functions of banks, corporate service providers, and other financial services organizations are:
- Anti-money laundering (AML) reviews
- Know-your-customer (KYC) verifications
- Verification of beneficial owners
- Analysis of the source of funds
- Compliance monitoring
Under prior Nevis law, totally confidential offshore companies of ANY TYPE could be formed. Although most of the special provisions formerly allowing for completely confidential offshore companies have been repealed, the newly formed form of a Nevis company and the newly formed form of a Nevis LLC created with special exemption from current AML rules and regulations of the FSRC, as most recently updated and published here under the “New Company Reforms” page and summarized in Section 96 of the LLC Ordinance, etc., are extremely flexible and permit completely confidential affairs to be conducted in complete secrecy.
Why Businesses and Investors Still Use Nevis
Offshore jurisdictions can be structured in a sophisticated manner to create what can be termed a ‘clean foreign structure,' whilst onshore structures are often viewed with suspicion as to their true intentions to hide assets.
This can include such issues as:
- Assets held outside their home country
- Operations taking place in various foreign countries
- International investments
- Exposure to liability from foreign transactions
Full formation for all Nevis entity structures listed on this site is provided within one of the best and most protective offshore legal frameworks in the world, far superior to most onshore jurisdictions. These complex structures of Nevis entities have been set up as offshore entities for companies and individuals from around the world. The formation of such an asset protection vehicle is achieved through risk segregation and effective organization and planning for long-term success.
The Main Advantages of Using Nevis Offshore Structures
Why form an offshore Nevis company? The Nevis offshore company is one of the most sought-after offshore jurisdictions for many reasons.
Strong Asset Protection Laws
Offshore company formation, such as Nevis offshore company formation, is extremely popular for many reasons.
The laws of all offshore jurisdictions, including Nevis, are enacted by the legislatures of such offshore jurisdictions. These laws protect the assets of trusts and LLCs formed as offshore entities from creditors in such offshore entity’s home country.
As noted above, a creditor of a member of a Nevis LLC may apply for a charging order under Section 60 of the LLC Ordinance with respect to the distributions on the interest of such member in the LLC. A charging order creates a charge against the interest of a member in an LLC, but such does not enable a judgment creditor of a member to collect a debt owed by the LLC to the member. Section 61 addresses fraudulent dispositions by a trust asset protection structure in relation to a qualifying international trust.
However, no asset protection trust, including a qualifying international trust, can offer absolute protection to the structure owner's assets against all of his/her creditors — whether existing or foreseeable, or whether sought to be enforced in foreign jurisdictions or not.
It is also important to consider any existing or anticipated claims and litigation conducted in foreign jurisdictions. Other important considerations in using a Nevis offshore structure include the location of assets and control of those assets. All transfers of assets to a grantor trust are designed to affect the grantor with respect to his/her creditors and must be carefully planned and completed under the advice of experienced offshore planning specialists. The documents can later be challenged in a suitable court for having been completed for improper motives.
Tax Neutrality
“Tax neutrality” is a frequently misused term. Such a foreign country will generally tax all local corporations separately from any possible exemption a qualified foreign trust (an “intl trust”) would be entitled to in such a country.
Tax treatment depends upon the following:
- Whether you are personally resident in Nevis;
- Whether or not your corporate entity is resident in Nevis;
- Where your source of income originates;
- Where the management, business operations, and taxable establishments of the company are located.
- Under the Controlled Foreign Corporation (CFC) rules, which country will the entity be classified in?
An offshore LLC may be treated as separate entities for tax purposes in different countries, even if the LLC itself pays no tax. Such entities may have filing requirements with local and home country tax authorities. Advice should be sought from local and home country tax advisors and confirmed for the proposed entity.
Just because a structure is offshore does not mean that all taxes will be eliminated, but an offshore structure does give you a variety of ways to structure an international business.
Privacy Protections
All that remains of the concept of privacy when establishing an offshore structure is that it can be controlled but no longer as in the past.
Information about the owners or shareholders of a Nevis company is not disclosed. However, information in relation to a company’s owners or shareholders may be sought by a number of people, including regulatory bodies, banks, and other organizations where permitted by law. Information about a company’s owners or shareholders is not secret offshore in the complete sense of the word.
Cross-Border Flexibility
Offshore investors look for ‘neutral jurisdictions’ to carry out their international business activities. An example of such a structure is:
- Owners located in one country;
- Suppliers based in another;
- Customers distributed around the world;
- Property or assets in yet another location.
This type of investment structure can be difficult to implement when the individual is resident in a single country. A neutral forum such as Nevis may be viewed as acceptable.
The Most Common Offshore Structures in Nevis
Two of the major structures for Nevis planning are the Nevis LLC (limited liability company) and international trusts. The best arrangement depends on several factors, including the ownership structure, the individuals who control the entity, the nature of the commercial activities conducted by the company, and the client's objectives relating to the company’s succession.
Both structures can be used to form an international business conducted entirely from within Nevis and thus are often formed by clients on an as-needed basis to form an international business structure in Nevis.
Nevis LLCs
An LLC combines a separate legal personality with flexibility in how it is organized and managed, as described in the FSRC LLC overview. Because of this, Nevis LLCs are often used.
The LLC is classified and taxed as normal in the owners' country of residence.
Uses for a typical Nevis LLC may be:
- Consultant firms
- Internet companies
- Investment holding
- International trading
- Ownership of intellectual property
- Foreign real estate holding
This type of offshore corporation is particularly popular because an LLC member has the protection of a charging order, whereas in many onshore jurisdictions the remedies available to a creditor of a member of a corporation are far greater than those available in Nevis.
Why Nevis LLCs Are Popular
| Feature | Practical Benefit |
| Charging order protection | Restricts a member’s judgment creditor’s remedies under Nevis law; does not cover the LLC’s own debts |
| Flexible ownership | Easier international structuring |
| Tax assessment | No automatic exemption; determine applicable local and foreign treatment |
| Privacy protections | Reduced public exposure |
| Ongoing maintenance | Registered agent, renewal fees, records and applicable filings must be maintained |
For newly formed Nevis LLCs, opening bank accounts generally requires sufficient documentation for the newly formed entity and the underlying business.
A poorly explained Nevis LLC can complicate a bank’s compliance onboarding process.
Nevis Trusts
Nevis trusts have been most famously associated with;
- Long-term wealth planning
- Estate planning
- Asset protection
- Succession structuring
A trust generally consists of assets placed under the care of one or more trustees to be distributed to a group of people as identified in the trust instrument (the papers that establish the trust). In many cases, a trust company can act as a trustee.
How claims by creditors to assets in a Nevis Trust are dealt with internationally is well known.
For many, creditors will be subject to:
- Strict filing deadlines
- Higher evidentiary standards
- Procedural restrictions
- Possible bond requirements before claims proceed
In the jurisdiction in which the trust was created, a trust may be recognized for a certain time period (such as one year) as a “safe harbor” or otherwise. Assets located outside of Nevis would, however, be subject to the laws of such foreign jurisdiction or jurisdictions.
How Nevis Compares to Other Offshore Jurisdictions
Offshore comparison charts typically compare offshore structures like Nevis and BVI, Belize, the Cayman Islands, and Seychelles.
Offshore comparison charts typically detail offshore formations (e.g., Offshore Nevis vs. Offshore BVI), i.e., where the offshore corporation is incorporated. The chart would then outline where the offshore-formed corporation’s assets are located, the offshore tax regime, and offshore banking requirements, as well as provide a full price for the offshore formation. Ratings for asset protection and banking are not provided by this office and therefore should not be relied upon for a legal evaluation.
| Comparison point | What to verify in Nevis, BVI, Belize, Cayman or Seychelles |
| Legal structure | Entity or trust law, eligibility, governance and licensing |
| Creditor exposure | Claim type, transfer rules, remedies and relevant court jurisdiction |
| Tax and reporting | Local rules and treatment in the owners’ and beneficiaries’ countries |
| Banking | A particular institution’s acceptance policy, fees and supported activities |
| Total cost | Formation, annual agent or trustee charges, filings, tax advice and exit costs |
Offshore jurisdiction selection should not be based on cost alone.
Just because something is cheap doesn’t mean it’s a good long-term idea.
How Offshore Banking Has Changed
The often tough process of offshore banking and opening an offshore bank account when setting up an offshore structure to manage your wealth.
Banks today are extremely interested in all of the following:
- Your source of income
- The origin of your wealth
- What type of business you run
- Consistency in transactions
- Is there sufficient “substance” (actual operation) behind the name of the legal entity?
- Transparency regarding tax information
- Risk associated with the country/jurisdiction
Banks normally ask for full and sufficient documentation with regard to the identity of all owners and/or shareholders of an account applicant. In addition, a correct organizational structure has to be established and must come into effect. A bank may also be interested in the types of transactions the account holder plans to conduct. Most banks stick to their general policy when opening accounts for new customers. That policy may even decline a perfectly organized offshore company structure. Most offshore companies promote on their websites and through online advertising cheap offshore structures of poor quality.
How Nevis Fits Into Modern Compliance Systems
Offshore jurisdictions are no longer standalone entities, as increasing numbers of jurisdictions’ laws apply overseas.
We also provide reviews and comments on other offshore structures such as Nevis structures and further assist with the setup and administration of such offshore structures globally.
CRS and Financial Reporting
Under the IRD guidance notes for financial institutions and non-financial entities, Saint Kitts and Nevis automatically exchanges information under the Common Reporting Standard (CRS). Note, however, that an LLC incorporated by an entity is not automatically a reporting financial institution under the CRS.
For example, a bank will need to provide information about the controlling persons of a passive NFE (e.g., a trust or company) conducted by that bank. Depending on the nature of the trust activities conducted and how the trust is managed, information will then be exchanged with the tax authorities of participating jurisdictions on an auto-exchange basis in accordance with the terms of the relevant tax information exchange agreement. Participating jurisdictions are listed on the HMRC website.
AML and KYC Requirements
Banks and many other financial services worldwide have already implemented measures to combat money laundering as recommended by FATF.
- Beneficial owner identification
- Identification of the source of funds
- Ongoing transaction monitoring
All new offshore structures will be ‘compliance-based’ rather than ‘secrecy-based’.
Who Typically Uses Nevis Structures?
An individual can decide whether to establish a foundation in a tax-efficient, cost-efficient way to support their entrepreneurship and whether that establishment is also financially sound.
For example:
- Entrepreneurs
- Business people with international online operations
- People with assets in several countries who want to safeguard their interests worldwide.
- Someone who is working as a consultant or professional from abroad and wants to establish themselves in the markets of their home country.
- High-risk individuals/employees (e.g., doctors)
- People creating trusts for family estate planning purposes
- Litigation-exposed individuals/employees.
What Nevis Does NOT Do
Many companies worldwide now advertise offshore company formation in foreign countries on the internet. It appears that the vast majority of these companies have no accurate information about Nevis.
We also warn against other companies around the world offering offshore incorporations in foreign countries, as these structures can increase tax and reporting in foreign countries for their customers. Research the foreign country’s requirements before incorporation.
Nevis does not:
- Eliminate all taxes automatically
- Approve bank accounts in the name of the shareholder.
- There is no guarantee of anonymity or ‘invisible’ status (CRS & Financial Reporting disclosed above).
- Validate unlawful transfers or remove liability for fraud
- Remove reporting requirements
- Override the tax laws of your home country
Offshore planning is of little interest to most people. Perceptions of offshore planning are that it is dull, totally disclosed, and in many jurisdictions, illegal. However, offshore vehicles are completely legal and are utilized by individuals and companies worldwide.
Common Mistakes People Make With Nevis Structures
People often choose the wrong offshore structure for the wrong reasons, which can cause serious problems later on. Many people mistakenly believe that setting up an offshore corporation is a one-off transaction, but in reality it is an ongoing situation and requires more than a simple incorporation of a foreign corporation.
Nevis offshore company incorporation mistakes include:
- Most people see offshore corporations as single transactions (forming a company, and that is it). The reality of an offshore corporation, however, is ongoing.
- Commingling personal and business financial transactions;
- Overlooking the continuing reporting obligation of your company;
- Worse, the client sets up his/her offshore corporation via the cheapest incorporation service available on the Internet. The client has ZERO knowledge of the numerous TAX IMPLICATIONS and other “criteria” banks will examine when trying to open an account in the name of the offshore corporation.
- Your preconceived misconception is that incorporation of an offshore company is a single event, and therefore you can go to the cheapest incorporation service and incorporate the offshore corporation before you have determined the TAX IMPLICATIONS and other factors
- Misunderstanding who the beneficial owner(s) of your company are;
- Many people are under the wrong impression as to what information is classified as ‘private’ in relation to a private offshore entity and therefore remains secret.
- Moreover, equating a company used for a one-off conveyancing transaction (e.g., transfer of property) with huge future problems in ascertaining whether the transferor was solvent to meet his/her creditors’ claims is grossly erroneous.
- Ignoring foreign tax classification, management, and asset-location considerations.
Incorporation errors described above can trigger a bank review, a tax audit, a large transaction, or a foreign entity’s compliance requirements when transferring monies between accounts abroad. Events that typically trigger such reviews include:
- When you have banking reviews performed;
- During tax audits;
- As part of large transactions;
- Or upon review for compliance purposes;
- And/or when transferring money across international borders.
Summary
Nevis special legislation, combined with a variety of Nevis corporate forms, can help build an international financial structure. The degree of tax and creditor protection, as well as the extent of required disclosure and reporting, depends on the chosen structures and jurisdictions.
Offshore asset protection structures have changed significantly over the last few years. Today the perception of a traditional offshore vehicle such as a Nevis offshore structure is one of great suspicion. Many of these structures must now disclose information concerning the structure and all of its beneficial owner(s) in order to open a bank account. In addition, offshore structures are required to provide ever-increasing amounts of information to banks in order to satisfy their reporting requirements. A properly formed Nevis offshore structure must be fully documented and vigilantly maintained to remain effective and comply with current and future international regulatory requirements.
