With the globalisation of business there has been a corresponding surge in the movement of executives and their families, and in some cases businesses themselves, in relocating to new countries. In many cases the relocation has been temporary but for a growing number the move has been permanent, sometimes by design but on many occasions by choice.
Relocating one’s business, family or financial affairs takes into account a wide range of factors such as lifestyle, infrastructure, and the business and legal environment. For The Bahamas which has a long history of attracting wealthy individuals to settle permanently there, the factors that have given rise to its popularity as a choice for relocation have its roots and advantages in the country’s sovereignty, its 80 plus years of experience in international financial services, and its longstanding recognition and growth as the region’s leading tourist destination.
The combination has created a stable political environment and a service-based economy that caters to the business and financial needs of companies, individuals and their families, and a lifestyle that seamlessly blends cosmopolitan amenities within a tropical ambience.
While private banking and trust services are the bedrocks of the country’s international financial sector, asset management has emerged as a strong second pillar of services, serving both international and domestic clients, including those who have relocated to the country located just off the coast of Florida.
Wealth management operates at the very highest level of sophistication in The Bahamas, anchored by some of the leading global private banks and trust companies and supported by a legislative and regulatory framework that continues to evolve to meet international standards and the investment and planning needs of old school and new generation clientele.
Trust legislation in The Bahamas always has been leading edge and is often used as the standard for other jurisdictions to follow. This propensity to be ahead of the curve in addressing the needs of the marketplace and providing practitioners with the right tools, especially for succession planning and the transfer of wealth through the generations, extends across the wealth management spectrum.
The Bahamas Executive Entities Act (BEE) for example represents an important addition to the arsenal of the wealth management industry. Introduced in 2011 to resolve complex governance issues in fiduciary and wealth management structures, the BEE provides a mechanism by which persons can use an executive entity to carry out their business activities using a limited liability company or foundation. Its structure is designed to encapsulate powers within existing wealth management and estate planning structures in the form of a legal entity. It can act in various capacities: as a protector, as a governance structure or as an ordinary shareholder. Its benefits include limited liability and unlimited duration, as well as its ability to exist in a standalone capacity and to be tailored to perform specific functions.
The Bahamas SMART (Specific Mandate Alternative Regulatory Test) Fund is another example of a forward thinking philosophy to distinguish The Bahamas from other jurisdictions in the regions by creating a unique instrument adaptable to both the structuring needs of high net worth private investors and to the requirements of the alternative funds industry. SMART Funds allow promoters and clients to tailor a fund model and its reporting requirements to their needs. Once submitted and approved by the regulator, it is available to anyone in the industry. Seven Smart Fund models are now in place.
The latest version, formally the Super Qualified Investor Fund but popularly dubbed Model 007, may be offered on a private placement basis to up to 50 ‘super qualified’ investors who must make a minimum initial investment of USD500,000. While it is much more institutionally focused than other models, it can also be used for private structures with a small number of investors.
The innovative approach embodied in the BEE and SMART Fund concepts is a strong asset for The Bahamas in competing for new business. It is also reflective of the country’s overall pro-business environment that welcomes foreign direct investment into the economy and its recognition that growth and development are contingent on creating economic opportunities for Bahamians and capitalising on its inherent and strategically-developed advantages to attract high net worth individuals and their families, boutique firms and independent trust companies and fund administrators to its shores.
The existing financial services infrastructure and the services it represents and the regulatory regime -- including due diligence requirements, anti-money laundering legislation and the implementation of transparency and exchange of information standards -- form the backbone of a comfortable and business-friendly environment for business owners and executives from any part of the world.
Tax neutrality for those wishing to relocate in a completely transparent way has always been a part of the Bahamian economic landscape and one of the advantages of living in The Bahamas. There is no income tax, corporate tax, capital gains tax, inheritance tax or sales/value-added tax. The Government derives its revenue from import tariffs, license fees and property and stamp taxes.
While The Bahamas tax neutral environment is an important consideration, an equally important priority is maximising the efficiency of financial assets. Bahamian asset managers have the experience and global connections to provide the advice and planning to meet investment objectives.
Furthermore, the integrity and continuity offered by institutions located in The Bahamas provide a secure environment for individuals planning the future for themselves and their families. Many of the world’s largest and most prestigious financial institutions have branches or subsidiary operations in The Bahamas, taking advantage of the country’s stable political and economic system, and establishing the jurisdiction as a regional leader in wealth management. Both government and private business maintain levels of oversight that make The Bahamas one of the best-regulated jurisdictions in the world.
The financial services industry in The Bahamas is staffed and managed by a large pool of experienced professionals. With personnel committed to the local community, continuity of service, which lies at the heart of a successful professional relationship, is more predictable and secure in The Bahamas.
Moreover, respect for personal privacy is a strongly held tenet within Bahamian society and the government has long recognised and valued the right of the individual to confidentiality in financial matters. This right is carefully balanced with the need to protect the integrity of Bahamian financial systems.
The Bahamas is not only home to more than 260 banks and trust companies which enjoy long standing relationships with clients from around the world. As more and more individuals opt to “follow their money” with respect to where they live and work, The Bahamas also has become the preferred choice for many who have adopted this way of life.
The public and private sectors work hand in hand to create the most advantageous conditions for wealthy individuals and their families to live and work in a tropical paradise where their assets are protected and their confidentiality is guaranteed.
With a streamlined application process for Economic Permanent Residency (EPR), the ability for individuals to work and live in The Bahamas has become even easier and more attractive. A predictable and user-friendly EPR application process, combined with the country’s physical resources and infrastructure, enhances The Bahamas’ environment as a location for individuals and Family Offices as well as for more institutions to consider the establishment of subsidiary operations in the country.
The Government also maintains a flexible immigration policy which recognises that the national development objectives are pursued through a policy suited to the needs of international firms, individuals and families.
Location is the buzz word often cited by the real estate industry and it’s an apt expression for The Bahamas as well. Its location off the coast of Florida provides easy access to both North and South America. That access is facilitated by six major airports which allow services by various international airlines with direct flights to and from key destinations in Europe, North and South America and the Caribbean, with connections around the globe.
The Bahamas approach to real estate transactions is also geared to easy access. The Bahamian government encourages foreign investment in real estate and purchasing property in The Bahamas is relatively easy and straightforward. One simply has to register the property with the Investment Board and pay a registration fee. The purchase of raw land in excess of 5 acres by a non-Bahamian does, however, require a permit.
This approach has resulted in second and third home ownership becoming one of the fastest growing sectors in the real estate industry. The choices are endless, from gated waterfront communities packed with lifestyle amenities such as golf, tennis and marinas, and located in key tourist destinations with shopping and fine restaurants nearby, to grand estates on private islands or hideaways on the Family islands.
Residency in The Bahamas can be obtained by way of a Permanent Resident Permit, an Annual Residence Permit or a Home Owner’s Card.
There are two options for receiving permanent residency status. Accelerated permanent residency is now in place for substantial investors and individuals purchasing a residence of $1.5 million or more. Permanent residency may also be granted to individuals with a minimum investment of $500,000 in real estate.
For non-Bahamians wishing to reside in The Bahamas on an annual basis, individuals can apply for annual residence. Non-Bahamians who own homes in The Bahamas may apply for an annual home owner’s resident card that entitles the owner, spouse and any minor endorsed on the owner’s card, to enter The Bahamas and reside here for as long as the validity of the card.
All of these advantages may be summed up very simply: The Bahamas is committed to growth and developing its natural resources and cultivated assets to create an environment that supports business and the enjoyment of life in equal measure. Individuals, companies and family offices will all find a warm welcome when they come to The Bahamas.