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Form a Barbados Trust Introduction
A Barbados Trust can be used for tax reductions (for beneficiaries in certain countries), privacy, and asset protection. Barbados Island is also well known for its International Business Company (IBC) structure popularly used by many foreigners as an offshore corporation.
Barbados has laws allowing for the formation of four different types of trusts: Domestic, Private, Offshore and International trusts. The most relevant to foreigners are the offshore trust, international trust and private trust.
Barbados Offshore Trusts
Barbados Offshore Trusts are traditional Asset Protection Trusts deriving only passive income worldwide. The International Financial Services Act of 2002 (IFSA) established the Offshore Trust which only accepts funds in foreign currencies and/or foreign securities from persons outside of Barbados. Offshore Trusts can also hold ownership of foreign properties (movable and immovable) or foreign real estate. They can own a Barbados International Business Company (IBC) and manage the IBC under the Barbados International Financial Services Act creating an exemption from income taxes. Offshore Trusts are exempt from all Barbados taxes. In addition, this type of trust does not have to register with the government or make any filings. The Trustee must be licensed under the IFSA. Their lifespan is up to 80 years.
Barbados International Trusts
The International Trust Act of 1995 (ITA) allows holding assets for specific beneficiaries or specified purposes. It is the perfect personal Asset Protection Trust because it can be formed with no set purpose nor any named beneficiaries. Considered a non-domicile for tax purposes in Barbados it is not subject to taxes other than any income obtained inside Barbados or remitted to Barbados residents. Qualifying for an ITA requires at least one trustee to be a Barbados resident, the Founder (Settlor) and Beneficiaries cannot be a Barbados residents, the trust instrument specifies that the ITA governs, and no Barbados immovable properties are owned. This is the only trust required to register with the government, but its records will not be made available to the public. Its lifespan can be up to 100 years.
Barbados Private Trusts
The Private Trust Companies Act of 2012 created Private Trust Companies (PTC) which is exempt from income tax and capital gains tax in Barbados. A PTC is basically a company providing trust administrative services for a specific trust or to several related trusts. Wealthy families create a Barbados PTC to act as the Trustee for their own offshore, private, or international trusts. This allows the Founder (Settlor) of all the trusts to have complete control over their Trustees.
Barbados is an island nation located on the Caribbean. It is a former British colony which obtained independence in 1966 and currently is part of the British Commonwealth.
Barbados Trust Benefits
Barbados Trusts receive many benefits including:
Trusts can choose any name as long as it is not similar to other Barbados legal entities.
Trusts must have a local address which can be that of the Trustee.
Barbados trusts have a Founder (Settlor) who creates the trust and transfers funds and assets to it. The Trustee, acting on behalf of the Settlor, administers the trust and protects the Beneficiaries who are named by the Settlor who are usually his/her heirs. Trusts have the option to appoint a Protector to oversee the Trustee to further protect the Beneficiaries.
Trusts are not required to have a minimum authorized capital.
Trusts are exempt from paying all taxes unless income is earned within Barbados or funds are remitted to residents of Barbados.
Offshore Trusts do not have to register or file documents with the government, so no fees are required. International Trusts are required to register with the government and a fee of $1,100 USD is paid to the Ministry of Industry, International Business, Commerce and Small Business Development. Private Trusts are also required to register because they provide trust services for other trusts. There are also trustee fees which are in addition to possible government fees.
International Trusts and Private Trust records filed with the government are not available to the public. The names of Beneficiaries are never included in the required filed documents.
Accounting and Audit Requirements
Barbados does not set accounting standards for its trusts and have no auditing requirements. However, typical trust charters require full access to all records and documents by the Settlor and the Beneficiaries and their authorized representatives.
Annual General Meeting
There is no requirement for annual general meetings for a Barbados trust.
Time Required for Registration
An International Trust and a Private Trust can be registered with the government within 24 hours.
There are no shelf trusts in Barbados.
Form a Barbados Trust Conclusion
Barbados Trusts receive many benefits including: total tax exemptions for the Trust and Beneficiaries, the only exception is when a Trust earns income in Barbados or remits funds to a Barbados resident, no capital gains tax, complete confidentiality and privacy, no currency controls, asset protection and estate planning tools, no government registration of Offshore Trusts, and English is the official language.