Essential Guide to Doing Business in the Cayman Islands for Finance Firms

Learn about tax benefits and legal considerations that make the Cayman Islands an attractive destination.

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Advantages of doing business in the Cayman Islands

Despite the triple whammy of: Covid 19, the war in Ukraine, and the resulting cost of living crisis, the British Overseas Territory, the Cayman Islands, recorded economic growth of 4.2% in 2023, according to the latest Cayman Islands Monetary Authority (CIMA) financial stability report.  The Cayman Islands Monetary Authority cited low inflation and unemployment as factors behind domestic economic stability.  But this benign economic outlook is not the main reason the islands are popular with foreign companies and why there were over 8000 investment funds registered in the Cayman Islands at the start of 2025, according to the CIMA“With its political stability, robust judicial system, connectivity to the United States and a modern and reliable communications infrastructure, the Cayman Islands provides an ideal operating base for service providers to the asset management industry. As a result, many overseas investors, both traditional and together with a full spectrum of fund service providers, are drawn to this highly commercial jurisdiction,” says asset servicing provider FundBank.Fund managers in the Cayman Islands sit in the middle of an international financial centre which is home to numerous holding companies, 324 banks and trust companies which includes 47 of the world’s 50 largest banks.Roughly 70 banks and trust companies maintain their own office in the Cayman Islands, according to Hermes Corporate Services.
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how to set up a finance firm in the cayman islands
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A business-friendly environmentThe Cayman Islands nestle between Cuba and Jamaica in the Caribbean, and have an equally enviable location on the TMF Group’s 2024 Business Complexity Index as the least complex business jurisdiction globallyThe TMF Group Index looks at 292 different indicators relating to business complexity across three core areas of business administration and the Cayman’s 2024 ranking was one place higher than 12 months earlier.TMF highlighted the country’s government digital first approach as a key factor in its high rating of the Cayman Islands as a location for foreign companies.“The Cayman Islands ranks as the least complex jurisdiction, consistent across service lines and over recent years. Its straightforward taxation system and high level of digitalisation simplify operations for international businesses. Government and regulatory interactions are also mainly through online platforms, enabling remote operations,” says TMFTax neutralityThe Cayman Islands doesn’t just offer overseas investors a scenic location to establish their company — it is also ‘tax neutral’.Following the abolition in 1985 of an annual head tax of C$10 on all adult male residents under 60 years of age, there are no direct taxes in the Caymans. This means residents pay no income, capital gains, property, payroll, or withholding taxes. The government generates revenue via methods such as tourism fees and import duties. “This tax-neutral environment makes Cayman a highly desirable destination for relocating companies and attracting top talent to expand business operations,” says the Cayman Enterprise CityAccording to asset services firm Ocarian this tax neutrality provides major benefits for wealth management, fund managers, and firms looking for a holding company location.“Entities domiciled in Cayman can be structured so that they will not be subject to taxes on such entity’s income, capital gains, or dividends for a period of time ranging from 20 to 50 years, depending on the entity type. This tax-efficient environment provides benefits for both fund managers and investors”,  says OcarianFlexibilityIt’s not just tax neutrality which makes the Caymans an attractive destination for foreign companies and fund managers, according to Hermes.Cayman Islands company law does not require any directors or officers of the company to be resident in the Cayman Islands. Likewise, the register of shareholders and minute books can be held offshore. A Cayman Company is also not required to hold shareholder AGMs. And while in general, firms are not required to submit an annual audit, there is an exception for investment funds regulated by the CIMA.The Cayman Islands 2024 Companies Amendment Act made operating a firm on the islands even more flexible, by allowing for the reduction of share capital without court approval“This is a welcome development which will inevitably increase the efficiency of reductions in share capital,”  says law firm Loeb Smith.
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bar chart showing net trade statistics in Cayman islands until 2021
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Risks and considerations

Increased regulatory scrutinyThe Cayman Islands brought the Beneficial Ownership Transparency Act, 2023 (BOTA) into force on 31 July 2024, as part of an increased focus on compliance and anti money laundering activities by local regulators. According to law firm Harneys the Act aims to align the Cayman Islands government's regime with global standards such as the US Corporate Transparency Act and the EU’s impending Anti Money Laundering Agency.This act replaces the beneficial ownership reporting regime which was introduced in 2017 and has several changes to align it with international standards and it requires that directors be of good standing.“The new regime mandates more comprehensive transparency measures concerning beneficial ownership to combat money laundering, tax evasion, and terrorist financing,” Harneys says. While the 2017 rules only applied to companies, limited liability companies (LLCs) and limited liability partnerships (LLPs), the act brings new entities into scope and applies to all ‘legal persons’, which in all types of Cayman Island corporate entities, even non-profits. The introduction of the BOTA coincided with the Cayman Islands being removed from The Financial Action Task Force (FATA) Grey List of jurisdictions subject to increased monitoring. Law firm Simmons & Simmons says FAFT’s actions will be helpful to the island’s fund managers in the light of changes to the EU’s Alternative Investment Fund Managers directive (AIFMD) that concerns AIFs.“This move will also be a relief ahead of the implementation of changes to the AIFMD which would require the jurisdiction of a non-EU AIFM or non-EU AIF not to appear on either EU Black List in order to be able to market to investors in the EU,” says Simmons & SimmonsEconomic substance reportingIn 2024 the Cayman Islands introduced the International Tax Co-operation (Economic Substance) Act which imposes economic substance requirements on companies, partnerships, limited liability companies (LLCs) and limited liability partnerships (LLPs) in the Caymans. According to law firm Mourant, the Act was introduced in response to concerns of the EU Code of Conduct Group that tax regimes in certain jurisdictions were facilitating offshore structures that generate profits without real economic activity. Mourant says that act also forms part of the Cayman's commitment as a member of the OECD's Inclusive Framework on Base Erosion and Profit Shifting (BEPS)The act imposed three main requirements
  • All entities must submit an Economic Substance Notification to the Cayman Islands Registrar by 31 January each year
  •  Within 12 months after financial year end all entities tax resident outside of the Cayman Islands must submit an Economic substance return – tax resident in another jurisdiction form (TRO Form) to the DITC
Data protectionData protection laws have become increasingly popular with authorities over the last decade, with legislation such as GDPR in the EU, the CCPA in California, and the Australian Privacy Act, ramping up oversight of private data use. The Cayman Islands’ brought its own data protection rules in force with the  Data Protection Act (2017), before revising the statute in 2021.
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line chart showing Cayman Islands' gross national income until 2022
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The Cayman Islands' Economy

The Cayman Islands chose to remain a British dependency when the Federation of the West Indies was dissolved in 1962 as the United Kingdom dismantled its empire. According to the CIA Global Factbook, since then the Cayman’s has evolved into the dominant global offshore banking territory; with financial services accounting for over 85% of its economic activity. Financial services dominate the Cayman Islands economy, and alongside tourism, it is commonly referred to as one ‘the two pillars of the Cayman Islands economy’, according to the Cayman Islands government.As a result the Cayman Islands are a major offshore financial centre for company formation and it has carved out a leading role in the fund management sector.The CIMA 2024 Investments Statistical Digest reported another increase in AUM for the sector the previous year. At the end of 2023, the total number of funds registered with CIMA was up 1.75% at 29,353 compared with 12 months earlier, according to digest.  CIMA says that private funds emerged as a significant driver of growth in 2023 adding 697 new registrations during the year.  The Cayman’s 2023 Investment Company Fact Book reports the jurisdiction is home to 21% of 140,000 open-end funds available to investors worldwide.
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doing business guide in the caymans for investment companies
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Legal System

The Cayman Islands are one of the roughly 80 countries worldwide which follow English Common LawMinor and civil cases in the Caymans go before a Stipendiary Magistrate in the Summary Court. More serious cases are tried in the Grand Court by the country’s resident judges.Appeals from the Grand Court are tried in the Cayman Islands Court of Appeal, with the final arbiter of legal case being the Judicial Committee of the Privy Council in England, according to the Cayman Islands Real Estate Brokers Association (CIREBA) which says the country’s legal system was a major attraction for investors. “The Cayman Islands have enjoyed economic and political stability throughout its history. There is a good legal and judicial system in place, constantly evolving for Caymanian society under the guidance of the Law Reform Commission,” says CIREBA. 
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Know a country's economic and political situation before opening a bank account. Chart shoring refugees seeking asylum in Caymans trend
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Foreign Investment

Can a foreigner open a business in the Cayman Islands?As one of the largest offshore financial services centres globally the Cayman Islands have an open economy, and its government encourages company formation by foreigners to conduct business activities. One high profile way the Cayman Islands does this is via the Cayman Islands Non-Resident Company, which is more commonly known as an ‘Ordinary’ Non-Resident Company and doesn't require a physical presence there. The Ordinary Non-Resident Companies are governed by the Cayman Islands Companies Law (2023). Any foreigner can own a Non-Resident Company which is barred from conducting trades with a local company. “However, they may execute contracts on the islands in order to do business activities outside of the islands. For instance, contracting with local service providers in order to maintain an office in the islands,” according to one company specialising in relocation. Restrictions on Foreign ShareholdersIn general, foreign investors have complete freedom to invest in Cayman Islands firms that don’t offer local services, according to law firm Chambers & PartnersThere are, however, additional local company formation rules for fund managers looking to set-up an overseas company on the islands.  “Certain categories of entities, such as those registered under the Mutual Funds Act, may require minimum investment thresholds. However, while there may be minimum investment thresholds, there are no restrictions regarding foreign investors making an investment in a Cayman Islands mutual fund,” says Chambers & Partners. Restrictions on Acquisition of SharesThere are no foreign investment or exchange control rules in the British Overseas Territory. However, any company conducting local business is required to be licensed under the Trade and Business Licensing Act, must be at least 60% owned by a Cayman Island’s citizen, according to legal information provider ICLG.“However, foreign investment, if considered beneficial to the Cayman Islands’ economy, is generally encouraged”, ICLG said. Business VehiclesThe Cayman Island Business Registry lists 15 different company structures which are available to investors interested in onshore company formation.In a sign of the country’s economic focus, a large number of these company structures are different types of domestic tax exempt corporations, such as foundation companies.Business Vehicle Most Commonly Used by Foreign Finance CompaniesThere are four main company structures available in the Cayman Islands. The first is the ordinary resident company resident, or ordinary company, which is aimed at firms operating onshore.The ordinary resident company therefore isn’t typically used by financial firms or general partners, according to business service provider, InCorp.The second type is Ordinary Non-Resident Company, which is a variant on the first aimed squarely at foreign investors. The ordinary company is well suited to fund managers, or wealth management, as it enables an exempt limited partnership.“For foreign investors, the Ordinary Non-Resident Company provides a Cayman Islands presence without intending to conduct local business. This structure is particularly useful for general partners holding investments or shares in companies outside the Cayman Islands,” says InCorp. The third option is the Cayman Islands Exempt Company, which is the most popular choice for foreign investors.“For foreign businesses, the Exempt Company offers flexibility and privacy. While it cannot conduct local business, except to further its offshore activities, it can engage in a wide range of international operations,” according to InCorp. The final option is the Limited Duration Company (LDC), a specialised form of Exempt Company aimed at time-limited projects backed by foreign investors, rather than one which will provide ongoing annual returns. “Its predefined lifespan can be particularly useful for joint ventures, investment funds with a specific timeline, or tax planning strategies in certain jurisdictions,” says InCorp. The Cayman Islands also offers the unique structure of foundation companies. Foundation companies are similar to an ordinary company while functioning in a similar manner to a trust or foundation. “Clients from common law jurisdictions frequently use foundation companies to hold higher-risk assets such as shares in family businesses and as part of family office and private trust company type structures,” says law firm Carey Olsen.How to Register a Company in Cayman IslandsOnce foreign businesses have decided which corporate structure, or association, to use, the next step is to choose a unique business name which is then registered with the Cayman Islands General Registry.Newly registered exempted companies are required by the Cayman Islands Companies Act to submit a number of documents such as the location of its registered office and pay the relevant fees to the Cayman Islands General Registry within a month.The company’s registration will then be issued. How to Open a Business Bank account in the Cayman IslandsIncorporating your company in the Cayman Islands may be a straightforward process but the light touch regulatory approach does not extend to opening a bank account, according to one expat websiteAccording to Cayman Resident, opening a business bank account in the Cayman Islands, involves ‘a very detailed application’, and the provision of a wide range of documents, including:
  • Full incorporation paperwork
  • A written request to open a new account on company letterhead including a business overview and the reason for needing the account
  • A certificate of Incorporation, certified by a Notary
  • Articles and Memorandum of Association, certified by a Notary
  • An annual report, financial statements, and auditors reports or a business plan
  • A certificate of Good Standing, if business is older than one year
  • Register of Members, Officers and Directors, certified by the registered office or a Notary
  • The identity of each beneficial owner, director and signatory; including a certified copy of their passports and proof of address
  • A professional reference from an accounting or law firm and a professional reference from a bank demonstrating a good relationship of over three years
  • Details on the nature and dollar volume of likely transactions, including the source of funding for initial and subsequent deposits
  • A tax declaration form
  • Details of the personal bank accounts of all directors
According to the expat website, banks may have additional requirements of some companies. “If there are more than a nominal number of shareholders, the bank requires identification and references for the principal shareholders (those who own 10% or more of the shareholding), directors and officers responsible for the operation of the account. Companies incorporated in other countries require notarised documents to verify the bona fides of the company. Each bank in Cayman will have a minimum amount required to open a business account,” Cayman Resident said. Alternatives to opening a Cayman Island business bank account In contrast to the multilayered onboarding approach of Cayman Island banks, Finnish electronic money institution Narvi can offer 10-minute digital onboarding followed by a review by the internal compliance department.Because Narvi’s compliance team is familiar with the due diligence requirements of onboarding specialist financial firms such as family offices and alternative investment managers it is able to reach decisions faster than traditional lenders. Narvi doesn’t just offer a streamlined account opening process according to Neil Ambikar, the company’s CFO and Co-founder, who points to the multiple IBANs that can be added to each account which enable all investment funds to be managed separately. Ambikar adds that Narvi also provides clients with an API so they can automate the bank account into their platform. Additionally while the Nomad Capitalist reports that opening a bank account in the Cayman Islands can require a minimum initial deposit of $1m, Narvi is able to offer banking services to fund managers with NAV in the low millions. 
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Reporting RequirementsThe 2007 revision to the Cayman Islands’ Companies Law addressed the issue of record keeping and financial statements.Local regulations only require that companies must maintain a "proper books of accounts". Firms are therefore not required to report their annual returns for public inspection.The Cayman Islands also don’t specify a specific accounting standard to be used for company records for exempted companies or non exempted companies to produce financial statements for public inspection. Share CapitalThe Cayman Islands does not set-out a minimum or maximum amount of authorised, issued or paid up share capital, for exempt companiesThe only regulatory stipulation is that although at least one share must be in issue at all times. Companies can issue share capital in various currencies and can issue fractional shares.Changes to shareholdings need to be reported to the islands’ company registry. Business CultureUnsurprisingly given its location and relaxed pace of life, doing business in the Cayman Islands is a more relaxed affair than London, New York, or Tokyo. According to an expat website the visitors to the Caymans from an overseas company should be prepared for a formal but courteous business environment where respect for hierarchy and cultural differences is key. “Respect for authority and those in senior positions is vital when doing business in the Cayman Islands. Local business professionals value politeness, discretion, and professional courtesy,” says Expat Arrivals.Moving to the CaymansThere are two main routes to relocating to the Cayman Islands; those with cutting edge tech skills can apply for residency via the Cayman Enterprise City (CEC)The CEC is part of a series of special economic zones (SEZs) which are intended to attract knowledge-based industries, such as science and technology, as well as the maritime and aviation industries. According to the CEC this residency programme offers a streamlined process for eligible individuals to live and work in the Cayman Islands, as the jurisdiction looks to attract foreigners to set up a special economic zone company.The CEC programme enables individuals to set up their special economic zone company in the Cayman Islands in four to six weeks, which then kick-starts a process that can lead to residency. The other alternative for individuals of good standing looking to relocate to the Cayman Islands but who are not Caymanian or married to one, is obtaining a work permit. Your employer will need to apply for the work permit and it is important their HR is familiar with the differences between a Full Work Permit, and a Temporary Work PermitAs with the CEC route, a work permit can eventually lead to full residency.
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how to create a finance company in caymans as non-resident
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Cayman Islands residency requirements

A major added incentive for investors looking to set-up a company in the Caymans is the potential for permanent residency.  According to the Bridge West Legal Network there are four main ways to transmute company ownership into permanent residency. Cayman Islands citizenship requirementsThere is a clear process for obtaining citizenship under Cayman Islands law. Citizenship can be obtained after living legally there for a period of five years, a period of time which can sometimes be extended to eight years.In order to obtain citizenship a Cayman Islands certificate of permanent residency is a prerequisite, according to Bridge West Legal Network. Enjoy the ‘friendliest place on Earth’Once the tricky work of setting up a business is complete it's time to consider all the other things the Caymans has to offer international investors. With white sands, an international workforce population and a booming financial services sector it’s no surprise that in 2012 In 2012 Forbes Magazine named the Cayman Islands “The friendliest place on earth to live!,” and the country’s authorities promise newcomers a warm welcome and a high standard of living. “Made up of three islands with over 135 nationalities, Cayman is English speaking and a very safe place to live and work. Having been named “the friendliest place to live on earth”, Cayman has a very stable Government and an enviable economy, and let’s face it, the lack of winters and great beaches make it a wonderful place to have the perfect work/life balance,” the country’s government says.
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Published June 2, 2025Author
  • Aaron Woolner is a financial journalist with over a decade of experience covering banking, insurance, fintech, and regulatory topics. Having led editorial teams at prominent publications like Capital.com and Asia Risk, Aaron delivers informed and compelling insights from across Asia and Europe.
Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
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