Country code – BS
Legal Basis – Common law
Legal framework – Trustee Act 1998 (As amended), The Purpose Trust Act of 2004
Formal name – Trust
Settlor – The settlor is the person, individual or corporate body, who establishes and whose assets are put into the trust. The settlor of Trust in the Bahamas may also be the beneficiary of those assets and may retain control of the trust. There is no protection from a subsequent settlor’s bankruptcy after assets are gifted to the trust
Trustee – Trustees are natural or legal persons who hold the title to the assets and manage the trust, but they cannot benefit from it. At least one trustee is mandatory.
The trustee should be licensed by the Central Bank of The Bahamas under the Banks and Trust Companies Regulation Act. As the regulator, the Central Bank licenses institutions determine whether a licensee retains its license and may examine the books and records of the trust company and conduct on-site examinations.
Custodian trustees are not permitted.
Beneficiaries – Beneficiaries are those who get benefit from the trust.
A trust may be established as a strict settlement or as a discretionary settlement.
In a strict settlement, the beneficiaries and their shares in the trust assets are definitively set forth in the trust deed.
In a discretionary settlement, the trust assets are vested in the trustees with complete discretion to determine how capital and income will be distributed amongst the beneficiaries. The beneficiaries must be identified in the trust deed or be capable of identification.
There are specific provisions to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. Bahamas’ Trusts allows avoiding both probate and forced heirship rules.
Protector – The trust deed may provide for the appointment of a protector. A protector is often appointed pursuant to the terms of the trust and has such duties and functions as prescribed by the trust.
Trust deed – The private document on which the trust is drafted is not needed to be filed with the Registrar.
Disclosure - A licensed trust company is subject to the strict confidentiality laws of The Bahamas and must respect the confidentiality of the trust. The penalties for transgression are severe, including fines and/or imprisonment.
Protection from foreign judgments – The law includes limited provisions regarding ignoring and not enforcing foreign judgments. The Hague Convention on Trusts does not apply in the Bahamas.
Protection from creditors – The Trustee law does not repeal the Statute of Elizabeth, so transfers by the settlor to the trust may be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, of which its definition is not clear in the law. Creditor claims are separated and cannot be brought jointly. If a fraudulent transfer is proven, the trust may be declared invalid. There is a statute of limitations on a fraudulent transfer of 1-2 years.
Protection for immigrant trusts – Trusts that migrate from other jurisdictions do not benefit from retroactive protection.
Community property – Community properties transferred to a Bahamas trust may not retain its community property character.
Exclusion of foreign law – There are specific exclusions in the legislation to be able to exclude foreign law.
Choice of law – The choice of law of Bahamas to govern the trust or a particular aspect of that trust, is valid, effective and conclusive regardless of any other circumstances.
Duration - Bahamas trusts are not subject to the rule against perpetuities, which makes it possible to have a Bahamas trust which has an unlimited life.
Compliance – Non-resident beneficiaries do not pay taxes on distributions, provided that the trust does not have any underlying asset land in The Bahamas, or which carries on a business or trade in The Bahamas.
The Trustee Act provides for exemption from registration for any deed creating a trust; all deeds of the appointment made pursuant to the terms of a trust; and all other deeds (but not including conveyances of Bahamian real property or personalty) executed by the trustees, settlors, beneficiaries or protectors of a trust.
- Settlor as a beneficiary
- Bankruptcy protection
- Ignore foreign judgements
- Hague convention on trusts
- Choice of law is binding
- Protection from immigrant trusts
- Community property provisions
- Custodian trustee permitted
- Rule against perpetuities (years)
- Yes Specific exclusion of foreign law
- Yes Settlor can retain control
Protection of Settlor
Protection from foreign judgements
- Avoidance of forced heirship
- Spendthrift provisions
- Exclusion of Statute of Elizabeth laws
- Trust invalid if transfer fraudulent
- Creditor must prove fraudulent transfer
- Clear definition of fraudulent transfers
- Separation of creditor claims
- Statutory limitation on fraudulent transfer
Protection of Beneficiary
A trust established in the Bahamas may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of Bahamas benefit from the trust and no physical assets are located there.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in Bahamas, transfer assets to it and receive profits from said assets.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- - Offshore Income Tax Rate
- - Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 3.9% Social Security Employee
- 5.9% Social Security Employer
- 0% Personal Income Tax Rate
- 7.5% VAT Rate
- 31 Tax Treaties
The Commonwealth of the Bahamas consists of more than seven hundred islands (of which 24 are inhabited and more than 700 uninhabited), cays and islets in the Atlantic Ocean, is located to the north of Cuba and Dominican Republic, northwest of Turks and Caicos Islands, to the southeast of the state Florida and east of the Florida Keys. Geographically the Bahamas form, along with the Turks and Caicos Islands, the Lucayan Archipelago, also denominated by extension Bahamas.
It has a population of almost 400,000 inhabitants. Its capital and the most populated city is Nassau, located on the island of New Providence. Its official language is English, although the Bahamian Creole is widely spoken. Its official currency is the Bahamian Dollar, pegged to the US Dollar at an exchange rate of 1:1.
The Bahamas is a hereditary constitutional monarchy belonging to the Commonwealth of Nations. The British monarch, as head of state, appoints his/her representative, the Governor General. Executive power is exercised by the Cabinet, headed by the prime minister, an institution that appears in 1955 with the first parliamentary elections in the archipelago.
Legislative power rests on a bicameral parliamentary system. It is composed of sixteen members of the Senate (appointed by the Governor General) and forty members of the House of Representatives, elected directly by the population.
The Bahamas has an economy based on imports, tourism, and banking. Tourism alone accounts for more than 60 percent of GDP and employs directly or indirectly half the workforce of the archipelago.
Financial services are the second most important sector of the economy: about 15% of GDP.
Industry and agriculture contribute about one-tenth of GDP. Its major industries apart tourism and banking services are ceme
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