Nevis LLC Formation | Why and How to set up an Offshore company in Nevis

[UPDATE November 2019 – Nevis Business Corporation Ordinance (Amendment), 2019, Nevis Limited Liability Company Ordinance (Amendment), 2019]

Under the Nevis Business Corporation Ordinance (Amendment), 2018, and the Nevis Limited Liability Company Ordinance (Amendment), 2018, companies incorporated in Nevis on or after January 1, 2019, are subject to Saint Kitts and Nevis’ Income Tax Act which provides for corporate tax rate of 33%. Companies incorporated on or before 31st December 2018 are still exempt from taxes until June 2021. 

However, the Nevis Business Corporation Ordinance (Amendment), 2019, and the Nevis Limited Liability Company Ordinance (Amendment), 2019, further provides that companies that carry on new business activities, or acquire, hold, own, or deals with any new assets that produce assessable income would be subject to the Income Tax Act, regardless of whether they have been incorporated on or before the 31st December 2018]

St Kitts and Nevis is an independent sovereignty and not a crown dependent, such as the Channel Islands, and the country is not connected to another larger dependency. St Kitts and Nevis has grown in profile in recent years for its instant (6+/- months) passport program. Other official instant passport program options include the Dominica and the Grenada Citizenship by Investment Programs. Explore the full list of passport and residency by investment programs at passports.io and residencies.io.

Why should YOUR company be incorporated as a Nevis LLC?

Below, we will explore how a Nevis LLC is perfect for someone who:

1. Is the sole owner of their business and doesn’t want to have another director.
2. Wants the benefit of strong asset protection.
3. Wants a private and secure registration.
4. Doesn’t want to pay for nominee directors.
5. Doesn’t want to face yearly audits.
6. Desires a relatively simple and easy incorporation offshore.

Single-Member LLCs

A distinct advantage of a Nevis LLC is the ability to incorporate with a single member. Although Nevis isn’t the only place this is possible, the strong asset protection laws of Nevis are favorable compared to other jurisdictions.

Easy Corporate Compliance

Unlike other jurisdictions, an example being Hong Kong, a Nevis LLC does not have to face mandatory audits, and corporate compliance is minimal. There are very few company records to be maintained; examples are corporate minutes and a record of shareholders, though this does not need to be made public. Your company meeting can be held anywhere, and an operating agreement can be tailored to your exact specifications.

Nevis LLCs are required to prepare and maintain accounting records, to reflect the financial position of the company. Account records should be kept for 5 years from the date of their preparation and may be kept anywhere. Companies are not required to file accounts, annual returns or to divulge information relating to ownership. However, Registered Agents acting on behalf of companies are required to obtain and maintain such information pursuant to AML/CTF Regulations. Nevis LLCs are subject to an annual government license fee.

No Resident Directors

A Nevis LLC can be formed without mandatory resident directors.

No Minimum Capital Requirements

Standard authorized capital of a Nevis LLC is US$10,000, in a non-paid up basis. However, there are no minimum capital requirements as well as no maximum limit.

Strong Asset Protection

Nevis uses Common Law as its legal basis. 

To bring an action against a business incorporated in Nevis, the creditor would need to hire a local lawyer licensed in Nevis and post a cash bond with the court. In addition, attorneys in Nevis are not allowed to work on contingency – the creditor must pay for all legal services up front and in full. 

It might not be as strong as the Cook Islands, but Nevis is a solid choice from an asset protection standpoint.

Be careful if you’re considering starting a single member LLC in the United States!

U.S.-domiciled single-member LLCs have been perceived as risky because they don’t always have outside-in asset protection or ‘personal lawsuit’ protection.

The best place to operate an LLC in the US is within the states of Wyoming, Delaware or Nevada. This is because of strong charging order protection which has faced – and defeated – legal challenges. The State of Wyoming has statutes that specifically provide for charging order protection in support of single-member LLCs.

Nevis offshore statutes for Nevis IBCs and Nevis LLCs are actually derived from the jurisdictional law of the states of Delaware and Wyoming, respectively. A single-member LLC in Nevis has charging order protection, and other benefits of a Wyoming LLC, located in a jurisdiction offshore, with Nevis courts governing. So you get all the benefits of the strongest LLC in the United States located offshore in Nevis.

Nevis has no connection to U.S. court systems or governance; the country simply borrowed its jurisdictional law because they felt it was the strongest upon which to build their offshore domicile laws.

Privacy

The Confidential Relations Act of 1985 guarantees the confidentiality of Nevis offshore companies and bank accounts.

Nevis Has No Public Registry – Nevis does not have a database of corporate records accessible to the public. Only the government of St Kitts and Nevis, as well as lawyers practicing in Nevis, can access this database.

However, a Nevis LLC must have a Registered Agent and Registered Office in Nevis, provided by a licensed service provider authorized by the Financial Services Regulatory Commission.

Unlike other jurisdictions, it’s considerably difficult for a greedy creditor to get even the most basic information about your LLC, such as when it was filed, whom it was filed by, or who owns the company. Your registration is essentially anonymous.

How is an LLC Different from a Company Limited by Shares?

This may be basic for some of you, but it’s a question we get asked a lot so it’s worth covering:

A member of a Limited Liability Company (LLC) is limited to the amount of contributed capital they make to capitalize the company and ‘buy’ a membership interest. An LLC is comprised of membership interest, whereas a shareholder in a company is limited by shares. This limits the owners’ personal liability to the amount in which they’ve invested in the company.

Your Nevis LLC is backed by strong laws

Nevis is a common law jurisdiction with LLC statutes. English is used in the court system and the knowledge that foreign creditors will need to post a bond in order to sue you offers a strong deterrence against such actions being taken.

Your Offshore Nevis LLC is private

Your name is not on the company registry, because there is no publicly accessible company registry. Nevis LLC formation is a private procedure, and your name won’t be disclosed.

Single-member LLC & Flexibility

You have the choice of a manager-managed LLC with multiple members, or a member-managed LLC with multiple members. LLCs are for the most part very flexible. The condition is that there is at least one manager, who may be a natural or legal person of any nationality. An LLC may be managed either by its owners or by third parties.

Furthermore, entities may be re-domiciled in or out of Nevis.

Nevis Taxes

Nevis was traditionally considered a ‘No-Tax’ destination for offshore companies. However, recent changes to its legislation have made the situation slightly more complex. 

Corporate income tax [UPDATE 31 December 2018]

Nevis is updating its legislative and regulatory framework commitments to the EU COCG under its Tax Governance Initiative and at the same time to the OECD BEPS Inclusive Framework.

The parliament recently passed the Nevis Business Corporation (Amendment) Ordinance, 2018, and the Nevis Limited Liability Company (Amendment) Ordinance, 2018.

Under these amendments, LLCs and corporations incorporated on or before December 31, 2018, will still enjoy full tax exemptions until June 30, 2021, provided that they do not carry out business in Saint Kitts & Nevis.

LLCs and companies incorporated after December 31, 2018, will be subject to the local tax regime (currently, 33% tax on worldwide income). The amendments have also abolished the preferential tax regime for companies incorporated by non-residents that obtained a tax resident status. 

This decision was made following the direct request of the European Union and OECD, for the purposes of tax harmonization. What that means in effect is that since 1st January 2019, newly-incorporated Nevis IBCs and LLCs have effectively been subject to Federal Corporate Tax.  

However, the Nevis Island Administration is expected to shortly introduce additional legislation to implement a local territorial tax system for corporations and LLCs established from 1 January 2019. Therefore, once that comes into place, income derived from foreign-sources will not be subject to taxation.

We are following the situation closely and will update this information once new developments occur.

Other taxes 

Saint Kitts and Nevis does not levy direct personal taxes. Personal income, as well as, capital gains and net wealth are not subject to taxation.

Property tax is assessed on the market value of the real property, ranging from 0.2% to 0.3%, depending on the location and use. There is a stamp duty on transfer of real property from 6% to 10%. The value-added tax is 17% for most goods and services. Reduced rate of 10% applies to the tourism sector. Certain goods are tax-exempt.