Nevis

GENERAL INFORMATION

The two small islands comprising the Federation of St. Kitts and Nevis are located in the Leeward Islands in the Eastern Caribbean, approximately 1,300 miles southeast of Miami. The two islands cover only 101 square miles, and have a population slightly greater than 40,000. The capital city of Bassetterre is found on St. Kitts.

St. Kitts, Nevis and Anguilla formed the West Indies Federation, a British colony, until 1967, when the Federation became an Associated State in the British Commonwealth. That same year, Anguilla seceded from the Federation. In 1983, the Federation of St. Kitts and Nevis attained full political independence, including its own representation at the United Nations. The Federation is a member of the Organization of American States (OAS) and is an associated Commonwealth participating state of the European Union (EU). It is also a member of the Caribbean Community (CARICOM) economic and trading group, along with fourteen other area nations including the Bahamas, Bermuda and Belize.

The Federation follows a parliamentary system of government. The Governor, who is nominally the Queen’s representative, appoints a Prime Minister. The Federation has a National Assembly composed of eight members from St. Kitts and three from Nevis.

The Federation follows the English common law system, and recognizes the Court of Appeal and High Court of the Eastern Caribbean Supreme Court, as well as the Judicial Committee of the Privy Council.

Nevis is its own political subdivision under the Federation, with its own Assembly, and has some autonomy and the right to secede. The leader of the majority party of the Nevis Assembly, the Premier, is responsible for all administrative matters. Nevis has enacted its own International Exempt Trust Ordinance.

OFFSHORE OVERVIEW

Since Nevis introduced a new and modern corporate statute in 1984, the Federation has emerged as an attractive Western hemisphere sanctuary for financial and trading services. The Nevis Business Corporation Ordinance’s primary attractions for international business are its all-inclusive tax exemption section and a low fee schedule. Moreover, the 1989 Amendment to the Nevis Business Corporation Ordinance facilitated the transfer of a foreign domicile to Nevis at a reasonable cost of $530 US, by simplifying the redomicilation procedure. Nevis' achievements in attracting offshore companies inspired St.Kitts to enact International Business Companies legislation in 1994, making the entire federation a tax haven.

In 1985 the Federation passed "The Confidential Relationship Act 1985", an act designed to give sanction to the duty of non-divulgence of information imported under conditions of business or professional confidence and for purposes connected therewith. This statute gives complete confidentiality to private banking and financial records, and provides for a penalty of mandatory imprisonment for violating the statute, and is a significant deterrent to foreign enforcement authorities even attempting to investigate such records. However, Nevis does have an agreement to share certain information with the United States and other nations to assist with investigations for tax evasion and some other crimes.

The official currency in Nevis is the Eastern Caribbean Dollar, which is shared by eight states throughout the Eastern Caribbean and is controlled by the Central Caribbean Reserve Bank, situated in St.Kitts. The Eastern Caribbean Dollar is tied to the U.S. Dollar at about EC$2.70 to US$1.00. The US Dollar is generally considered to be a second currency and is freely accepted and interchangeable throughout the Island.

The Federation guarantees the free transfers of profits and repatriation of capital, and does not have exchange controls. There are no limits on the amount of currency which may be brought into or taken out of the islands. Foreign trade transactions may be conducted in any currency. Importers are not required to make prior deposits in local funds, and export proceeds do not have to be surrendered to Government authorities or to authorized banks.

St.Kitts and Nevis have a good banking system (although not nearly as well-developed as the Caymans, Bermuda, or the Bahamas) consisting of the Government owned National Bank, the Development Bank of St.Kitts and Nevis, the privately-owned Bank of Nevis, Barclays Bank PLC, Royal Bank of Canada, Bank of Nova Scotia, the Nevis Co-operative Bank Ltd. and the Foundation for National Development. Banking hours vary but generally are 8-2 Monday through Thursday, Friday 8-5 and Saturday 8:30-11:00 a.m.

NEVIS TAXES

St. Kitts and Nevis have Income Tax Conventions with several major countries, including the United Kingdom and Switzerland, to avoid double taxation. Unfortunately, there is no such treaty with the United States.

There is no personal income tax in the Federation, nor is there any corporate tax on businesses doing business outside of the islands. Companies doing business or trading with St. Kitts or Nevis are subject to a company income tax rate of 40% on income earned in Nevis unless they qualify for development and tax concessions under the Fiscal Incentive Act. However, offshore companies registered in Nevis are exempt from such tax.

A corporation is not considered to be doing business in the Federation solely because it engages in one or more of the following activities:

• maintains a bank account there;

• holds meetings of directors or shareholders there;

• keeps its corporate or financial records there;

• runs an administrative or managerial office there with respect to assets or outside activities;

• maintains a registered office there; or

• invests in stocks or entities of local corporations or is a partner in a local partnership or a beneficiary of a local trust or estate. In addition, any dividend or distribution paid by a corporation having no business in the Federation to another corporation, entity or individual who is neither a citizen nor resident of the Federation is exempt from withholding tax.

NEVIS TRUSTS

Go to Full Text of Nevis Trust Ordinance

Principal discussion here will be on the Nevis International Exempt Trust Ordinance, which is one of the best offshore trust statutes in the world. The initial St. Kitts and Nevis Trustee Ordinance was passed in 1961, before Nevis obtained autonomy. Therefore, the Nevis International Exempt Trust Ordinance of 1994, as amended on the 21 April 1995, is a law under the Nevis Island Administration, as opposed to the Federation.

Creation and Duration

A registration form is necessary for an international trust, which must be registered with the Registrar. The registration must be accompanied by an affidavit from a trust company, or a local attorney certifying that the trust is an international trust, giving the date of trust creation, and identifying the trustee. The filing fees are approximately US$200, and an annual fee which is also US$200 must be paid to maintain the filing. The basic trust documents are not required to be filed, and are not made a matter of public record.

Trusts are for a period of 100 years or more than 100 years if so stipulated in the trust instrument. The trust act has no specific provision for migration of trusts. Trust can be migrated by settling the trust into another trust by jurisdiction.

Settlor/Trustee/Protector

Under the Nevis International Trust Ordinance, the same person can, but is not required to, be the Settlor (creator), Beneficiary, and Protector of the trust.

The Settlor (creator) of the trust must be a nonresident of the Federation of St. Kitts and Nevis, or a corporation which has been incorporated in the Federation.

Nevisian law requires the appointment of a trust "Protector" who oversees the trustees operation of the trust. The Protector does not actively manage the trust, but rather exercises veto power over some Trustee actions. There can be multiple "Protectors" of the Trust.

There must be at least one trustee, and no more than four (except for charitable trusts). Corporate trustees are allowed if they are licensed to do business in the Federation. Settlors and beneficiaries may be trustees. The trustees are allowed to make investments unless prohibited by the trust document.

The Trust Ordinance does not specifically provide for Trustee and Protector compensation.

Beneficiaries

The Rule of Perpetuities does not apply; therefore, the trust need not have beneficiaries — i.e., a "Discretionary Trust" may be formed. Letters of wishes can be used, but they are not binding.

An international trust can be created for a non-charitable purpose provided the purpose is specific, reasonable and capable of fulfillment, and not immoral or unlawful in St. Kitts & Nevis, and the trust provides for a protector. The Court may, where the trust is for charitable purposes, vary or revoke the purposes or terms of the trust provided it is suitable and is consistent with the original intent of the settlor.

Forced heirship rules do not apply under the statutory revisions.

Challenging a Nevisian Trust/Foreign Judgments

Although foreign trusts are recognized, foreign judgments are not enforceable. Foreign laws, including U.S. laws, do not apply to Nevisian trusts. This means that under Nevisian law the claim will always have to be re-tried, ab initio, in the Nevisian courts, with Nevisian attorneys and with Nevisian judges who can generally be expected to uphold the Nevisian trust.

A person seeking to challenge a Nevis trust must first post a US$25,000 bond with the court to cover court and other costs. This bond must be posted before the filing of the suit will be allowed.

Any challenge to a Nevis trust must be filed within one to three years of the date the trust was created or settled, depending on the circumstances. If fraudulent intent in the creation or operation of the trust is alleged, the burden of proof is on the trust challenger.

NEVIS CORPORATIONS

Go to full text of Nevis Limited Liability Company Ordinance

Go to full text of Nevis Business Corporation Ordinance

The 1984 Nevis Business Corporation Ordinance is modeled on the Delaware corporation statutes. A 1989 amendment simplifies the redomiciliation procedure, and allows for the relatively inexpensive transfer of a foreign domiciled corporation to Nevis – the only requirement is that the Articles of Incorporation be amended to conform with Nevis law. International Business Corporations (IBCs) are recognized; these are exempt from taxes, and individually-negotiated government-guaranteed tax holidays are available provided the IBC does not conduct business locally. In 1995 Nevis passed a Limited Liability Company Ordinance.

Corporation creation and registration is instantly accomplished by the payment of the initial capitalization tax and associated fees to the Registrar of Corporations; thereafter, the formal incorporation documents must be filed within ten days.

Nevis does not require the disclosure of company ownership, management or financial records of any kind. There is no requirement that the records, principal office or meetings be held in Nevis.

NEVIS CITIZENSHIP

St. Kitts & Nevis offer free citizenships upon marriage to a citizen, or in return for a $200,000 investment under the "Citizenship Act".

NEVIS TRAVEL & LODGING

A daily passenger and cargo ferry service from St.Kitts to Nevis enables cargo and passengers connecting through St.Kitts to arrive at their Nevis destination within 45 minutes. Although Nevis does not have a deep water port, it has a prominent Caribbean mooring basin for yachts and is gaining in popularity as a stopover station.

Direct international links are provided through the additional hubs of St.Maarten and Antigua by British Airways, Caledonian, Lufthansa, American Airlines, Air Canada and BWIA International. From St. Kitts there is direct air service to New York and Miami via BWIA. The latter also flies directly to Toronto. There is also a direct service to the United Kingdom via St.Lucia.

NEVIS LEGISLATION

• Nevis Limited Liability Company Ordinance (1995), as amended, 1999

• Nevis Business Corporation Ordinance (1984), as amended, 1999

• Nevis Offshore Banking Ordinance (1996)

• Nevis International Exempt Trust Ordinance (1994), as amended, 2000

TAX WARNING FOR U.S. CITIZENS

U.S. citizens are taxed on their taxable income from wherever it is derived, anywhere in the world. U.S. citizens are also taxed on investments indirectly made through foreign trusts and foreign corporations, including offshore trusts and IBCs. Thus, the fact that an offshore jurisdiction may have low or no taxes does not mean that if a U.S. citizen does business there that he or she will enjoy only low or no taxes on the personal income made. There are simply NO personal income tax advantages, at all, for U.S. citizens to use offshore structures, and anyone who tells you differently is probably telling you a falsehood. Any discussion we make of an offshore jurisdiction's tax laws should be construed only according to the foregoing warning.

BEWARE OF OFFSHORE SERVICE PROVIDERS: There are some offshore service providers who will make wild claims about saving you personal income taxes, so as to convince you to set up an offshore structure. Most of these people don't know the first thing about U.S. tax law, and their representations to you will not help you, at all, if you are caught with an unreported trust, corporation, or bank account. All they really want is your money, and even if you commit tax evasion they are not subject to U.S. law, and so couldn't care less. See Hiding Money Offshore