If you’re looking for a safe country in the Caribbean that has the strongest passport in the region, this island offers you tax residency in 2 weeks in Barbados, and you barely need to stay there at all.
Additionally, it’s a low-tax country, so you can withdraw your cryptocurrencies or investments absolutely tax-free. If anyone is interested in a second passport in addition to low taxes, Barbados also offers this.
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Double Tax Treaties and Their Importance in Barbados
Unlike most Caribbean countries, Barbados has many double tax treaties. You know that a double taxation treaty is not always used when moving to another country; however, in case a dispute might arise in the future about where you are a tax resident, the double taxation treaty will provide you with a mechanism that prevents you from paying taxes twice on the same income.
Therefore, Barbados has many of these double taxation treaties, which is not common in that part of the world.
Tax Residency Categories in Barbados
Barbados was a British colony for over 300 years, which of course influenced various aspects of life, including the legal and tax systems. Like most countries influenced by the Anglo-Saxon legal system, Barbados categorizes everyone who passes through the island into two main groups: non-tax residents and tax residents.
Thus, all tax residents may be domiciled or non-domiciled in Barbados. Interestingly, a little while ago, the UK decided to abolish the non-domiciled regime, but its former colonies, like Cyprus and Malta, not only do not decrease the benefits provided to non-domiciled tax residents, but also try to attract as many foreigners as possible to benefit from it.
In case you are not familiar with the Nom-Dom concept, in practice it is usually easy to answer:
Do you consider Barbados your true home or not? If the answer to this question is negative and you could eventually consider moving to another country, then you are considered non-domiciled in Barbados.
That’s why, although it is possible to pay no taxes at all while living in Barbados, the country itself is not on the GAFI blacklist and is rarely included in the list of tax havens of many countries… But stay until the end of the blog to see what other countries like Spain think of this country.
Barbados only taxes the worldwide income of domiciled tax residents. Non-domiciled individuals are only taxed on income from within Barbados; foreign-derived income is not taxed in Barbados, which is wonderful: Tax residency in 2 weeks and 0% taxation.
Methods for Obtaining Tax Residency in 2 Weeks in Barbados
So, how can you actually become a tax resident there?
Well, there are several ways for those who wish to become tax residents:
1. 183-Day Stay in Barbados
You can stay there for at least 183 days. However, not many prefer this option, as Barbados, although a very beautiful country with magnificent beaches, is still quite a small country and for most people accustomed to the dynamic lifestyle of a big city, it might seem boring. Therefore, there is another option.
2. Create a Company in Barbados
The only exception is that the company should NOT be involved in cryptocurrency activities. Any other activity, such as consulting or marketing, is allowed.
After registering the company, you need to be employed in your company as a director and obtain a work permit. After obtaining the residence permit in Barbados, as an employee of the company, you need to apply for a tax number, which will take about 1 month.
Thus, with the option of creating a company, there is no time limit on how long you must stay in Barbados to be considered a tax resident there. By staying two weeks there, you can be considered a tax resident.
Keep in mind also that Barbados has no wealth tax, no capital gains tax, and no inheritance tax. Therefore, it is suitable for those who have foreign income.
In case you have acquired tax residency by registering a company in Barbados, it does not necessarily mean that you really have to operate with this company. Quite the opposite. Previously the corporate tax rate was very low, but under pressure from the OECD, the corporate tax rate was increased, and from 2024 it is charged at a rate of 9%.
Although companies do not have a bad reputation, it is usually not recommended to have Barbados as the main location for a business. It is absolutely great for personal tax residency, but the company you register there might be better used strictly for migration purposes and obtaining tax residency in 2 weeks instead of 183 days. The main business should be registered abroad.
3. Investment of at least 300,000 USD in Barbados
Now let’s move to the third way you can acquire a residency permit, which is by making an investment of at least 300,000 Barbados dollars. After securing the investment in your name, you can apply for a residency permit. If you are interested in this process, we can discuss it in a new blog.
Citizenship Options in Barbados
Interestingly, as mentioned at the beginning, Barbados also allows dual citizenship, so you can obtain a passport without giving up your current nationality. You can obtain Barbadian citizenship by:
- Descent;
- Naturalization; and
- Birth.
Obtaining Citizenship through Naturalization in Barbados
Let’s talk about naturalization. To obtain a passport issued by naturalization, you need to reside on the island for 5 years, and in the fifth year, you have to live there continuously (i.e., throughout the entire year without leaving the country).
Also, something very interesting related to citizenship by birth is that this provision created a reason why birth tourism is popular in Barbados. Couples come to the country just to have a baby and secure a passport for it. The best part is that the family does not have to stay in the country long after the birth.
Unlike the U.S. option, which used to be an extremely popular destination for birth tourism, U.S. citizenship entails hefty taxes that the child will likely want to avoid later. Of course, the Barbadian passport does not have this problem. Additionally, many desire to obtain tax residency there to pay 0% taxes.
Opportunities for Tax Residents in Latin America and Digital Nomads
As already mentioned, Barbados is not included on most blacklists. However, for those wishing to move directly from Spain to Barbados, it is not a good option, as it is included on Spain’s blacklist, which anticipates that anyone moving to Barbados will still be a tax resident of Spain for another four years.
Therefore, you either have to move first to another country outside of Spain and then change to Barbados, or choose another country that is not on the Spanish list. In any case, there are many options around the world. If you need any advice on which country is right for you, contact us.
Thus, it may be very interesting for tax residents of Latin America or or other parts of the world, definitely a good option, as well as for digital nomads from other parts of the world.
See you in an upcoming article.
