Offshore company formation (2026): BVI, Cayman, Seychelles and Nevis compared

Founders & Company Structures
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An offshore company is one formed in a low- or no-tax jurisdiction such as the British Virgin Islands (BVI), the Cayman Islands, Seychelles or Nevis, by owners who live and do business somewhere else. Setting one up is legal and the government fees are low, from US$140 a year for a Seychelles company. What it does not do is remove tax for someone living in a high-tax country. Your home country can tax the profits under its controlled foreign company (CFC) rules, or treat the company as resident there if you run it from there. Banks report the accounts automatically under the Common Reporting Standard (CRS) and FATCA.

Last checked: October 2026

In short:

  • Government fees are small: BVI US$550 to form and US$550 a year (up to 50,000 shares), Cayman CI$700 to register and CI$925 a year, Seychelles US$130 and US$140, Nevis LLC US$300 and US$300. Registered agent fees come on top and are usually larger.
  • None of the four is on the EU’s blacklist (Annex I, last updated 17 February 2026). The BVI is on the “grey” Annex II, and Seychelles was taken off Annex II in February 2026.
  • An offshore company is still taxed in your home country through CFC rules, management-and-control tests and CRS/FATCA reporting. US persons also file Form 5471 or 8858, with penalties starting at US$10,000.

What an offshore company is, and what it is for

“Offshore” just means the company is formed in one jurisdiction and does its business elsewhere. Cayman’s General Registry puts it plainly: an exempted company is for activities “carried on mainly outside of the Cayman Islands.”

Legitimate uses include:

  • Neutral holding vehicles for joint ventures between investors from different countries.
  • Investment funds and pre-IPO structures, where Cayman and the BVI are standard.
  • Owners who already live in a no-tax or territorial-tax country, so no home-country CFC rules apply (see Tax residency explained: why the 183-day rule is a myth for most countries).
  • Asset protection planning done in advance, especially with a Nevis LLC (below).

The common myth is that a founder in London, Sydney or Berlin can invoice through a BVI company and pay no tax. That does not work, for four reasons.

Why it doesn’t remove tax for residents of high-tax countries

1. Management and control. Many countries treat a company as tax resident where it is really run. HMRC’s manual quotes the leading case: a company resides “where the central management and control actually abides.” If you make the decisions from your flat in London, your BVI company can be UK resident. It then pays UK corporation tax.

2. CFC rules. Most high-tax countries tax their residents on low-taxed profits kept in foreign companies they control. EU states have been required to have CFC rules since 2019 (see Holding company for founders (2026): how it works and where to set one up).

3. CRS. Banks and other financial institutions report account balances and income to the account holder’s country of tax residence. For passive companies, they also report the people who control them. The OECD’s 2025 peer review covers over 100 jurisdictions. Cayman’s tax authority, for example, collects FATCA and CRS reports from its financial institutions. Assume the offshore account reaches your home tax office.

4. US persons. FATCA requires foreign financial institutions to report US account holders. US citizens and green-card holders also have their own filings:

  • Form 5471 for US persons who control or hold significant stakes in a foreign corporation. The penalty is US$10,000 per company per year, plus US$10,000 for every 30 days the failure continues more than 90 days after an IRS notice, up to US$50,000 more.
  • Form 8858 for US persons who own a foreign disregarded entity.
  • Form 8938 for specified foreign financial assets above the thresholds.

US tax rules classify a foreign entity automatically if you don’t elect. It is a corporation if all members have limited liability, which describes a Nevis LLC. A single US owner can elect disregarded treatment on Form 8832, and then files Form 8858 instead of 5471. Neither choice removes US tax. For how this plays out elsewhere, see Where to incorporate as a digital nomad: US LLC, UK, Estonia, UAE.

Government fees compared

These are government fees only, from the registry or regulator, or a trust company’s fact sheet where noted. Registered agent and office fees are extra, and you can’t form or keep these companies without an agent.

BVI business company Cayman exempted company Seychelles IBC Nevis LLC
Formation (government) US$550 (up to 50,000 authorised shares); US$1,350 above CI$700 (US$853.66) for capital up to CI$42,000 US$130 registration US$300 Articles of Organization, plus US$20 certificate
Annual government fee US$550 / US$1,350 CI$925 (about US$1,128) from 1 January 2025 US$140 US$300 renewal
Source and date Trident Trust fact sheet, January 2026 Cayman General Registry, fees from 1 January 2025 FSA Seychelles fee schedule, 5 July 2022 (“indicative”) Nevis SRO 10 of 2024, in force 1 April 2025

Notes:

  • BVI deadlines. Annual fees are due by 31 May for companies incorporated in the first half of a year and 30 November for the second half. Late payment adds 10%, then 50%, per Collas Crill.
  • BVI annual return. Since 1 January 2024, most BVI companies give their registered agent an annual financial return within 9 months of year end. It shows a basic balance sheet and profit and loss. Fines start at US$300 and rise by US$200 a month to US$5,000.
  • Cayman fees rise with capital: CI$1,225 a year above CI$42,000, up to CI$2,793 above CI$1,640,000.
  • Seychelles. Agents often quote US$150 a year because they add the ICSP tax. The FSA schedule shows US$140.

Economic substance: who needs real activity on the island

The BVI, Cayman and Seychelles changed their laws after EU and OECD reviews of harmful tax practices.

BVI. The Economic Substance Act has applied since 1 January 2019. It covers nine “relevant activities”:

  • banking
  • insurance
  • fund management
  • finance and leasing
  • headquarters
  • shipping
  • holding (pure equity holding gets a reduced test)
  • intellectual property
  • distribution and service centre

A company with none of these doesn’t have to meet the test, but per Harneys it must still file a “nil return” through its registered agent. Breaches can lead to penalties and, ultimately, striking off.

Cayman. The International Tax Co-operation (Economic Substance) Act (2026 Revision) lists the same nine activities, excluding investment fund business. Failing the test costs CI$10,000 in the first year and CI$100,000 if it fails again the following year. Every entity files an Economic Substance Notification each year before its annual return.

Seychelles. Per the FSA, IBCs lost their blanket tax exemption from 1 January 2019. IBCs with assessable income in Seychelles now file returns and audited accounts. Its later substance rules mainly target members of large multinational groups with passive foreign income. Check with your agent whether yours is caught.

Real substance also matters for your home country’s management and control test.

Beneficial ownership: who can see the owners

Threshold Where it’s filed Public?
BVI 10% (was 25%) Register of beneficial ownership filed with the Registry from 2 January 2025; new companies within 30 days; changes within 30 days. BOSS database since 2017 No. Restricted to the company, agent and authorities. Access for “legitimate interest” to 25%+ owners is planned
Cayman 25% Beneficial Ownership Transparency Act 2023, in force 31 July 2024, via the registered office provider Legitimate-interest access regulations from 28 February 2025; people at serious risk can apply for protection
Seychelles 10% Beneficial Ownership Act 2020; register copied to the Financial Intelligence Unit No

None is fully public, but authorities can access them and share on request.

EU list of non-cooperative jurisdictions

The EU’s list, last revised by the Council on 17 February 2026, has 10 jurisdictions on Annex I (the blacklist): American Samoa, Anguilla, Guam, Palau, Panama, Russia, Turks and Caicos Islands, US Virgin Islands, Vanuatu and Viet Nam.

  • BVI: Annex II (the grey list), meaning it cooperates but has pending commitments.
  • Seychelles: removed from Annex II in February 2026.
  • Cayman and St Kitts and Nevis: on neither annex.

The Council’s next revision is scheduled for October 2026. It had not been published when we checked on 6 October 2026. Blacklisting matters because EU countries apply defensive measures, such as extra withholding or denied deductions, to payments to listed places.

Nevis LLC: the asset protection features

The Nevis Limited Liability Company Ordinance (revised to 31 December 2020) is popular for asset protection:

  • Charging order is the only remedy. A creditor of a member can get a charging order over distributions. Under section 60, that is “the sole remedies available,” and foreclosure, seizure, levy and attachment of the member’s interest are barred.
  • Charging orders expire. They are non-renewable and expire 3 years after entry (section 60(15)).
  • Bond before suing. Under section 62, a creditor must first deposit a bond from a Nevis financial institution with the Ministry of Finance. The High Court sets the amount and can change it. Many websites still say “US$100,000”. Alper Law says the current text sets no fixed figure, and the ordinance we read confirms that.
  • High bar for fraud claims. Under section 61, a creditor must prove “beyond reasonable doubt” that the transfer was made with the principal intent to defraud that creditor and left the member insolvent.

Limits. Alper Law notes that US courts may issue their own charging orders under state law and get around Nevis rules. Planning after a claim exists invites contempt and fraud findings. None of this changes your tax position.

Banking: the practical problem

Opening a bank account is often harder than forming the company. Banks want source of funds, contracts and proof of where you live. A company with a non-resident owner and no local activity is a high-risk profile, and EU-listed jurisdictions draw extra scrutiny. Expect weeks, not days. See Offshore bank account (2026): what’s legal, costs, where to open.

Who it suits

  • Suits: people who are genuinely resident in no-tax or territorial countries; international holding and fund structures with proper advice; people planning asset protection well before any claim.
  • Doesn’t suit: anyone living in a high-tax country who wants to avoid tax there. It also doesn’t suit US persons, unless the aim is non-tax and they budget for Form 5471/8858 compliance. For a simpler, bankable alternative, compare a US LLC in Wyoming LLC for non-US residents: Form 5472, banking and tax (2026).

Related guides: Offshore bank account (2026): what’s legal, costs, where to open · Holding company for founders (2026): how it works and where to set one up · Where to incorporate as a digital nomad: US LLC, UK, Estonia, UAE · Wyoming LLC for non-US residents: Form 5472, banking and tax (2026) · Tax residency explained: why the 183-day rule is a myth for most countries

Quick answers

Q: Is it legal to have an offshore company?
Yes. Forming and owning a BVI, Cayman, Seychelles or Nevis company is legal almost everywhere. What’s illegal is hiding it or its income from your tax authority. Most home countries tax the profits through CFC or management-and-control rules, and banks report the accounts automatically under CRS and FATCA.

Q: How much does a BVI company cost per year?
The BVI government fee is US$550 a year for a company authorised to issue up to 50,000 shares, and US$1,350 above that, per Trident Trust’s January 2026 fact sheet. Registered agent and office fees are extra. Late payment adds 10%, then 50%, after the 31 May or 30 November deadline.

Q: Does a Nevis LLC really need a US$100,000 bond to sue?
Not as a fixed figure. Section 62 of the Nevis LLC Ordinance requires a creditor to post a bond from a Nevis financial institution before suing, but the High Court sets the amount and can vary it. The US$100,000 figure on many websites isn’t in the current text.

Sources

This is general information from the Nomad Forums team, not legal, tax or financial advice. Rules change; check the official source or a qualified adviser before acting.

Over to you: If you run a BVI, Cayman, Seychelles or Nevis company, what did your registered agent charge on top of the government fee, and which bank actually opened the account? Has anyone had a home tax authority ask about one?

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