What is a Foundation?
A foundation is a legal entity that has the hybrid features of both a company and a trust. It is managed by a council whose function is similar to a board of directors. Foundations in Barbados can be domestic or international, as well as charitable or non‐charitable, and can also be established for indefinite or fixed periods. Barbados’ Foundations are established under the Foundations Act, 2013‐2.
A foundation presents an alternative vehicle for wealth management and asset protection. Following are the main advantages of a Barbados foundation:
• Access to tax treaties - Barbados foundations have access to a range of tax treaties
• Reserved powers - allows the founder to retain control over the management and operation of the foundation
• Flexibility - depending on need, a foundation can operate like a trust or a company. Also, cost benefits accrue by eliminating the need to use both types of entities
• Legal entity - a foundation has a legal personality independent of its founder and beneficiaries.
• Depreciating assets - ideal entity for holding assets that do not easily fit in with a traditional trust structure, i.e., a yacht.
Establishing a Foundation
The following are required for the establishment of a foundation:
• A certified copy of the Charter (that sets out, purpose, objectives, beneficiary etc.) must be delivered to the Registrar, Corporate Affairs
• Payment of the relevant registration fee
• Must hold assets valued at not less than BDS$10,000
• Certificate of establishment must be issued by the Registrar
• Must have a council responsible for its management and operations
An international foundation is one which is organised in a jurisdiction other than Barbados.
• No income or withholding tax on distributions made to non resident beneficiaries
• No inheritance taxes and stamp duty. However real estate is not exempted from stamp duty
• Freedom from exchange controls
• Avoidance of forced heirship rules
• Barbados has a growing network of tax treaties
Requirements for an International Foundation
• Must have at least one councillor resident in Barbados
• Must have at all times, a registered agent resident in Barbados
• The registered agent must be licensed under the Corporate and Trust Service Providers Act.