You may know that Barbados is a tropical island and popular tourist destination – or how the nation left the Commonwealth in 2021 and became a republic. But did you know that a growing number of businesses and investors are considering a company formation in Barbados because of the advantages the jurisdiction provides, such as as tax benefits? Consider the island either to form a company or open a bank account in Barbados. This guide outlines the essential steps, from reserving your company name to opening a bank account, to help you navigate the process efficiently.
Initial Considerations for Incorporation
- Local vs. International Business: Determine whether your company will conduct business primarily within Barbados and the CARICOM region (requiring a Regular Barbados Company) or exclusively outside of it (making an International Business Company more suitable). This choice has significant tax and regulatory implications.
- Name Reservation: Before preparing documents, conduct a thorough name search and reserve your desired company name with CAIPO to ensure it is unique and available.
- Documentation: Gather all necessary due diligence documents for shareholders and directors early, including certified copies of passports and proof of address.
Key Takeaways On How To Form a Company in Barbados
| Is Foreign Ownership Permitted in Barbados? | Yes, a business can be 100% foreign-owned by either legal persons (legal entities) or natural persons (individuals). |
| Key steps to register a company in Barbados: | Step 1 – Create your company’s name Step 2 – Prepare a Memorandum of Association (MOA) document Step 3 – Obtain and complete an Article of Incorporation document Step 4 – Submit all the correct documentation to the relevant Barbadian authorities Step 5 – Receive a Certificate of Incorporation Step 6 – Finally, begin the process of opening a corporate bank account in Barbados |
| What Are The Common Legal Entity Types In Barbados? | The RBC (similar to a corporation) and SRL (similar to an LLC) business types are the most common and can be turned into an IBC or International Business Company. |
| What Details Are Necessary To Incorporate a Company in Barbados? | A name for your legal entity. Shareholder identification documentation and personal details of directors (minimum 1) Confirm the business activities and corporate purpose. Minimum initial capital to be registered. Barbadian address |
| Why choose to form a company in Barbados? | The country has a solid economy and that friendly tax system for foreign investors means that company formation in Barbados is very attractive. Also, an Anglophone populace and rights to secrecy. |
6 Steps to Form a Company in Barbados
This is the breakdown of the steps necessary to form a company in Barbados:
- Step 1: Choose and Reserve Your Company Name
- Step 2: Prepare and File Articles of Incorporation
- Step 3: Appoint a Registered Agent
- Step 4: Obtain the Certificate of Incorporation
- Step 5: Develop the Company Bylaws
- Step 6: Open a Corporate Bank Account
On average, it takes about six weeks to incorporate a business in Barbados, and that’s not including the time it takes to set up a corporate bank account.
The process of incorporating in Barbados can at once be straight-forward and complicated. When you’ve decided to move forward with a company formation in Barbados, it’s best to hire a local legal expert who knows how to navigate the legal, regulatory and financial landscape.
Step 1: Choose and Reserve Your Company Name
You should have two backup alternative names in case the business name is already taken, or if it’s too alike an already-established business. These names then must be submitted to the Barbadian Companies Registry
Step 2: Prepare and File Articles of Incorporation
Prepare a Memorandum of Association (MOA) document that spells out the scope of the company’s business activities and why it must be incorporated
This will be given out from the Business Office and will mark your official intent to make your firm a legal reality.
Ensure that the stated business activities are broad enough to cover your intended future operations to avoid having to amend the articles later.
Step 3: Appoint a Registered Agent
A registered agent is a mandatory requirement for companies in Barbados. They serve as the official point of contact for the government and are responsible for receiving legal and official notices on behalf of your company. The agent must have a physical address in Barbados.
This will need to be someone who can represent you through the company incorporation process. They will also be responsible for giving accurate financial and accounting records.
Step 4: Obtain the Certificate of Incorporation
This must be issued by the Business Office and will confirm that you are ready to set up and begin operations. After this, you need to open a bank account. You will also be able to consider changing the terms of your operation to being an IBC.
Which documents you need to submit, and to what government body, will depend on the type of business you are incorporating. Be prepared to wait a while for paperwork to be completed.
Step 5: Develop the Company Bylaws
These will need to clearly lay out the directorship structure and internal bureaucracy of the business. Make sure that they comply with all local law in order to avoid problems down the line.
Step 6: Open a Corporate Bank Account
The due diligence process for corporate accounts is thorough, so having all shareholder and director documentation ready and certified is essential for a timely opening. To start the process of opening a corporate bank account in Barbados, you will be required to complete a comprehensive application and provide the following information:
- Complete the bank’s application paperwork.
- Submit certified copies of corporate filings.
- Provide copies of government-issued identification and related proofs for each shareholder and director.
- Submit company financials and additional required documents.
- Generally, most banks in Barbados follow these procedures for opening a corporate bank account.
Company types in Barbados
There are many kinds of companies that foreigners can register in Barbados, the most common being limited liability companies (SRLs) and Regular Business Companies (RBCs).
Limited Liability Company (SRL): Standing for Society with Restricted Liability, this type of company is ideal for businesses where liability protection for the owners is desired. It combines the flexibility of a partnership with the liability protection of a corporation. SRLs in Barbados are governed by the Companies Act of 1982 and provide limited liability for their members.
Primary Use Case: A flexible structure popular for international finance and investment, combining the limited liability of a company with the tax pass-through features of a partnership.
Regular Business Company: A private limited company or corporation in Barbados is used for local business operations. It limits the liability of shareholders and is often chosen by those looking to operate within the domestic market. The company must have at least one director and one shareholder, who can be the same person.
Primary Use Case: For entrepreneurs and businesses intending to trade, offer services, and operate within the local Barbadian and CARICOM markets.
External Company: This type of company is suitable for businesses planning to enter the market under a foreign umbrella. It essentially means operating as a branch office.
International Business Company (IBC): This is the most common and popular type of company in Barbados. IBCs are used for international trade, investment, holding assets, and other business activities. They offer benefits such as tax exemptions on income earned outside Barbados, confidentiality for shareholders and directors, and ease of formation. However, they cannot operate within the territory or send profits to residents of the CARICOM area.
Primary Use Case: For international trade, investment holding, and global service provision where all income is generated from outside of Barbados.
What do you need to form a company in Barbados?
To proceed with company formation in Barbados, you will need to provide the following:
- A name for your legal entity.
- Shareholder identification documentation and personal details of directors (minimum 1)
- Confirm the business activities and corporate purpose.
- Minimum initial capital to be registered.
- Barbadian address
Important Tip: We always recommend having a preferred legal name and two alternatives in case the primary legal name is unavailable.
FAQs on company formation in Barbados
Answers to some of the most common questions we get asked by our clients.
1. Are there any restrictions on foreign ownership in Barbados?
No, Barbados allows 100% foreign ownership of companies. There are no requirements for local directors or shareholders, making it an attractive jurisdiction for international investors.
2. How long does it take to register a company in Barbados?
On average, it takes about six weeks to incorporate a business in Barbados, and that’s not including the time it takes to set up a corporate bank account.
3. What does an SRL company name mean in Barbados?
It is a type of business entity where the liability of its members (shareholders) is limited to their contributions to the company’s capital. This means that the personal assets of the members are protected from the company’s debts and liabilities.
4. What does an RBC company name mean in Barbados?
A private limited company or corporation in Barbados is used for local business operations. It limits the liability of shareholders and is often chosen by those looking to operate within the domestic market. The company must have at least one director and one shareholder, who can be the same person.
5. What entity types offer Limited Liability in Barbados?
The LLC and RBC offer limited liability.
6. What is the role of a registered agent in Barbados?
A registered agent is a mandatory requirement for companies in Barbados. They serve as the official point of contact for the government and are responsible for receiving legal and official notices on behalf of your company. The agent must have a physical address in Barbados.
7. What are the ongoing compliance requirements?
Companies in Barbados must file an annual return with the Corporate Affairs and Intellectual Property Office (CAIPO). They are also required to renew their business registration annually and maintain proper accounting records. International Business Companies have specific reporting requirements to maintain their status.
8. Can I form a company in Barbados remotely?
Yes, the entire company formation process can be handled remotely. Through a registered agent and by providing the necessary notarized and apostilled documentation, you do not need to be physically present in Barbados to incorporate your company.
Benefits of company formation in Barbados
- Has Double Tax Agreements with more than 40 countries
- No residency requirement for incorporation
- Well-educated, English-speaking labor force
- Shareholders/beneficiary details can be kept private
- Business-friendly environment
- Social, political and economic stability
The above list is not exhaustive. There are many more reasons why a company formation in Barbados would be a smart move for many foreign businesses and investors.
Expert Tip: Leveraging the International Business Company (IBC)
Based on our experience with international clients, a common oversight is not fully understanding the specific operational requirements of an International Business Company (IBC). While the tax benefits are attractive, it is crucial to maintain strict separation between the IBC’s offshore activities and any potential business within the CARICOM single market. We advise clients to establish clear and demonstrable management and control outside of Barbados to fully comply with the substance requirements and secure the preferential tax rate. Proper record-keeping to prove all income is foreign-sourced is non-negotiable.
Top 6 reasons why foreign companies should consider company formation in Barbados
1. DTA treaties with most developed economies
Barbados has entered into Double Tax Agreements (DTAs) with many major economies. A DTA is a treaty between two or more nations that don’t subject individuals or companies to double taxation of income and property. Company formation in Barbados would likely be an attractive option for those countries which have DTAs in place with the island nation, including Canada, China, Finland, Germany, Norway, Sweden, Switzerland, the United Kingdom and the United States.
2. No residency required for Company formation in Barbados
There are different sets of rules depending on what type of company one plans to form in Barbados, but unlike other jurisdictions, residing in Barbados is not required. In terms of location, a Barbadian business address (which may be that of your office) is all that is required to set up a company. Non-resident companies are subject to tax only on income generated on the island.
3. A highly skilled, English-speaking labor market
Just under 150,000 of the island’s 287,000 residents make up Barbados’s labor force. There are plenty of young, well-educated and highly skilled employees in the labor market, and that figure is growing. There is no shortage of Barbadian talent in the tech and services sectors, the majority of whom work in the corporate/financial services sector – in fact, just under 80 percent of Barbadians are employed in these sectors. And unlike other jurisdictions in the region, Barbados is an English-speaking country, so communication is not an issue.
4. Shareholder/beneficiary details can be kept private
Many countries in Latin America and the Caribbean require foreign investors and businesses to divulge details about their shareholders, beneficiaries, executives and managers, etc. Not so in the island nation. Company formation in Barbados will likely appeal to companies that wish to keep details about their senior leadership and shareholders confidential.
5. A business-friendly environment
Barbados offers a well-regulated, transparent, and supportive business environment for investors and company formation in Barbados. There are no restrictions on foreign ownership of businesses or real estate, and the government works to make it as easy as possible for you to do business on the island. Barbados ranked 128 out of 190 countries in the World Bank’s 2020 Ease of Doing Business Report, giving it a “Medium” grade in terms of doing business on the island.
6. A highly stable political system and economy
Barbados transitioned from the Commonwealth and became a sovereign republic in November 2021, but this had little-to-no social, political or economic impact on the country. It has a long tradition of democratic governance and well-established property rights, rule of law, and boasts low crime and low corruption rates. All these conditions make it a conducive jurisdiction for company formation in Barbados.
Biz Latin Hub can help you with company formation in Barbados
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about company formation in Barbados, our portfolio of services includes hiring & PEO, accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent, or otherwise doing business in Latin America and the Caribbean.
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