A bit of Holland in the sun as onshore regulation comes to the Caribbean
Vistra, a fund services provider based on the Caribbean island of Bonaire, is combining the advantages of offshore and onshore to offer South American clients a unique service.
Vistra has been granted a licence to offer fiduciary services on the Caribbean island of Bonaire one of three Leeward Islands off the north coast of Venezuela.
As the first fiduciary provider on Bonaire officially licensed by the Dutch Central Bank, Vistra will aim to combine onshore credibility with offshore services.
The firm has an office in the neighbouring island Curaçao where it has offered offshore services for the past ten years.
Curaçao offers a well-developed infrastructure, with large international banks, tax consulting and accountancy firms based there.
Supervision and regulation is handled by the Central Bank of Curaçao and St. Maarten, and ultimately by the Dutch Central Bank.
Curaçao’s status as an offshore centre also offers the security and stability of being connected with a European central bank.
Curaçao’s legal system is based on the Netherlands’.
The Curaçao population speaks four languages: English, Dutch, Spanish and Papiamentu.
The island has good airline connections, a large seaport and high-speed telecoms, as does Bonaire. Boeing 747s land on Bonaire daily, but sometimes a connecting flight is needed from Curaçao, Aruba or St. Maarten.
Bonaire is in an early stage of development, and is in no position to compete with Curaçao.
The Dutch Caribbean Securities Exchange (DCSX) on Curaçao offers a platform for listing funds, bonds, equities and exchange-traded funds.
Bonaire is unlikely to create a rival exchange as it can use Curaçao’s. To list on Curaçao’s exchange, a company must use a listing adviser granted a licence by the DCSX.
Being able to list securities gives firms access to a wider range of investors and therefore capital, as legal and regulatory constraints can prevent them from investing in unlisted securities.
Having a trading platform also gives transparency for both buyers and sellers of securities.
For tax purposes, Bonaire-listed companies can elect to have Dutch residency instead of opting for the local tax regime.
That means they pay Dutch corporate income tax and dividend withholding tax, but they can also benefit from the business connections enabled by tax information exchange agreements (TIEAs) signed between the Netherlands and other countries.
Vistra has plenty of competitors on Curaçao, but none of those have the Bonaire fiduciary licence. Gerard Jan van Spall (pictured), managing director of Vistra’s Curaçao office, expects other firms to follow.
Vistra is targeting mid-sized corporations in the Netherlands for listing on the DCSX. Chinese firms have expressed particular interest in using Vistra’s services to access South America, says van Spall.
Further expansion is planned. Vistra is planning to enter the Spanish market, although the focus this year is on other regions, including Bonaire and Asia.
Spain and Curaçao signed a TIEA this year, which should make it easier to develop links with South American investors, says van Spall.
The dissolution of the Netherlands Antilles in October 2010 granted the islands of Bonaire, Saba and St. Eustatius the status of ‘special municipalities’ within the Netherlands, with financial regulation falling under the Dutch Central Bank.
However, apart from Bonaire, these islands do not have the infrastructure or the population to become offshore financial centres.
Curaçao has been granted the status of a country within the kingdom of the Netherlands.
Another island in the area is Aruba. For the past few years the island has been under scrutiny by a Financial Action Task Force (FATF) investigation into money laundering.
The island is cleaning up its act and has recently received an improved report from FATF. Vistra is looking to establish itself in Aruba serving similar clients as in Curaçao and Bonaire mostly high net worth individuals and corporations but it will use the Aruba’s tax laws, says Van Spall.
Historically, Bonaire’s financial services offering has been in the shadow of its big brother Curaçao, says van Spall. Now that is changing.