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Nevis LLC or Cook Islands LLC: Which Offers the Best Offshore Asset Protection

Protecting your assets is a critical point in the modern world. Any asset you have may be of interest to other people, and without reliable protection, you may end up losing it.

There are many ways to seize other people’s assets. In developed countries, the court is the most popular way to take possession of other people’s property. Litigation has become almost a national sport in some countries.

It is easiest to sue private property that is in the direct possession of a person. A local LLC, corporation, or partnership can make this task much more difficult. But foreign (offshore) asset protection does a better job.

Assets protection

However, you need to understand that most proceedings do not reach the court and are resolved by agreement. At the same time, good offshore asset protection allows you to set your own terms in negotiations. For example, you can pay not 50-80 cents for every dollar protected from prosecution but 5-10 cents. The savings are significant, right?

If it is impossible to avoid litigation, well-thought-out asset protection will become your reliable shield. Most lawyers will refuse to pursue a case against you when they find out about offshore asset protection. In this case, the claimant’s chance of success is minimal, and the assets are almost inaccessible.

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Best offshore asset protection tools

Foreign enterprises are great for protecting assets, but there are important nuances.

Firstly, this is the place of enterprise registration. In some countries, the law equalizes the chances of two parties in litigation (for example, in the USA). In other countries, the law leans more towards protecting entrepreneurs and their property, as do local lawyers. For example, such a situation is in Nevis and Cook Islands.

Secondly, the enterprise registration form you choose is of great importance. Many business people prefer to register corporations, but they are less beneficial in terms of asset protection. It is much better to choose those types of enterprises that have pass-through taxation (tax neutrality), such as LLC:

  •  LLC country of incorporation does not collect taxes from the company.
  • If you transfer property to an LLC (for example, real estate), you do not pay capital gains tax.
  • If you take property out of LLC ownership, you also do not pay capital gains tax.
  •  By using an LLC to receive dividends or long-term capital gains, you secure more favorable tax rates.
  • Essentially, all LLC income and expenses flow directly into your tax return.
Notice Red

IMPORTANT: check all the details with your tax consultant! For example, if you are a US tax resident, then forgetting to check the box on form 8832, your LLC will be considered a corporation and taxation will be much stricter.

Nevis vs Cook Islands for international asset protection

Cook Islands and Nevis are two English-speaking jurisdictions that have created attractive asset protection legislation. They base their rules on Delaware law, which is a great starting point for asset protection. At the same time, both jurisdictions have developed their legislation in this direction to an even higher level.

Nevis and Cook Islands have common principles and differences. Let’s start with what they have in common.

High flexibility: it is not required to pay the authorized capital; LLC assets are not required to be located at the place of company registration; you can personally manage the company or hire a third-party professional; you can reside in any part of the world.

At the same time, it is always necessary to maintain relations and communication with the local registered agent – this is an essential and unshakable rule.

Nevis and Cook Islands DO NOT recognize foreign court decisions: if a foreign court decides to seize your assets, it means nothing to local courts; local legislation requires a new court case to be held right here on the islands; litigation here is very expensive – only the initial payment can be USD 100,000.

An LLC with a single member receives the same protections as an LLC with multiple members: in many countries, only companies with multiple members receive benefits.

In the best case for the creditors, they will be able to obtain a charging order which does not concern assets within the LLC; also, they will not be able to become a member of the LLC and take control of the business – only claim the profits. However, the company remains independent and may decide not to pay dividends or distribute profits in your favor until the court decision expires.

Therefore, realizing future problems, many creditors will be ready to agree on terms acceptable to you.

Short term for assets fraudulent conveyance: usually, within 3-5 years, it is possible to prove in court that a person transferred their assets to another person or entity, such as an LLC, illegally to avoid liability. In Nevis and Cook Islands, this period is only two years. This means that assets still need to be transferred in advance, but in general, the period is much shorter than in other jurisdictions.

At the same time, proving that the transfer of assets was illegal is difficult because the proof level must be beyond a reasonable doubt. This is the highest standard of proof in the American legal system, usually applied to criminal cases. The creditor needs to prove the illegal transfer only in a court in Nevis or Cook Islands.

In addition, Nevis offers more and will never recognize the transfer of assets as illegal in such cases:

  •  If by the time the creditor appears in the local court, your LLC exists for one year or more.
  • If at least two years have passed since the event for which the creditor is suing you and the LLC formation.
  •  If such a transfer of assets did not make you insolvent and you can pay the debt with other assets.
Notice Red

IMPORTANT: creating an LLC and transferring assets to it AFTER the event for which the creditor is suing you is late and illegal. No jurisdiction will protect you in such a case. Therefore, you need to act at least 1-2 years in advance if you provide asset protection in Nevis or Cook Islands.

Features of asset protection in Cook Islands

Cook Islands is a small state in the Pacific Ocean. It is located northeast of New Zealand and has a free association with it. Cook Islands is something like Puerto Rico for the US: local residents are New Zealand citizens and use the New Zealand dollar.

Wellington is responsible for the defense and foreign policy of the islands. The remaining issues, including tax, are in the hands of the Cook Islands government.

All this provides excellent conditions for asset protection: few people decide to fly here to challenge the rights to your assets in a local court with a minimal chance of winning. And the decisions of foreign courts in Cook Islands are not accepted.

As mentioned above, the creditor can only use a charging order against the LLC, while the assets within the LLC will be safe. The charging order lasts only five years without the possibility of renewal. For comparison, the validity of such an order in the US is up to 20 years.

In Cook Islands, it is mandatory to maintain and keep records, but they do not need to be filed annually (only in case of direct request). Documents must be kept by the registered agent in paper or digital form.

An LLC in Cook Islands provides the protection not only of assets but also your personal information. You need to provide the government only with the following information: the LLC name and the name and address of the registered agent.

It is required to pay an annual fee for the company renewal and a fee for the registered agent services.

Features of asset protection in Nevis

The Federation of Saint Kitts and Nevis is known for its resorts, citizenship by investment, and asset protection tools.

Nevis is responsible for the assets. As with Cook Islands, a charging order is all that creditors can claim. They cannot get any assets and access to the Nevis company itself. In the event of a court case, it is also possible to transfer your part of the LLC property to a partner or exchange it for other liquid property.

Decisions of foreign courts are not accepted in Nevis. Creditors need to go to the Nevis court, and before starting the process, they have to pay a deposit of USD 100,000 to the Ministry of Finance for coverage of legal costs. This discourages many creditors from suing, given that the country’s laws are sharpened under the LLC protection. Only very large sums can cause a lawyer to have a genuine interest in suing you.

Regarding reporting, Nevis requires you to file a simple tax return if you are not a tax resident of this jurisdiction. This is necessary to avoid the 33% tax. Usually, a registered agent can do this for you for a small fee.

Reporting (accounting, invoices, checks) must be kept for five years from the transaction date. You can store it digitally or on paper wherever you decide.

In terms of expenses, an annual company renewal and registered agent fees are required. The Nevis authorities will know your LLC name and the name and address of the registered agent.

According to the latest KYC requirements, the registered agent needs to request from you a certified passport copy, recommendations from a bank and a professional (for example, a lawyer or accountant), proof of residential address, and a completed KYC form.

This information remains confidential and can only be obtained by government agencies upon direct request to the registered agent.

What to choose for asset protection: Nevis or Cook Islands?

In general, Cook Islands and Nevis are pretty similar.

The advantage of Cook Islands is that this jurisdiction is physically far from any country, even from Australia. Few people choose to travel that far, plus they have a great history of litigation in favor of local LLCs. However, in most cases, Cook Islands are chosen for their trusts, not LLCs.

Nevis has the advantage of requiring creditors to deposit USD 100,000 before a trial can begin. In addition, local LLCs provide many of the benefits available to trusts. Also, which is always essential, registering and maintaining an LLC in Nevis is cheaper.

As a result, Nevis is more beneficial for registering an LLC as an asset protection tool. And if you combine an LLC and a trust in Nevis, you get an almost impenetrable structure. Your creditors will be able to get your assets only if you give them yourself.

LLC registration in Nevis will cost you from USD 1899. It usually takes 2-3 business days. The annual renewal fee is USD 1699. You can find details and register an LLC in Nevis to protect your assets by contacting [email protected] or via messengers indicated in the website’s header.

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