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Choosing An Appropriate Domicile

At last check, there were nearly 70 Domiciles worldwide (domestic and offshore) with captive enabling legislation.

Historically, most captives were domiciled offshore; however the past few years have seen a significant uptick in the number of new captive formations domestically. This trend is largely fueled by 1) captive enabling legislation being adopted by an increasing number of states, and 2) competition amongst those states driving down premium taxes, licensing fees, and capitalization requirements.

As we’ve previously discussed, choosing an appropriate Domicile can make all the difference in your captive ownership experience.

But how do you choose the right one from a list of nearly 70? Here are some guidelines to consider:

  • Regulatory Environment – too much or too little oversight, find the right balance
  • Political Stability – changes in captive rules and regulations can be devastating, seek a domicile with longevity
  • Active Captive Association – Domiciles with active captive associations tend to adopt favorable changes to their legislation frequently
  • Tax Status – an election exists that make offshore captives practically identical to those formed onshore from an income tax perspective
  • Support Services – most Domiciles require your captive to use at least one local service provider,
  • Location – you will likely have to travel to your captive’s Domicile, make sure it’s somewhere you don’t mind visiting and can get to relatively easily