Cayman vs. Other Offshore Jurisdictions: What Sets It Apart?

When building international wealth structures or funds, selecting the right offshore jurisdiction can make a measurable difference in cost, legitimacy, regulatory compliance, and investor confidence. Among these, the Cayman Islands often stands apart—but how, specifically, does it compare to other popular offshore jurisdictions like the British Virgin Islands, Bermuda, Panama, Seychelles, and others? In this article, we dissect the key differentiators, using data, real-world examples, and insights to help UHNWIs, family offices, and institutional investors understand when Cayman is the superior choice.

Cayman’s Position in Numbers

Before comparing, it’s useful to understand where Cayman stands today:

• As of early 2025, Cayman had over 30,038 registered investment funds per the Cayman Islands Monetary Authority (CIMA). Of these, approximately 17,080 were private funds and 12,958 were mutual funds. en.martinsadvisory.com
  
  

• In a PwC-crypto hedge fund report, 49 % of crypto open-ended funds chose Cayman as their domicile, versus 13 % for the British Virgin Islands (BVI) in that category. Loeb Smith
  
  

• By comparison, BVI had about 2,899 mutual funds registered (though definitions and regulatory scope differ) and has boosted its offerings especially in niche sectors. Mondaq+2Harneys+2
  
  

These numbers highlight that Cayman remains the largest and most established of the offshore fund domiciles—but that size comes with certain trade-offs.

Comparison Criteria

To properly compare Cayman to other jurisdictions, one should evaluate several dimensions:

Cayman vs Key Offshore Jurisdictions

Below is how Cayman compares with some of the other popular jurisdictions, using the above criteria.

1. Cayman vs British Virgin Islands (BVI)

Regulatory & Legal Credibility

• Both Cayman and BVI are British Overseas Territories, sharing elements of legal tradition, but Cayman’s regulatory framework (primarily via CIMA) is often viewed as more mature for institutional fund structures. en.martinsadvisory.com+3Mondaq+3Harneys+3
  
  

• Cayman tends to be better known among large pension funds, sovereign wealth funds, and global institutional LPs. BVI has gained ground, especially among niche fund managers and digital-asset strategies. Harneys+2Loeb Smith+2
  
  

Cost & Setup Time

• BVI tends to have lower setup and ongoing regulatory fees than Cayman. For emerging managers or smaller strategies, this is a meaningful cost saving. Charter Group Fund Administration+1
  
  

• Setup time in BVI can be faster for certain vehicle types. Cayman often requires more documentation, auditing obligations, and longer compliance or substance checks, leading to longer timetables. Charter Group Fund Administration+1
  
  

Structural Flexibility

• Cayman supports a wide range of fund structures (Exempted LPs, Exempted Companies, Segregated Portfolio Companies, etc.), which is particularly valuable for complex, multi-strategy, multi-share-class vehicles. charlesrussellspeechlys.com+2en.martinsadvisory.com+2
  
  

• BVI has added flexibility and is increasingly used for digital asset funds or hybrid vehicles, but may have limitations in certain institutional or real estate fund structures relative to Cayman. Harneys+2Loeb Smith+2
  
  

Tax & Economic Substance

• Cayman is fully tax neutral: no corporate, capital gains, income, withholding or inheritance taxes on Cayman vehicles. Investopedia+2Kraemer & Kraemer+2
  
  

• Both have introduced economic substance rules (Cayman’s Economic Substance (Companies and Limited Partnerships) Act 2018; BVI’s Economic Substance Act from 2019). Entities must demonstrate real staff, premises, management locally for certain activities. mourant.com+2Harneys+2
  
  

• Cayman tends to have stricter enforcement and more robust expectations in terms of audit, valuation, transparency, investor disclosures. This enhances credibility but increases cost and operational burden. BVI has made improvements but remains on a lower friction path in many cases. Charter Group Fund Administration+1
  
  

Investor Perception & Market Share

• Cayman dominates many categories: traditional hedge funds, large real asset funds, complex funds, crypto funds (for larger size). The PwC report showed nearly half the market of crypto open-ended funds domiciled in Cayman. Loeb Smith
  
  

• BVI, though smaller in fund numbers, is strong in emerging asset classes, smaller funds, crypto or digital asset strategies, incubators. It is often chosen for speed, lower cost, and operational flexibility. Harneys+1
  
  

2. Cayman vs Other Jurisdictions (Bermuda, Panama, Seychelles, Jersey, Guernsey, etc.)

While Cayman vs BVI is perhaps the most common comparison, there are other offshore jurisdictions worth comparing:

• Bermuda: Strong reputation, particularly in insurance, reinsurance, some structured finance. However, Bermuda can have higher costs and less flexibility for certain fund types compared to Cayman. Institutional investors consider Cayman more familiar for private funds and real estate-strategy funds.
  
  

• Panama, Seychelles, Belize: These jurisdictions can offer lower costs and very fast incorporation. However, they generally have weaker regulatory oversight, less investor familiarity or prestige, and may face higher due diligence friction from banks, custodians, and institutional co-investors.
  
  

• Jersey / Guernsey: These are often preferred when investors desire a jurisdiction closer to European legal and regulatory norms. They often come with more regulatory overhead, potentially higher costs, and more stringent substance requirements—but perhaps better perceived by certain LPs, especially those in Europe.
  
  

What Makes Cayman Uniquely Compelling

Putting the comparisons together, here are the traits that often tilt the balance in favour of Cayman for many high-net-worth structuring and investment fund strategies:

1. Scale & Ecosystem Depth
   
   

   • Cayman has one of the largest fund domiciles in the world. Large numbers of service providers (law firms, fund administrators, auditors, custodians) are based there or deeply familiar with its laws and expectations.
     
     

   • This leads to efficiency in structuring, negotiating documentation, investment onboarding, and cross-border operational flow.
     
     

2. Institutions & Investor Confidence
   
   

   • Institutional investors often require the “Cayman box” (or similar credibility). They are comfortable with its audit standards, legal precedents, court infrastructure, regulatory reporting, and protections.
     
     

   • In many cases, global banks, custodians, gatekeepers factor in Cayman funds more readily than lesser-known jurisdictions, reducing friction and often improving access and terms.
     
     

3. Regulatory Clarity + Tax Neutrality
   
   

   • Cayman offers near-ideal neutrality from a tax perspective, and the economic substance regime is structured to provide compliance without destroying that neutrality.
     
     

   • The trade-off (more oversight, higher cost) is accepted by many institutional managers in exchange for global legitimacy and reduced perceived risk.
     
     

4. Structural Versatility
   
   

   • Ability to host complex structures: segregated portfolios, master-feeder arrangements, multiple share classes, different asset types including real estate, private equity, digital assets.
     
     

   • Clear precedent and mature law around real asset investments, which is especially relevant for Caribbean investors or those acquiring luxury properties, developments or villas across multiple jurisdictions.
     
     

5. Risk Mitigation & Reputation
   
   

   • Cayman has invested heavily in aligning with international AML-CFT standards, economic substance rules, CRS / FATCA, etc., thereby reducing the risk of being blacklisted or facing adverse regulatory action.
     
     

   • The reputational risk for investors is lower, because Cayman is often seen as “safe offshore” for large-scale capital.
     
     

When Another Jurisdiction Might Be the Better Choice

Despite Cayman’s advantages, there are scenarios where another offshore domicile may make more sense:

• Cost pressure / early stage funds or family offices: For smaller fund sizes (< US$50-100 million), the higher cost of Cayman setup, audit, ongoing fees may erode returns.
  
  

• Speed and simplicity: If speed to launch is critical, or the strategy is relatively simple, jurisdictions like BVI or other lightly regulated ones may offer faster incorporation or lighter documentation.
  
  

• Target investor profile: If LPs are less institutional, more flexible, or familiar with other jurisdictions, then prestige may matter less—and cost or flexibility may matter more.
  
  

• Regulatory burdens in home jurisdictions: Some investors may face tax/residency or reporting burdens that favour jurisdictions with less stringent substance, or those less scrutinized by their local tax authorities—though this must be weighed carefully with legal risk.
  
  

• Geographic/regional alignment: Sometimes proximity of legal norms, or trusted relationships, or bilateral treaties, may give small jurisdictions an advantage if they are well known in a given region.
  
  

Special Considerations for Caribbean Real Estate & UHNWI Investors

For investors in the Caribbean, luxury real estate, villa rentals, resort development, or seeking permanent residency, the choice of offshore jurisdiction affects more than just tax or fund flow. Some key points:

• Holding real estate via Cayman-domiciled entities can simplify cross-island ownership structures, joint ventures, and fractional shares.
  
  

• For projects seeking financing, co-investment, or institutional capital, Cayman entities are often more acceptable to international lenders and partners.
  
  

• When combining real estate investment with residency or citizenship programs (for example in Bahamas, Turks & Caicos, Barbados, St. Barths), structuring via Cayman may help optimize ownership, succession, and repatriation of profits.

• For clients concerned about risk (political, currency, regulatory), Cayman’s institutional protections and standards reduce friction when acquiring or managing real property across boundaries.
  
  

Risks & Governance When Choosing Cayman (or Any Offshore Jurisdiction)

Even with Cayman’s advantages, careful structuring and governance are essential:

• Ensure compliance with economic substance rules—having real operations, management, staffing local where required.
  
  

• Detailed fund documentation, clear disclosure, appropriate audit/valuation practices.
  
  

• Oversight on cost overruns: Cayman’s prestige comes at a cost (higher service provider fees, more rigorous regulatory expectations).
  
  

• Accounting for home jurisdiction tax & reporting obligations (CRS, FATCA, potential CFC, PFIC, etc.). Even if the offshore jurisdiction is tax neutral, home country laws still apply.
  
  

• Liquidity and exit planning must be baked in, especially for real asset/illiquid investments.
  
  

• Reputational risk: avoiding jurisdictions whose standards are questionable; ensuring transparency and alignment with global norms.
  
  

Synthesis: What Sets Cayman Apart

In sum, Cayman tends to win out when the goal is to combine institutional credibility / investor confidence, structural complexity or real asset scale, and long-term value and risk mitigation. For clients whose investments are large, cross-border, and involve institutional co-investors or lenders, Cayman often offers the strongest platform.

For smaller funds, simpler structures, or more cost-sensitive strategies—especially in emerging asset classes—other offshore jurisdictions (especially BVI, or specific ones with regulatory flexibility) may provide a better risk-return trade-off.

Conclusion & Call To Action

Choosing the right offshore jurisdiction is less about prestige and more about matching structure, regulatory expectations, investor sophistication, and long-term goals. The Cayman Islands is not always the cheapest or simplest—but for many, its advantages in terms of trust, compliance, flexibility, and global recognition make it the rational infrastructure choice.

At BE Luxury Collection, we partner with top fund-structuring and legal experts to advise our clients on international vehicle design, real estate structuring, residency, and investment architecture. Whether you’re weighing Cayman vs. BVI vs. another jurisdiction, our advisors can develop a plan tailored to your asset base, risk profile, and investment horizon.

Contact BE Luxury Collection today to explore your offshore structuring options—and ensure your next Caribbean real-estate acquisition or investment fund is built for performance, compliance, and legacy.