Key Takeaways
- A Bahamas company can hold both foreign and Bahamian real estate, with local property subject to a foreign ownership permit regime.
- Tax neutrality and the absence of a treaty network shape how rental income is collected and repatriated, and what owners should expect abroad.
- Selling the shares rather than the property itself can ease transfers and succession, though stamp duty and transfer costs still apply to moving property in and out.
- Using one company per property ring-fences liability across a portfolio, while economic substance requirements apply to a property-holding entity.
Why Use a Bahamas Company to Hold Real Estate
A Bahamas real estate holding company is most often an International Business Company (IBC), the vehicle defined by the International Business Companies Act 2000. For a foreign owner placing property into a corporate wrapper, the appeal is straightforward: complete tax neutrality at the company level, separation of personal assets from property liabilities, and an English common law framework that advisers from common law countries already understand. The country's own Bahamas Investment Authority administers the permits that govern foreign-owned property, a point that matters greatly where the asset itself sits inside the islands.
This article explains how such a structure behaves in practice, both for property located abroad and for property located in the Bahamas, and where the fit is genuinely weak. It is written for non-resident investors and their advisers who are deciding whether a Bahamian entity earns its place in a property-holding plan, rather than a personal name or a vehicle from another jurisdiction.
An IBC needs only one director, with no residency requirement where the company carries on no regulated business, and no minimum share capital. Setup is light. The harder questions concern tax outside the islands and the rules that apply when the property is Bahamian.
Tax Neutrality and the Absence of a Treaty Network: What It Means for Property Owners
The islands levy no income, capital gains, corporate, withholding, gift, or inheritance tax. Rental income collected at the company level carries no domestic tax, and dividends paid up to shareholders suffer no withholding. As a holding tier, the entity adds no fresh tax cost of its own.
That neutrality is the whole story only when the property sits outside any taxing jurisdiction, which is rarely the case. The country has signed Tax Information Exchange Agreements but has not built a double-tax-treaty network, and TIEAs do not reduce withholding rates in the country where property is located.
If your property sits in a jurisdiction that withholds tax on rent paid to a non-resident company, the gross rate applies in full with no treaty reduction. Have your adviser confirm the source country's domestic withholding rate on rental income paid to an offshore entity before you commit.
The practical effect: the Bahamian layer mitigates nothing in the source country, and your own country of residence applies its rules independently. Treat tax neutrality here as the absence of an extra layer, not as a shield against tax where the asset and the owner actually sit.
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Holding Foreign Property Through a Bahamas Company
Holding international real estate is among the most common reasons investors use a Bahamas IBC. The entity is built to operate outside the islands, and no Bahamian exchange-control restriction touches an IBC that holds only non-Bahamian property. Where the company holds assets solely outside the country, it owes no Bahamian business licence and no business licence tax.
One structuring point recurs across portfolios. A single IBC can hold properties in several countries, but many investors instead place each property in its own company to isolate liability between assets.
The recurring cost is treaty leakage. Any withholding the source country imposes on rental income or disposal proceeds remitted to the holding company cannot be reduced, and where that rate runs to 15 to 30 percent, the drag is real. The structure works cleanly for assets in countries that do not withhold on rent to offshore companies; it is a poor fit where they do.
Holding Bahamian Property: Local Rules and the Foreign Ownership Permit Regime
Property inside the islands brings a separate regime under the International Persons Landholding Act (IPLA). A foreign-owned company buying a property for rental or any commercial use must obtain a Permit from the Bahamas Investments Board before closing. The Permit costs USD 1,000, payable to the Public Treasury, and processing usually takes 30 to 45 days once complete papers are filed.
The timing rule is strict. A Permit must be annexed to the conveyance before it is recorded in the Registry of Records, and an acquisition that proceeds without it is deemed null and void.
Two further approvals attach to the same purchase. An IBC may hold Bahamian real estate only with the consent of the Exchange Control Department of the Central Bank, and it may be designated "resident" so that it can operate a Bahamian dollar account; all foreign property purchases also require Central Bank approval to bring the purchase funds into the country. A foreign company incorporated elsewhere may instead register under the Companies Act 1992 and hold property through that registration.
Amendments dated 1 July 2024 and 1 July 2025 refined the regime, the latter allowing automatic 180-day Permit extensions, up to twice, where a sale has not closed and an extension notice with fee is filed at least 30 days before expiry.
Where a company owns Bahamian property, its directors are jointly and severally liable with the company for any unpaid real property tax. This is personal exposure, and it compounds when several properties sit under one board.
If the premises will be let to visitors, the proprietor must also register with the Hotel Licensing Department of the Ministry of Tourism and Aviation, or with the relevant Family Island Administrator.
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One Property Per Company: Ring-Fencing Liability Across a Portfolio
The IBC offers an ordinary corporate veil, nothing more. It contains no protected-cell or segregated-portfolio mechanism for ordinary property holding, so two properties inside one company are not legally walled off from each other. Isolating liability across a portfolio means one company per asset.
That structure carries a second advantage on exit. When each company holds exactly one property, a buyer can purchase the shares rather than the asset, which matters for the VAT treatment discussed below.
The cost is linear. Annual government fees and registered-agent fees repeat for every company, and the director's joint liability for property tax multiplies with each Bahamian asset added to a single board. Weigh the protection of separation against the running cost of a multi-entity structure.
Collecting and Repatriating Rental Income
Rental income, whether from short-term lets or long leases, faces no Bahamian income or corporate tax, and distributions to shareholders carry no withholding. The gross return stays with the company before any source-country deduction.
For property abroad, the figure that reaches the company is the gross rent less whatever the source country withholds, with nothing added on the Bahamian side. For Bahamian-sited property, repatriation runs through exchange control: the Central Bank has delegated authority to commercial banks to release foreign currency on evidence of proper approvals, and a designated-resident company must keep that compliance current.
- Securing "Approved Investment Status" at the time of investment matters, because the Central Bank can block later conversion of Bahamian dollars to foreign currency where the original transaction lacked required approvals.
- Residential rentals shorter than 45 days attract VAT; lettings longer than 45 days do not, which shapes short-stay rental planning.
- Banks abroad may apply enhanced due diligence to a Bahamas-company account, a friction tied to the country's listing history covered later.
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Stamp Duty, Transfer Taxes, and the Cost of Moving Property In and Out
The government's VAT on conveyances applies to the transfer of all Bahamian real property and has effectively replaced the old stamp duty on conveyances. The point that bites foreign buyers and companies is the rate.
| Item | Rate |
|---|---|
| VAT on conveyance, non-Bahamian or company buyer | 10% flat, regardless of price |
| Lease under five years | 2.5% of annual rent reserved |
| Recording deeds/mortgages | USD 4.50 per page |
| Real property tax, non-owner-occupied, up to $500,000 | 0.75% per year |
| Real property tax, $500,001 to $2,000,000 | 1% per year |
| Real property tax, above $2,000,000 | 1.5% per year |
Graduated lower tiers, from 2.5 percent, exist only for Bahamian citizens; foreign buyers and companies pay the flat 10 percent on every transaction. Custom splits the conveyance VAT roughly 50/50 between buyer and seller, though that is negotiable.
Two compliance points govern recording. Since 1 October 2022, a conveyance must state the property's tax assessment number and cannot be stamped until all outstanding real property tax is paid, and unpaid tax sits as a first charge ranking ahead of any mortgage, with a 5 percent annual surcharge on late payment.
Moving an existing personally-owned Bahamian property into an IBC is itself a conveyance to a company, drawing the full 10 percent. That upfront charge often outweighs the structuring benefit for property already held in a personal name. Rates and worked examples appear in published costs and fees material.
Transferring Property by Selling the Company Shares
For Bahamian property, the share-sale exit does not work the way investors hope. The Value Added Tax Act treats the sale of a business that involves a transfer of land, or a share in a landowning company, as a supply of real property, so selling the shares of an IBC whose only asset is Bahamian land still attracts VAT.
For foreign property, the position differs sharply. A share sale in the holding company is generally not a Bahamian conveyance and draws no Bahamian VAT; tax falls entirely to the country where the property sits and to the seller's residence country.
There is no Bahamian capital gains tax on either route, since the country does not tax appreciation. Shares may be issued or transferred for various forms of consideration, including an interest in real property, with the board holding wide authority over valuation.
One IPLA check applies to Bahamian assets: a change in the beneficial ownership of the company may trigger a fresh Permit requirement where the result is a new non-Bahamian person holding Bahamian land. Confirm this before any share transfer involving local property.
Succession and Inheritance Through Share Transfer
No estate, inheritance, or gift tax applies, so shares in a property-holding company can pass on death or by gift with no Bahamian charge. Converting immovable property into moveable shares can also simplify cross-border succession, the classic "share wrapper" benefit, and for Bahamian property it avoids re-recording a conveyance and may avoid a fresh IPLA permit, though a beneficial-ownership change should still be checked.
The benefit is purely domestic, and that limit deserves emphasis. Where the owner's home country applies forced heirship, look-through succession rules, or inheritance tax on worldwide assets, the wrapper does little; a UK-domiciled owner still faces UK inheritance tax, and French real estate remains within French succession tax regardless of the corporate shell. The wrapper's value depends entirely on the owner's domicile and the property country's rules, which makes home-country advice essential.
Financing the Acquisition: Mortgages, Lender Attitudes, and Security Over Shares
Many foreign buyers pay cash or borrow at home. Bahamian banks do lend to foreign buyers in US dollars, but terms tend to demand a larger deposit, often 30 to 50 percent, with potentially higher rates.
Security over Bahamian property follows familiar common law lines. The usual lender remedy is the power of sale on default, exercisable after notice without court foreclosure, and a security trustee may hold the property on trust for a lender. A non-Bahamian security trustee must itself obtain a Permit from the Bahamas Investment Authority to hold property as security.
Lenders also watch the property-tax charge, which ranks ahead of a mortgage, so evidence of current payment is required before funds advance. The Central Bank has moved over recent periods, including in early 2024, to simplify aspects of exchange control and delegate certain approvals to local institutions, but the approvals needed for any given deal still warrant advice.
The weaker reality concerns international appetite. Many European and North American lenders apply heavier due diligence or decline to lend against a Bahamas-company-owned asset, and appetite for a pledge over the company's shares is uneven. Cash purchase or home-country financing are the common practical answers.
Economic Substance Requirements for a Property-Holding Entity
This is where a property holder fares well. Under the Commercial Entities (Substance Requirements) Act 2023, in force from 1 September 2023, real estate holding is not among the nine listed "relevant activities," which cover banking, insurance, fund management, finance and leasing, headquarters, shipping, distribution and service centres, intellectual property, and holding companies with subsidiaries in those fields.
A company that only holds real estate, Bahamian or foreign, and collects rent is therefore not an "Included Entity" and faces no full substance test. It sits closer to a "passive holding entity," which need only comply with applicable Bahamian law and meet annual reporting obligations.
- A real-estate holder earns rent, not dividends, so it is arguably not a "pure equity holding company" under the Act; classification should be confirmed with local counsel.
- Annual reporting still applies to passive holders, including disclosure of gross income, total expenditure, and the amount spent in the islands.
- The Ministry of Finance is the competent authority and may order on-site inspections to verify portal filings.
Two further points qualify the picture. An IBC that holds and rents out Bahamian real estate is conducting business in the islands and is not exempt from the business licence requirement under the Business Licence Act 2023, unlike a company holding only foreign property; the CESRA guidelines set out the reporting detail.
Reputation is the live concern. CESRA 2023 and the new licence regime were enacted in direct response to EU and OECD pressure, and the country has been delisted and relisted on the EU's non-cooperative list more than once, creating friction for compliance officers at banks and institutional counterparties. Verify the current list position before relying on the structure.
Conclusion
For property located outside the islands, a Bahamian holding company is a clean, tax-neutral, low-substance wrapper, provided you accept that it offers no treaty relief and may complicate banking and lending. For Bahamian property, the calculus tightens: a permit before closing, exchange-control approvals, a flat 10 percent conveyance VAT that even the share-sale route cannot escape, and personal director liability for property tax.
The single thing to weigh next is the source-country and home-country tax position, because the Bahamian layer changes nothing there, and that is where the real cost or benefit of the structure is decided.
How Expanship Can Help Your Business in The Bahamas
Expanship sets up and runs Bahamas holding companies for foreign-owned real estate, handling the IBC formation, the Investments Board permit process for local property, and the ongoing reporting that keeps the entity compliant, alongside the wider support a non-resident owner needs to operate there.
- Company incorporation, including IBCs for single-property and portfolio structures
- Registered agent and registered office services
- Economic-substance classification and annual tax-reporting support under CESRA 2023
- Ongoing compliance management, including business licence and property-tax obligations
- Accounting and bookkeeping for rental income and distributions
- Introductions to banking partners for company accounts and repatriation
To discuss a structure for your property, contact Expanship Bahamas.
Frequently Asked Questions
No. Real estate holding is not a "relevant activity" under CESRA 2023, so a company holding only foreign property is treated as a passive holding entity with no full substance test. It must still file an annual report disclosing gross income, total expenditure, and any amount spent in the islands.
Only for foreign property. The Value Added Tax Act treats a share sale in a company whose asset is Bahamian land as a supply of real property, so VAT still applies; for property located outside the islands, a share sale is not a Bahamian conveyance and draws no Bahamian VAT.
A non-Bahamian buyer or company pays a flat 10 percent VAT on the purchase price, with none of the lower graduated tiers available to citizens. There is also a USD 1,000 Investments Board permit fee, Central Bank exchange-control approval, and recording costs of USD 4.50 per page.
Yes. Where a company owns Bahamian real property, its directors are jointly and severally liable with the company for any outstanding real property tax, which ranks as a first charge ahead of any mortgage. The exposure increases when one board holds several local properties.
No. The country has TIEAs but no double-tax-treaty network, so any withholding the source country applies to rent paid to the company applies in full. The Bahamian layer adds no treaty relief, which is the main cost of using it for foreign property.
Bahamian banks do lend to foreign buyers in US dollars, though they typically require a 30 to 50 percent deposit at potentially higher rates. Many international lenders apply heavier due diligence or decline to lend against a Bahamas-company-owned asset, so cash or home-country financing are common alternatives.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
