Key Takeaways
- A Vanuatu company can hold listed securities, funds, and other market instruments for a single owner or family with no operating business.
- Tax neutrality on capital gains, dividends, and interest is a core draw, but the absence of a treaty network leaves withholding at source unrelieved.
- Opening a brokerage or custody account in the company name can be the main practical hurdle, since not every provider accepts a Vanuatu entity.
- Passive holding companies still face economic substance expectations and information-exchange exposure, which factor into comparisons with common alternatives.
The Vanuatu Company as a Private Investment and Portfolio Holding Vehicle
The vehicle most non-residents use is the International Company (IC), an entity limited by shares built for activity conducted outside the country. A single individual may hold all shares and act as sole director, with no nationality or residency restriction on either role. This makes the form workable for a private investor who wants ownership concentrated in one hand.
Statutory upkeep is light. There is no requirement to file accounts or an annual return, though the company must keep financial records sufficient to prepare statements if asked.
Costs are modest by offshore standards: incorporation runs USD 150 and the annual registration fee is USD 300. An IC is exempt from all Vanuatu taxation for 20 years from registration, and there is no paid-up capital requirement, with authorised capital conventionally set at USD 10,000 and adjustable.
For a family running several distinct portfolios, a Protected Cell Company (PCC) is also available. It allows assets and liabilities to be ring-fenced between cells inside one legal envelope, which can suit multi-beneficiary arrangements without forming separate companies for each pool.
What This Structure Can and Cannot Hold: Listed Securities, Funds, Forex, and Other Market Instruments
An IC may hold listed equities, ETFs, managed funds, bonds, and cash-equivalent instruments through a third-party broker or custodian. Where the company is merely the account holder and offers no dealing service to anyone else, this passive holding activity needs no securities licence from the regulator.
The boundary matters once the company starts acting like a dealer. The definition of "dealing in securities" under the Dealers in Securities (Licensing) Act [Cap 70] reaches foreign exchange transactions intended to make a profit for a client, and a company running proprietary forex for its own account can fall within that scope and may require a licence.
Two further limits apply by design. An IC cannot trade within the country or own local real estate, and any activity touching insurance, banking, or fund management requires separate VFSC approval before it begins.
Including words such as "bank," "finance," "insurance," "fund management," or "investment fund" in the company name requires prior approval from the regulator, regardless of the underlying activity.
There is a subtle classification point that returns in Section 7. A "pure equity holding entity" is defined narrowly: it holds only equity participations yielding dividends or capital gains. Add a single interest-bearing bond, and the company falls outside that definition.
Company Incorporation in Vanuatu
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Opening a Brokerage or Custody Account in the Company Name: Who Accepts a Vanuatu Entity
Account opening is usually the hardest step, not incorporation. Banks and brokers run extensive due diligence on offshore entities, ask for certified documents, source-of-funds evidence, and a clear business purpose, and some decline Pacific offshore jurisdictions outright as policy.
In-country options sit under the Reserve Bank of Vanuatu and include ANZ Vanuatu, Bred Bank Vanuatu, BSP Vanuatu, and Westpac Vanuatu. Their appetite for IC portfolio-holding accounts varies and is not publicly confirmed for this use-case, so the position should be checked through a registered agent.
International access is the genuine constraint. None of the major brokers (Interactive Brokers, Schwab, Fidelity, Saxo) publicly confirms acceptance of a Vanuatu IC as an entity account holder, and the country's presence on the EU AML list is a documented friction point that advisers must test platform by platform.
EU and UK-licensed Electronic Money Institutions offer corporate IBANs and sometimes accept offshore clients, making them a practical fallback when correspondent banks refuse. Where bearer shares remain in use, they must be immobilised with a licensed custodian who records beneficial ownership, in line with FATF-aligned reforms.
Tax Neutrality on Capital Gains, Dividends, and Interest Received by the Portfolio
At the Vanuatu level the position is clean. An IC pays no income tax, no corporate tax, no capital gains tax, and no withholding tax, and financial services attract no VAT where business is conducted exclusively offshore.
That exemption is statutory for 20 years from the date of registration. It applies so long as the company does not conduct business within the country.
The neutrality is real but narrow. It removes a Vanuatu tax charge; it does nothing about tax levied where the assets sit or income arises, and it does not touch the owner's personal liability at home.
Vanuatu's exemption does not override your own residence-country tax rules. The company may owe nothing locally while you remain fully liable on the same income personally; confirm your position with an adviser where you are resident.
Ongoing Compliance in Vanuatu
Keep your Vanuatu entity compliant with filings, returns, and statutory obligations.
Withholding Tax at Source and the Absence of a Treaty Network
This is where a yield-focused portfolio loses ground. Vanuatu has signed no Double Taxation Conventions with most countries, so there is no mechanism to reduce or reclaim withholding tax imposed at source.
The arithmetic is unforgiving. A Vanuatu IC holding US equities pays the non-treaty US dividend rate of 30 percent; on EU equities it pays each member state's non-treaty rate, commonly between 15 and 35 percent; interest from bonds in major markets is taxed at non-treaty rates in the same way.
What the country has signed are 14 Tax Information Exchange Agreements, with counterparties including Australia, France, Ireland, New Zealand, Norway, the Republic of Korea, and Sweden. These are exchange-of-information instruments only and confer no withholding relief whatsoever.
There is no Vanuatu competent authority through which the IC could file a treaty refund claim, because no treaty exists. Several countries also withhold on gains from the sale of locally domiciled companies, and a Vanuatu IC carries no protection against those charges either.
Zero tax in Vanuatu does not equal zero tax on the portfolio. For dividend or fixed-income holdings in the US, UK, or EU, source-country withholding is the dominant and irrecoverable cost.
Reporting and Information-Exchange Exposure for the Account and Its Owner
The structure is transparent to tax authorities by design. Vanuatu belongs to the OECD Global Forum, has signed the Convention on Mutual Administrative Assistance in Tax Matters, and joined the CRS Multilateral Competent Authority Agreement on 21 June 2018.
In practice, this means automatic exchange. If an account is opened for the company anywhere in a CRS jurisdiction and the beneficial owner is tax-resident in a participating country, that owner's home tax authority receives account information annually. A FATCA intergovernmental agreement is also in force, so US persons are reported to the IRS.
Confidentiality from the public is genuine. There are no public registers of directors or shareholders, and beneficial ownership data, while held in the VFSC registry, is not publicly accessible.
Confidentiality from governments is not. Competent authorities can obtain that information through proper legal process, and information requests are handled by the Vanuatu Competent Authority within Customs and Inland Revenue, whose exchange-of-information role is published. For a tax-resident owner, the company offers compliance, not opacity.
Vanuatu Incorporation Pricing
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Economic Substance Expectations for a Passive Holding Company
Under current practice, the country imposes no formal economic substance requirement on ICs. A Resident Entity (Economic Substance) Bill was introduced in Parliament in 2024, and its enactment status should be confirmed with the regulator or a local agent before relying on the position.
The more pressing substance question often comes from the owner's home country, not from Vanuatu. Many residence jurisdictions apply their own substance or anti-avoidance tests before they will treat the structure as tax-effective.
Here the portfolio's composition decides the classification. A pure equity holding company, holding only equity participations and earning only dividends and capital gains, attracts a reduced substance test under OECD BEPS Action 5 and similar frameworks. Add bonds, money-market instruments, or forex positions, and that reduced test is lost.
A critical point for this use-case: a company that holds a brokerage account, rather than direct shareholdings, does not qualify as a pure equity holding entity, because its asset is a claim against the broker, not equity ownership. Even a qualifying holding company cannot be a letter-box; the OECD minimum standard requires the people and premises needed to hold and manage the equity.
Structuring for a Single Owner or Family With No Operating Business
For a sole owner the structure is straightforward and cheap to run. One person can be both shareholder and director, no corporate secretary is mandatory, no annual meetings are required, and any meetings that do take place may be held anywhere.
A family with multiple portfolios has two main routes. The PCC ring-fences sub-portfolios into separate cells with separate assets and liabilities inside one company, while a trust overlay adds succession and asset-protection planning above the IC.
Vanuatu trust law applies UK legislation directly, including the Trustee Act 1925 and the Law of Property Act 1925, alongside the Perpetuities and Accumulations Regulation 1974. An IC held under a Vanuatu trust can sit beneath that structure, though trust management itself must be carried on by a locally incorporated company and cannot be conducted by the IC.
| Item | Amount |
|---|---|
| Incorporation (one-off) | ~USD 150 |
| Annual government fee | USD 300 |
| Registered agent and office (mandatory) | ~USD 500–1,500/year |
Bearer shares are permitted in principle, but industry practice has tightened: at least one major provider declines to assist with bearer share registrations, reflecting caution after FATF alignment.
Where Vanuatu Falls Short for This Use-Case and Practical Workarounds
The treaty gap is the structural weakness. With no conventions covering the US, UK, Germany, Japan, or any major capital market, source-country withholding applies in full and cannot be reclaimed, which is a permanent drag on a dividend or fixed-income portfolio.
Reputation compounds the problem. The country remains on the European Commission's list of high-risk third countries for AML purposes, which triggers enhanced due diligence at EU-regulated banks and brokers and makes EU account opening harder. It was placed on the FATF grey list in February 2016 and later exited, but the separate EU listing has persisted across multiple iterations and is documented in a published EU listing timeline.
Several further constraints bear directly on this use-case:
- No Tier-1 international broker publicly confirms acceptance of a Vanuatu IC as an entity account holder.
- A mixed portfolio (bonds, money-market, or any brokerage account) cannot claim the pure-equity reduced-substance classification and faces a broader, currently ill-defined holding-company test.
- The tax exemption runs 20 years from registration, not in perpetuity; the position after year 20 needs legal review.
- An IC account holder has no equivalent to FSCS, SIPC, or EU investor compensation schemes.
Workarounds exist but trade simplicity for cost. The custody account can be opened by the owner personally or through a non-EU-listed entity, with the IC sitting upstream as a holding shell. Interposing a BVI, Cayman, or Singapore entity as the direct account holder, with the Vanuatu company as shareholder, can ease EU broker access at the price of added structure. Choosing a TIEA-partner custodian jurisdiction such as Australia or New Zealand, where CRS-compliant disclosure is routine, may also reduce friction.
Comparing Vanuatu to Common Alternatives for a Personal Investment Holding Company
The comparison turns on two questions: does your portfolio generate treaty-relievable income, and do you need mainstream brokerage access. On both, Vanuatu sits behind Singapore and the UAE.
| Factor | Vanuatu IC | BVI BC | Cayman Exempt Co. | Singapore Private Co. | UAE Free Zone Co. |
|---|---|---|---|---|---|
| Corporate tax on portfolio income | Zero (20-yr exemption) | Zero | Zero | 17% (some investment income exempt) | Zero |
| DTC network | None | None | None | ~90 DTCs | ~130 DTCs |
| Withholding tax relief | None | None | None | Significant treaty relief | Significant treaty relief |
| EU AML list status | On EU list | On FATF grey list | Generally clean | Clean | Clean |
| Economic substance regime | Bill introduced 2024; no formal IC rule | In force | In force | In force | In force |
| Brokerage/bank acceptance | Difficult | Moderate | Good | Good | Good |
| Annual government cost | ~USD 300 | ~USD 550 | ~USD 1,000–2,000 | ~USD 300–600 | ~USD 2,000–5,000+ |
| Public registers | None | None | None | Directors public; BO private | Varies |
The conclusion is plain. Zero local tax avoids double taxation at the Vanuatu end, but the absence of any treaty network and the EU listing make this a materially weaker choice than Singapore or the UAE wherever the portfolio holds significant dividend-yielding or interest-bearing assets in major markets, or wherever Tier-1 brokerage access is required.
Conclusion
A Vanuatu International Company works as a cheap, private, low-maintenance holding shell, and for an equity-only portfolio held directly, or as an upstream entity above another account holder, it can earn its place. As the front-line owner of a yield-bearing brokerage account, it disappoints: source-country withholding is unrecoverable, mainstream brokers hesitate, and the EU AML listing raises the cost of every banking conversation.
Weigh one thing before deciding: the composition and source-country mix of your portfolio. If it is weighted to US, UK, or EU dividends and bonds, the treaty gap will cost you more each year than the structure saves.
How Expanship Can Help Your Business in Vanuatu
Expanship handles the formation and ongoing administration of a Vanuatu International Company used for investment and portfolio holding, from selecting the right vehicle to keeping it in good standing, and supports the wider needs of a foreign-owned entity established there.
- Incorporating your International Company or Protected Cell Company with the VFSC
- Acting as registered agent and providing the mandatory registered office
- Advising on economic-substance classification and any tax registration that applies
- Managing ongoing compliance, record-keeping obligations, and annual filings
- Arranging accounting and bookkeeping where you need financial statements prepared
- Introducing banking and custody options suited to an offshore holding entity
To discuss whether this structure fits your portfolio, contact Expanship Vanuatu.
Frequently Asked Questions
No. Where the company is only the account holder and provides no dealing service to third parties, holding listed equities, funds, or bonds through a broker or custodian requires no VFSC securities licence. A licence becomes relevant only if the company itself acts as a dealer or runs proprietary forex that meets the statutory definition of dealing.
No. Vanuatu has no Double Taxation Conventions with major markets, so a US holding suffers the non-treaty dividend rate of 30 percent and EU holdings face member-state non-treaty rates of roughly 15 to 35 percent. None of this can be reclaimed, because there is no treaty and no Vanuatu competent authority to file a refund claim under one.
Not from authorities. Vanuatu reports under CRS, having joined the Multilateral Competent Authority Agreement on 21 June 2018, and operates a FATCA intergovernmental agreement, so account information reaches the beneficial owner's home tax authority automatically. Public privacy is genuine, since there are no public registers, but that is separate from disclosure to governments.
It is often the most difficult part of the process. Banks and brokers apply enhanced due diligence to offshore Pacific entities, no Tier-1 international broker publicly confirms acceptance of a Vanuatu IC, and the country's EU AML listing adds friction at EU-regulated institutions. EU or UK-licensed Electronic Money Institutions and TIEA-partner custodians are practical fallbacks.
Under current practice, ICs face no formal substance requirement, though a 2024 bill on resident-entity substance should be checked for enactment with the regulator. The more common issue is that a portfolio including bonds or a brokerage account is not a pure equity holding entity, so it cannot claim the reduced substance test that your home jurisdiction or OECD frameworks might otherwise allow.
The IC tax exemption is statutory for 20 years from the date of registration. It is not perpetual, so the tax treatment beyond that point should be reviewed in advance rather than assumed to continue.
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.
