Grenada Tax Benefits, CBI, and Global Tax Treaties

Through its Citizenship by Investment programme, Grenada offers the benefits of a second passport, global mobility and access to international markets. This article looks at Grenada’s tax environment and the practical Grenada Tax Benefits available to residents and investors. We then turn to exploring the broader theory and operation of tax treaties around the world and specific implications for U.K. citizens.

Grenada Tax Benefits

1. No Global Taxation: Both individuals and companies are taxed only on income that is earned within Grenada’s borders. This territorial approach means that Grenadian residents - including those who have obtained citizenship through the Grenada CBI programme - are not taxed on income from foreign employment, offshore investments, or business profits earned outside Grenada.

2. Income Tax: Residents of Grenada benefit from a personal allowance of XCD 36,000 (approximately USD 13,300), meaning that the first portion of income earned locally is tax-free. Beyond that threshold, Grenada employs a progressive rate system ranging from 10% to 28%.

Companies operating in Grenada pay a corporate income tax of 30% on profits derived from local operations. However, many sectors - particularly tourism, technology, and manufacturing - qualify for tax incentives or investment allowances under Grenada’s investment legislation.

3. Property Taxation: property tax ranges between 0.2% and 0.5% of the property’s assessed market value as determined by the Government. The rate payable as property tax depends on the classification of the property as residential, commercial or agricultural. On the sale of real estate, property transfer tax is paid by vendors at the rate of 10% for citizens and 15% for non-nationals. Importantly, property ownership in Grenada is protected by the strong land title laws adding security for foreign investors.

4. Non-Residents: Non-residents are taxed only on Grenadian-sourced income, such as business profits generated locally.

5. No Capital Gains or Inheritance Tax: Grenada imposes no capital gains tax and no inheritance or estate tax. Investors can transfer or pass on Grenadian assets without triggering tax liabilities.

Tax Residency and the 183-Day Rule

The most common standard for determining tax residency is the 183-day rule - if you spend 183 days or more in a country during a tax year, you are likely to be considered a resident for tax purposes.  

• United States: applies the IRS Substantial Presence Test, which considers not only the number of days you are physically present in the current year but also a weighted portion of days from the preceding two years. U.S. tax residents are subject to worldwide taxation, which remains in force unless they renounce citizenship or qualify for specific exclusions such as the Foreign Earned Income Exclusion.
• United Kingdom: uses the Statutory Residence Test (SRT), which assesses not only the number of days spent in the U.K. but also a range of “ties” that connect an individual to the country, such as family members living in the U.K., property ownership or habitual residence; employment or business activities; time spent in the U.K. over previous years. For U.K. citizens moving to Grenada, reducing day counts and severing key ties - such as selling or renting out a U.K. home or ceasing employment there - are crucial steps toward non-residence.
• European countries, including France, Germany, and Spain, follow a calendar-year system where tax residency is generally triggered by being present in the country for 183 days or more during the year. However, these systems often include qualitative tests that look beyond mere physical presence - for example, identifying the “centre of vital interests” or primary economic base. If your main home, family, or business interests remain within the country, you may still be considered a resident even if you spend fewer than 183 days there.
• Asian Jurisdictions: in most Asian countries, such as Thailand, Singapore, and Malaysia, the rules are relatively straightforward. Spending 183 days or more within the country typically establishes tax residency, while fewer days confer non-resident status.
• Grenada’s approach to tax residency is simple and territorial. Individuals are generally considered residents if they spend more than 183 days per year in Grenada.

Global Tax Treaties

A tax treaty is a formal agreement between two countries that sets out how cross-border income should be taxed. Without these treaties, the same stream of income could face taxation twice, discouraging international investment and mobility. These agreements sit at the intersection of international law, economic cooperation, and personal finance.

Two major global organisations have shaped how tax treaties function: The United Nations (UN), and the Organisation for Economic Co-operation and Development (OECD).

The primary purposes of a Tax Treaty include:

• Preventing double taxation of the same income;
• Ensuring fair allocation of taxing rights between source and residence countries;
• Promoting cross-border trade, investment, and labour mobility;
• Creating mechanisms for tax cooperation and information exchange.

Common Scenarios Where Tax Treaties Apply

As of 2025, there are more than 3,000 tax treaties in force worldwide. Countries such as the United Kingdom, France, Germany, and the Netherlands maintain the largest networks, but developing economies — including those in the Caribbean — are increasingly expanding their treaty coverage.

Common examples where Tax Treaties apply include:

• Working abroad: A professional from one country taking employment in another.
• Retirement income: Pensioners receiving income from their home country while residing elsewhere.
• Real estate or CBI investments: Investors acquiring property or a second citizenship through investment programmes like Grenada’s.
• Cross-border businesses: Companies operating branches or subsidiaries in foreign markets.

Types of Tax Treaties

1. Income Tax Treaties: They govern income categories such as employment income, business profits, capital gains, dividends, interest, royalties, and pensions. Income tax treaties specify which country has primary taxing rights and often reduce or eliminate withholding taxes.

2. Estate and Gift Tax Treaties: ensure that inheritance or gifts are not taxed twice - once in the decedent’s country of residence and again where the assets are located.

3. Social Security or Totalization Agreements: prevent double taxation of social security contributions and allow workers to combine contribution periods to qualify for benefits in multiple countries.

4. Tax Information Exchange Agreements (TIEAs): promote transparency by allowing the exchange of taxpayer information between jurisdictions, helping combat tax evasion and improving compliance.

Unilateral Tax Relief vs. Treaty Relief

Even in the absence of a treaty, some countries provide unilateral relief for double taxation. For example, the U.K. offers foreign tax credits for taxes paid abroad, while the U.S. allows either a credit or a foreign earned income exclusion.

However, treaty-based relief is generally more comprehensive and predictable. It sets explicit rules for each type of income, reducing uncertainty and potential disputes. For U.K. citizens investing in Grenada, the presence of a bilateral treaty is thus a major advantage - it provides clarity on how Grenadian income will be treated in the U.K. and vice versa.

Treaty Overrides and Domestic Law Conflicts

Despite the authority of tax treaties, domestic laws sometimes override them. In the United States, the “last-in-time” rule allows newer domestic legislation to supersede existing treaties. In contrast, many civil law jurisdictions give treaties equal or superior status to domestic law.

This interaction can cause uncertainty, especially for cross-border investors. Understanding how local law interprets treaties—and whether any override clauses exist—is crucial for effective tax planning and compliance. Grenada generally upholds its international commitments, viewing tax treaties as binding instruments under its domestic legal framework.

Grenada - UK Tax Treaty - Implications for the UK Citizens

The United Kingdom and Grenada share a long-standing connection through the Commonwealth and maintain a Double Taxation Agreement (DTA). The DTA between Grenada and the U.K. ensures that income earned in one country is not taxed again in the other, preventing double taxation. It delineates which jurisdiction has taxing rights over specific types of income.

In practice, U.K. citizens relocating to Grenada - whether through CBI or by ordinary residence - can benefit in several ways. First, Grenadian-source income, such as local business profits, rental income, or employment earnings, will be subject to Grenadian tax rates. Second, foreign-source income is not taxed in Grenada. The U.K.–Grenada DTA ensures that where tax is paid in Grenada, a foreign tax credit can be claimed in the U.K., thereby preventing double taxation. For individuals who become non-U.K. tax residents and establish bona fide residence in Grenada, worldwide income may fall entirely outside both U.K. and Grenadian taxation - provided all residency criteria and reporting obligations are met. This creates an attractive environment for U.K. retirees, remote professionals, and international investors seeking lifestyle diversification and fiscal efficiency.

Benefits of Tax Treaties for Individuals and Businesses

Tax treaties serve as protective frameworks that create fairness and predictability for both individuals and corporations:

1. Reduced Withholding Taxes: Treaties often cut withholding taxes on dividends, interest, and royalties, reducing costs for investors.
2. Tax Credits and Exemptions: Individuals can claim foreign tax credits or income exemptions, ensuring they are not taxed twice.
3. Certainty and Stability: Businesses gain clarity about which country can tax profits, reducing the risk of disputes and unforeseen liabilities.
4. Access to Treaty Benefits: Taxpayers must meet residency and substance requirements, ensuring that only genuine economic participants benefit.

Final Thoughts

Grenada Citizenship by Investment programme allows investors to participate in Grenada’s economy while enjoying the benefits of a second passport, access to Grenada Tax Benefits and business-friendly environment . Understanding the mechanics of tax treaties is crucial for those exploring Grenada’s real estate opportunities or seeking a residency in the Caribbean.

FAQs - Common Misunderstandings and Clarifications

1. If a treaty exists, I don’t have to pay tax in either country

This is one of the most common myths. Tax treaties do not eliminate taxation - they simply allocate taxing rights between two countries to prevent the same income from being taxed twice.

2. All income types are automatically covered under a treaty

In reality, treaties vary widely in scope. Some exclude certain income categories, such as government pensions or capital gains on real property.

3. I automatically get the lower withholding tax rate

Treaty benefits are not automatic. They must be formally claimed and supported by proper documentation. Investors often need to file tax residency certificates or other forms with local tax authorities to confirm eligibility.

4. Anyone with a passport from a treaty country can claim benefits

Residency is the determining factor, not citizenship alone. Most treaties define a “resident” based on where an individual has a home, economic ties, or habitual abode. A person holding a Grenadian passport through CBI must also meet residency criteria if they wish to be treated as a Grenadian resident under a tax treaty.

5. Grenada’s CBI investors automatically avoid taxation

Not true. While Grenada’s CBI programme offers citizenship and access to favourable tax conditions, each investor’s global tax position depends on their country of residence and personal structure. 

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