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Captive Costs in British Columbia
Licensing and registration fees for captives are not a major determining factor in selecting captive locations. Current British Columbia licensing and registration costs are similar to those in many other domiciles. In terms of specific costs, annual fees for a single parent captive with limited services are as low as Cdn$l0,000. Costs of operating even complex B.C. captives are quite low because of the extremely competitive nature of the insurance industry in British Columbia. The cost of living in British Columbia is roughly the same as that in Washington, D.C. This puts British Columbia in the same cost of living range as major U.S. domiciles such as Vermont, Hawaii, and Colorado. The cost of living is, however, approximately 20 to 30% less than in offshore domiciles such as Barbados, Bermuda and the Cayman Islands. The cost of living effect is that operational costs for a B.C. captive, including staffing and the provision of technical services such as legal, accounting and claims management, generally do not exceed those of U.S. domiciles, and these costs can be expected to be significantly less than for offshore domiciles. In fact, costs may be considerably less than U.S. domiciles since captives in British Columbia are normally established in Vancouver, which is a large cosmopolitan city with a well-established professional infrastructure. One potentially distinct difference between British Columbia and U.S. domiciles, especially, is that premium tax is not charged on risks located outside Canada. For example, a U.S. owner establishing a B.C. captive would not pay premium tax to the British Columbia government for insurance of its U.S. operations. Premium taxes for U.S. captive domiciles are generally in the range of 1/2% to 3/4% of premium written regardless of where the risk is located. The absence of premium tax in these situations could be a major consideration in selecting British Columbia as a domicile. A U.S. owner, for example, could annually save in excess of $25,000 in premium tax on a premium level of $5 million per annum.
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