Choosing the Best Legal Structure for Your Vanuatu Business

Published on September 30, 2025 and written by Cyril Jarnias

Vanuatu, a South Pacific archipelago, has become a sought-after destination for international entrepreneurs seeking a favorable tax environment and flexible regulations. However, choosing the right legal status for your business in this offshore paradise requires a thorough understanding of the available options and their implications. This article will guide you through the different legal structures offered in Vanuatu, their advantages and disadvantages, as well as the factors to consider when making the best choice for your business.

Vanuatu’s Assets for Entrepreneurs

Before diving into the details of legal statuses, it’s essential to understand why Vanuatu attracts so many entrepreneurs from around the world. The country offers a particularly attractive tax environment, with a complete absence of corporate, income, capital gains, and inheritance taxes. This advantageous tax policy is accompanied by business-friendly regulations and appreciable political stability.

Furthermore, Vanuatu has significantly strengthened its regulatory framework in recent years to comply with international standards for combating money laundering and terrorist financing. This evolution allowed the country to be removed from the Financial Action Task Force (FATF) grey list in 2018, thereby strengthening its credibility on the international stage.

The Vanuatu Financial Services Commission (VFSC) plays a crucial role in regulating and supervising companies registered in the country. It ensures maintaining a balance between the country’s attractiveness for foreign investors and compliance with international standards.

Main Legal Structures in Vanuatu: Make the Right Choice!

Vanuatu offers several types of legal structures for entrepreneurs wishing to establish their business there. Each has specific characteristics suited to different needs and business objectives.

1. International Company (IC)

The International Company is the most popular structure among foreign investors in Vanuatu. It offers maximum flexibility and considerable tax benefits. Here are its main characteristics:

• Complete exemption from taxes on profits, dividends, and capital gains
• High confidentiality for shareholders and directors
• Possibility of having a single shareholder and a single director
• No minimum capital required
• Ability to hold offshore bank accounts

The International Company is particularly suited for international activities, online commerce, wealth management, and holdings.

2. Local Company

Although less common for foreign investors, the Local Company may be interesting for those who wish to have a physical presence in Vanuatu or conduct local commercial activities there. Its characteristics include:

• Ability to conduct commercial activities within Vanuatu territory
• Requirement to have a resident director in Vanuatu
• Need to maintain accounting and produce annual financial statements
• Subject to local VAT (15%) for activities conducted in Vanuatu

This structure is more appropriate for businesses intending to operate directly in the local Vanuatu market.

3. Exempt Company

The Exempt Company offers an intermediate status between the International Company and the Local Company. It presents the following advantages:

• Tax exemption on profits made outside Vanuatu
• Possibility to conduct certain limited activities in Vanuatu
• Requirement to have a resident agent in Vanuatu
• Simplified accounting compared to the Local Company

This structure may suit businesses wishing to benefit from Vanuatu’s tax advantages while having some local presence.

Sole Proprietorship or Company: Which Option to Choose in Vanuatu?

The decision between registering a sole proprietorship or creating a company in Vanuatu depends on several factors, including the nature of your activity, your long-term objectives, and your personal situation.

Sole Proprietorship in Vanuatu

The sole proprietorship, although less common for foreign investors, may be considered in certain cases. Here are its main characteristics:

• Simplicity of creation and management
• Unlimited personal liability of the entrepreneur
• No separation between personal and professional assets
• Applicable personal taxation (although Vanuatu does not tax personal income)

This option may suit individual entrepreneurs wishing to conduct consulting or freelance activities on a small scale.

Company in Vanuatu

Creating a company in Vanuatu, particularly as an International Company, presents numerous advantages:

• Limited liability for shareholders
• Clear separation between personal and professional assets
• Better credibility with business and financial partners
• Tax optimization thanks to Vanuatu’s advantageous regime
• Flexibility for future business development

For the majority of foreign investors, creating a company in Vanuatu, particularly an International Company, proves to be the most advantageous option. It offers better legal protection, maximum tax optimization, and greater flexibility for developing the business internationally.

Key Factors for Choosing the Right Legal Status in Vanuatu

To determine the most appropriate legal status for your business in Vanuatu, several factors must be considered:

1. Nature of Activity and Target Market

The nature of your activity and the market you target are crucial elements in choosing your legal structure. If your business operates mainly internationally without physical activity in Vanuatu, an International Company will likely be the most suitable. Conversely, if you plan local operations, a Local or Exempt Company might be more appropriate.

2. Capital Needs and Financing

Evaluate your capital needs and potential funding sources. A corporate structure like the International Company can facilitate obtaining financing and bringing in investors, thanks to its increased credibility and ability to issue shares.

3. Confidentiality and Asset Protection

If confidentiality is a priority for you, the International Company offers the highest level of discretion, with limited information accessible to the public about shareholders and directors.

4. Administrative Complexity and Management Costs

Consider the administrative complexity and costs associated with each structure. The International Company generally has minimal administrative requirements, while the Local Company involves more significant accounting and reporting obligations.

5. Growth Prospects and Flexibility

Think about your long-term growth objectives. A structure like the International Company offers great flexibility for future expansion, facilitating the addition of shareholders or company restructuring if necessary.

6. Tax Regime and Optimization

Although Vanuatu offers a very advantageous tax regime, different structures can have different tax implications, particularly regarding local activities and VAT. Make sure to choose a structure that optimizes your overall tax situation.

Registration Procedure and Legal Requirements

Once you’ve chosen the legal status most suited to your project, it’s important to understand the registration procedure and legal requirements associated with creating a business in Vanuatu.

Key Registration Steps

• Company name reservation: Check the availability of your desired name with the VFSC and reserve it.
• Preparation of incorporation documents: Draft the company’s articles of association and other required documents according to the chosen structure type.
• Appointment of a local agent: For International Companies, a licensed local agent is necessary to manage administrative aspects.
• Application submission: Submit your complete file to the VFSC, accompanied by registration fees.
• Obtaining the certificate of incorporation: Once approved, your company will receive its certificate of incorporation.

Specific Requirements by Structure Type

• No minimum capital required
• At least one shareholder and one director (who can be the same person)
• A licensed local agent
• No requirement to hold annual meetings in Vanuatu

• At least one resident director in Vanuatu
• Maintenance of accounting and production of annual financial statements
• Requirement to hold annual meetings in Vanuatu

Timelines and Costs

The company registration process in Vanuatu is relatively quick and efficient. For an International Company, registration can generally be completed in 1 to 2 weeks. Costs vary depending on the type of structure and additional services required, but are generally competitive compared to other offshore jurisdictions.

Ongoing Compliance

Once your company is registered, it’s crucial to maintain its compliance with Vanuatu’s regulations. This includes:

• Payment of annual renewal fees
• Updating information on shareholders and directors
• Compliance with reporting obligations, if applicable
• Maintaining a local presence compliant with your structure’s requirements

Conclusion: Making the Right Choice for Your Entrepreneurial Future in Vanuatu

Choosing the right legal status for your business in Vanuatu is a crucial decision that will significantly impact your long-term success. The International Company remains the most attractive option for the majority of foreign investors, offering an optimal combination of tax benefits, operational flexibility, and asset protection.

However, each situation is unique, and it’s essential to consider all aspects of your entrepreneurial project before making a decision. Businesses with local ambitions in Vanuatu might find more advantages in a Local or Exempt Company, despite greater administrative obligations.

Remember that the international regulatory landscape is constantly evolving, and Vanuatu strives to maintain a balance between its attractiveness for investors and its compliance with international standards. It’s therefore crucial to stay informed of potential changes and adapt accordingly.

Finally, although Vanuatu offers a favorable business environment, creating an offshore company requires careful planning and a thorough understanding of legal and tax implications, both in your home country and in Vanuatu. It’s highly recommended to consult experts in international business law and taxation to guide you through this process.

By wisely choosing your legal status and scrupulously respecting current regulations, you’ll lay the solid foundations for a successful entrepreneurial adventure in this South Pacific paradise.