British Virgin Islands
Business Company (Company limited by shares)
The British Virgin Islands is one of the world’s largest offshore financial center and a leading center for offshore company incorporation.
The British Virgin Islands has a strong offshore regulatory environment. They have a distinct combination of oversight and a laissez-faire approach which makes it both easy to do business – yet reputable with banks and other jurisdictions around the world.
Incorporation can take place within one or two days.
In addition, BVI has a modern infrastructure and good telecom systems. They also speak English and use a legal system derived from English common law. The BVI Government is quite responsive to the needs of offshore companies and has fostered a pro-business environment. The legislation is flexible, with the goal being to entice legitimate offshore activities, and to keep out money-laundering and other criminal activity.
An adequate economic substance is required for BVI Business Companies conducting relevant activities pursuant to the recently enacted Economic Substance (Companies and Limited Partnerships) Act, 2018.
Relevant activities include:
- Banking Business
- Insurance Business
- Fund Management Business (any activity that requires an investment business license under the Securities and Investment Business Act, 2010)
- Finance and Leasing Business
- Shipping Business
- Pure equity holding business – which will be subject to reduced substance requirements
- Intellectual property Business – those carrying out High-risk intellectual property business will be subject to enhanced substance requirements
- Distribution and service center business – trading goods with or providing services to foreign affiliates
Economic substance will be mainly assessed according to the following criteria:
- the relevant activity is directed and managed in the BVI;
- adequate numbers of suitably qualified employees who are physically present in the BVI (whether or not employed by the relevant legal entity or by another entity and whether on temporary or long-term contracts);
- adequate expenditures incurred in the BVI;
- appropriate physical offices or premises in the BVI; and
- where the relevant activity is the intellectual property business and requires the use of specific equipment, the equipment is located in the BVI.
All BVI Business Companies must provide information on an annual basis to enable the International Tax Authority in the BVI to assess whether a business is carrying out relevant activities and, if so, whether it is meeting the economic substance requirements.
Relevant BVI business companies incorporated on or before December 31, 2018, will have until June 30, 2019, to meet substance requirements.
Automatic exchange of information will be made to relevant foreign competent authorities if it is found that an entity is not complying with the economic substance requirements or conducts certain IP business or claims to be tax resident in a jurisdiction outside the BVI.
Failure to comply with substance requirements may lead to a minimum penalty of USD 5,000 and to a maximum penalty of USD 50,000 (High-risk IP) or USD 20,000 (other businesses).
Additional penalties may be applied if a company continues to fail substance requirements from a minimum amount of USD 10,000 to a maximum amount of USD 400,000 (High-risk IP business) or USD 200,000 (other businesses)
BVI BC companies are commonly used vehicles for offshore savings and investments, international corporate banking, forex, and stock trading, international trade, professional services, as well as a holding company, ship and aircraft registration, captive Insurance and estate planning.
Legal
Country code – VG
Legal Basis – Common law
Legal framework – BVI Business Companies Act, 2004 (As amended)
Company form – Business Company (Company limited by shares)
Liability - The liability of the shareholders is limited up to the amount of the shares they hold.
Economic Substance - Adequate economic substance is required for BVI Business Companies conducting relevant activities pursuant to the recently enacted Economic Substance (Companies and Limited Partnerships) Act, 2018.
Relevant activities include:
- Banking Business
- Insurance Business
- Fund Management Business (any activity that requires an investment business license under the Securities and Investment Business Act, 2010)
- Finance and Leasing Business
- Shipping Business
- Pure equity holding business – which will be subject to reduced substance requirements
- Intellectual property Business – those carrying out High-risk intellectual property business will be subject to enhanced substance requirements
- Distribution and service center business – trading goods with or providing services to foreign affiliates
Economic substance will be mainly assessed according to the following criteria:
- the relevant activity is directed and managed in the BVI;
- adequate numbers of suitably qualified employees who are physically present in the BVI (whether or not employed by the relevant legal entity or by another entity and whether on temporary or long-term contracts);
- adequate expenditures incurred in the BVI;
- appropriate physical offices or premises in the BVI; and
- where the relevant activity is the intellectual property business and requires the use of specific equipment, the equipment is located in the BVI.
All BVI Business Companies must provide information on an annual basis to enable the International Tax Authority in the BVI to assess whether a business is carrying out relevant activities and, if so, whether it is meeting the economic substance requirements.
Relevant BVI business companies incorporated on or before December 31, 2018, will have until June 30, 2019, to meet substance requirements.
Automatic exchange of information will be made to relevant foreign competent authorities if it is found that an entity is not complying with the economic substance requirements or conducts certain IP business or claims to be tax resident in a jurisdiction outside the BVI.
Failure to comply with substance requirements may lead to a minimum penalty of USD 5,000 and to a maximum penalty of USD 50,000 (High-risk IP) or USD 20,000 (other businesses).
Additional penalties may be applied if a company continues to fail substance requirements from a minimum amount of USD 10,000 to a maximum amount of USD 400,000 (High-risk IP business) or USD 200,000 (other businesses)
Share capital – BVI Business Companies are not required to state their authorized capital and have no minimum amount of shares. The usually authorized share capital is US$ 50,000, and it may be in any currency. There is no statutory requirement for capital to be fully or partly paid on incorporation.
BVI Business Companies may choose to state only the number of shares to issue, but they do not have to determine the monetary value of their capital. Thus, the company may issue its shares at a “market value”, or at a value that depends on the capitalization requirements of the company.
Shares may be redeemable; confer no rights, or preferential rights, to distributions; confer special, limited or conditional rights, including voting rights; confer no voting rights; participate only in certain assets of the company; where issued in, or converted to, one class or series, be convertible to another class or series, in the manner specified in the memorandum and articles of association. Shares may be with or without par value.
Subject to its memorandum and articles, a BC may issue fractional shares and bearer shares. Government fees for companies that issue bearer shares are substantially higher, and must be kept by an approved or authorized custodian.
Shareholders – Business companies may be formed by one or more shareholders, who can be either natural or legal persons, residents or non-residents. Details of shareholders are not publicly disclosed.
Directors – At least one director is required, who may be a natural person or a legal entity, resident or non-resident. Directors’ details are not available to the public.
Secretary – The appointment of a secretary is not required.
Registered Address – A BC must have a registered address in British Virgin Islands, provided by a licensed registered agent.
General Meeting – Annual general meetings are not mandatory, can be held anywhere, and may be conducted by telephone or other electronic means. Alternatively, directors and shareholders may vote by proxy.
Electronic Signature – Permitted.
Re-domiciliation – A foreign entity can be re-domiciled as a BC BVI, and vice versa.
Compliance – Business Companies may be required to keep accounting records and underlying documentation for a period of 5 years, but its location can be freely determined. There is no requirement to file financial statements, nor annual return.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- USD 1 Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Anywhere Location of annual general meeting
- 2017 AEOI
Taxes
Corporate income tax – The British Virgin Islands does not levy corporate tax, including no taxes on capital gains and investment income. All dividends, compensations, rents, and royalties are also exempted from BVI taxes.
No withholding tax is levied on dividend, interest and royalty payments to non-residents.
Although there is no tax on interest the BVI has implemented the EU savings directive which means that agents making interest payments to residents of an EU member state will automatically exchange information with the relevant member states tax authority with respect to the identity of the beneficial owner and the payment.
Other taxes – BVI does not levy direct personal taxes. Personal income, as well as, capital gains, net wealth and inheritances are not subject to taxation.
There is a stamp duty is imposed on the transfer of land in the British Virgin Islands. It is imposed on the contract value or the market value and ranges from 4% to 12%.
Land tax is levied annually at USD 50 for a half acre or less and USD 150 between half an acre and one acre. Each additional acre or part of an acre is taxed at USD 50.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- 0% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 0% Personal Income Tax Rate
- 0 Tax Treaties
Country details
The British Virgin Islands (BVI), officially the Virgin Islands, are a British overseas territory located on the Francis Drake Channel, east of Puerto Rico, in waters of the Caribbean Sea. The islands are part of the archipelago of the Virgin Islands, the other islands being part of the United States Virgin Islands and the Spanish Virgin Islands belonging to Puerto Rico.
The archipelago is made up of about forty islands, of which eleven are inhabited. The largest are Tortola, Virgin Gorda, Anegada and Jost Van Dyke. Its population is 27 800 inhabitants, living 23 000 on the island of Tortola, where it is located Road Town, the capital.
The executive power of the British Virgin Islands is shared between the monarch of the United Kingdom who is represented by a governor. This governor is appointed directly by the King on the advice of the British Government. Defense and foreign affairs are under the responsibility of the United Kingdom.
The BVI is one of the most prosperous economies among the Caribbean states, with one of the highest GDP per capita worldwide. Political stable, with modern infrastructures and a pro-business environment. Its main sectors are offshore financial services and tourism. Due to its close relationship with the US Virgin Islands, the US Dollar is the official currency.
The British Virgin Islands is one of the world's largest offshore financial centers and a world's leading center for company incorporation. The sector accounts on over half of the jurisdiction’s GDP and incorporation fees account for more than half of Government revenue.
The other significant economic sector is tourism, which approximately contributes to nearly half of the national income and employs a great part of its population.
The islands are a popular destination for its numerous white sandy beaches, the Baths of the Virgin Gorda, scuba diving on coral reefs near Anegada, the well-known bars on the Jost Van Dyke, or chartered yachts for exploring the less accessible islands.