What are the advantages of the set up of a company in the BVI?
- The British Virgin Islands (“BVI”) is a group of around 60 islands in the Caribbean Sea. The capital of the BVI is Road Town. The territory relates to the British Overseas Territories and has a stable political and economic system. The official language is English which allows business owners to avoid the costly translations of official documents.
- The BVI are one of the most popular world offshore jurisdictions. Approximately 40% of the world’s offshore companies choose to operate its business in this country.
- Formation of a company in the BVI gives various opportunities for effective tax planning (Our firm offers a wide range of tax planning services to our individual and business clients). Simplicity and clearness of the BVI tax rules is undisputable advantage of this jurisdiction. In addition, the offshore company is exempted from all local taxes and duties, including income and corporation taxes, capital gains tax, stamp duties, taxes upon the transfer of assets, taxes upon all interest, rent, royalties, etc. There are no requirements with respect to currency controls either.
- BVI companies are allowed to open local and foreign accounts, own shares and other securities, freely transfer their assets in any form, enter into and complete transactions in any currency, perform trading and investment activities. There are no restrictions on conducting business in any country of the world (except the BVI itself).
- Apart from a duty to maintain accurate accounting reports (ie preparation of bookkeeping), a company registered in the BVI is not burdened by excessive duties to submit any financial statements or tax reports for each fiscal year. There is no duty to conduct financial audit either. However, in the event the company maintains accounts with European Banks, management accounts are mandatory for almost all EU banks. This involves preparation of the financial and statistic information which shall be submitted in the form of periodic reports to the company’s managers to enable them to make appropriate commercial decisions related to the company’s daily operations. The management accounts are used for internal purposes (such account may contain details of cash flow status, sales revenues, accounts payable and receivable, etc), while financial accounting statements are publicly reported.
- The company which was set up in the BVI is subject to strictly confidential treatment since access to the data of its beneficial owners, shareholders and directors is restricted for third parties. The respective information is not available in the BVI Company Registry (except where the owners wish to do so) and may be disclosed exclusively on the basis of a ruling adopted by a local court. However, on 11 May 2017, the British Virgin Islands (BVI) published its list of Reportable Jurisdictions for the Common Reporting Standards (CRS) (an information standard for the automatic exchange of tax and financial information on a global level developed by the Organisation for Economic Co-operation and Development). 40 countries / territories are recognised as Reportable Jurisdictions for BVI law purposes (the full list may be found here http://www.bvi.gov.vg/pub/List of Reportable Jurisdictions for the CRS as of 13 June 2017 (final gazette copy).pdf). The BVI International Tax Authority has indicated that this is a provisional list and revisions to the list will be made as agreements are put in place between treaty partners to provide the information required under the CRS. The list of BVI Reportable Jurisdictions should be distinguished from the list of BVI Participating Jurisdictions. (the full list of Participating Jurisdictions can be found here: http://www.bvi.gov.vg/sites/default/files/bvi_list_of_participating_jurisdictions_for_crs.pdf)
- The existence of a simple and clear procedure for the incorporation of a company in the BVI is another sufficient advantage. The procedure for incorporation of a company in the BVI usually takes from 24 to 48 hours, and 1-3 working days should be allowed for the notarial certification and apostillation of all the necessary documents. An additional period of time required for the delivery of documents by courier service should also be taken into account by the future owner of the BVI company, whose personal presence is not mandatory within the process of incorporation.
- The official currency of the BVI is the US Dollar, which simplifies in a significant way the settlement of accounts with business partners. The main purpose of the formation of an offshore company in the BVI is the possibility to transfer any amount of currency to and from the country without any restrictions.
What is the legal framework for incorporation and operation of the BVI company?
The basic legislative acts regulating the issues of incorporation and operation of BVI companies are the following:
- The Companies Act (Cap 285);
- The BVI Business Companies Act (2004) (amended), which eliminated the double approach with respect to governance of incorporation issues depending on the company’s origin. From 1 January 2005 this act applies to both local and foreign companies and the respective procedure of company formation in the BVI shall be uniform from this date onwards.
The legal system of the BVI is based on the common law system.
What kind of company can be incorporated in the BVI?
A BVI Offshore Company may be incorporated as a BVI Business Company (BVI BC) in various legal forms (for instance, as a company limited by shares or a company limited by guarantees, authorized or not authorized to issue shares, and in certain other forms). Each legal form has its own peculiarities and features.
What necessary requirements should be taken into account with respect to the incorporation of a company in the BVI?
- At least one shareholder and at least one Director (both individuals and legal entities) are the necessary minimum for a company. The Shareholder and Director may be the same person. You may also use a nominal shareholder or director.
- The corporation structure of the BVI company may be quite flexible as no management bodies (except for at least one Director) are required. Meetings of the Board of Directors may be held in any country by any means (including telephone and other electronics means).
- The company is required to have its registered address and registered agent on the territory of the BVI.
- The name of the company shall be unique and may not be similar to the names of other companies, which may confuse the customers of both companies. The name of the BVI offshore company shall indicate that the liability of its members is limited (namely, it must include such parts as “limited”, “ltd”, Gmb, Corp., Corporation, etc). It must not demonstrate that the company’s activities refer to banking, insurance or trust activities.
- The company is required to have Memorandum and Articles of Association which shall be submitted to the Registrar of Companies. These documents are the only documents which are publicly available.
- BVI legislation does not provide the requirements with respect to the minimum share capital. The minimum nominal value of shares is not prescribed eith The most “popular” amount of share capital is 50,000 USD divided into 50,000 shares of 1 USD. The latter figure is the highest amount enabling the payment of the minimum registration fee of 350 USD.
- There are some exceptions provided by applicable legislation of the BVI with respect to particular types of business which offshore companies are not allowed to operate. For example, but not restricted to this, the company is not allowed to transact deals with residents of the BVI, to own any property in the BVI, to operate as a bank, trust or insurance company (unless the company has received a license). However, since 2007, according to the Financial Services (Exemptions) Regulations, private trust companies (“PTCs”) are allowed to be established in the BVI without the need to obtain a licence if certain conditions are met (for instance, the constitutional documents of the company shall include information that it is a PTC; the company shall be limited (by shares or by guarantee) and the designation “PTC” shall be incorporated into its name, etc). The PTC is allowed to act as a trustee of a specific trust or a number of related trusts, but it is not allowed to providetrust business services to the
For online registration of a company in the BVI please follow this link. With regard to the question “How to set up a business in the BVI?”, our clients will definitely have a number of questions: How to set up a company in the BVI? How to set up a BVI bank account? What is the step-by-step procedure for forming an offshore company in the BVI? It should be noted that the above-stated information serves exclusively as a general overview of the procedure for company formation. Our company is always willing to provide you with appropriate legal and financial advice with respect to all the necessary details. We will assist you in complying with the requirements set out by legislation and in determining the best way to set up an offshore company in the BVI and to incorporate your own company.