Forming a British Virgin Islands (BVI) Company
- Incorporation time: 2 days
- Shelf companies: Yes
- Accounting: No
- Secretary: No
- Nominee Shareholder: Yes
- Nominee director: Yes
History of the British Virgin IslandsThe British Virgin Islands (BVI), which are located in the West Indies, were discovered by Christopher Columbus in 1493 and captured by the British in 1673. Today they are a British Overseas Territory and although they do not form part of the UK they remain under its authority.
The British Virgin Islands as an Offshore LocationAlthough the British Virgin Islands offer anonymity and 0% tax companies, they are strongly associated with tax avoidance and evasion. Their relatively poor international reputation may negatively impact their ability to trade in Europe.There are two types of BVI offshore companies: British Virgin Islands Business Companies (IBCs), the traditional “offshore company”, and British Virgin Islands Ordinary Resident Companies, which are regulated in a manner closer to a European standard.A BVI IBC is the most popular offshore company form in the world and is equivalent to a European private limited company. IBCs are governed by the International Business Companies Act which provides that the company director must be appointed within 30 days of the company’s creation. There are no nationality or residency requirements for shareholders or directors. There is no minimum share capital requirement but there are Government fees payable on formation. These fees vary depending on the company’s share capital with the minimum being 350 USD for a BVI company with a share capital of 1,100 USD or less. An IBC may not carry out any activity in the British Virgin Islands, except for certain exempt services necessary to its incorporation and administration (accountants’ and lawyers’ fees etc.).In order to be able to do business directly in the BVI, it is necessary to opt for the British Virgin Islands Ordinary Resident Company which is permitted to trade in the BVI. A BVI company is considered resident in the BVI if most of the directors are based in the BVI and, in such cases, must apply for a trading licence.
British Virgin Islands SummaryThe BVI are a popular offshore location and remain an excellent choice for international transactions outside of Europe. Despite being a leading tax haven for more than 30 years, new standards combating offshore companies have been introduced in Europe which focus specifically on this territory and it is now highly inadvisable to use BVI companies to invoice to or from European entities. The BVI is therefore currently re-positioning itself as a tax planning destination for Asian clients.
Types of BVI CompaniesCreating a company in the BVI generally takes two days and there is no minimum share capital requirement. The cost is around 1,100 EUR. The BVI offers the following types of companies :
- IBC / Company limited by shares (the most common type in the BVI)
- Unlimited company not authorised to issue shares: often used by not-for-profit organisations
- Limited liability company authorised to issue shares: offering greater flexibility
- Unlimited liability company authorised to issue shares: considered the most “transparent” BVI entity
- Unlimited liability company not authorised to issue shares
Different tax rates
Companies pay no tax in the British Virgin Islands, and there is no VAT. Income tax is as follows :
|Personal income (USD)||Tax rate|
|0 – 3,000||0%|
|3,001 – 7,500||6%|
|7,501 – 15,000||10%|
|15,501 – 22,500||15%|
|22,501 or more||20%|
France and the BVI signed a Double Tax Avoidance Agreement
There is no accounting requirement for companies, which are not obliged to keep or publish their accounts.
The jurisdiction in detail
The British Virgin Islands are mainly known for their status as a tax haven and their particularly attractive environment for businesses. The location is so advantageous that a report published in 2000 found that 41% of global companies were registered in the BVI (KPMG). It is also estimated that 5,000 companies are created there each month. Other dynamic sectors in the British Virgin Islands are tourism (50% of the GDP) and water sports, as well as fishing, construction, fruit production and rum distillation.
Advantages of investing :
- Very favourable tax system
- The country’s good offshore reputation
- Fast and efficient trade registry
- Modern telecommunications infrastructure
- Flexible legislation
- No limit to offshore activity
Employment legislation in the BVI is almost non-existent. There are no trade unions or minimum wage. However, there are standards nonetheless, and employees must be registered with the Social Security Board. The retirement age is set at 65 years, subject to having made 250 weeks’ contributions. Employer social security contributions are 4.5% and 4% for employees.
The Queen of the United Kingdom appoints the Governor of the BVI (William Boyd McCleary), who names his Prime Minister (Ralph T. O’Neal). Together, they lead the executive power.