An “offshore company” is generally understood to be a corporation registered in a “tax haven” – low-tax or zero-tax country. Tax advantages, however, are by no means the only benefit to registering an international business enterprise in a jurisdiction like British Virgin Islands. A typical modern offshore company is a private corporation which is exempt from tax, suitable for virtually any international business activity, has a flexible organizational structure, is not subject to excessive accounting and reporting requirements and maintains certain level of confidentiality with rather limited information available to general public. The BVI offers all of these benefits – and more.
In 1984 the British Virgin Islands adopted International Business Companies Ordinance which marks the beginning of its success as an offshore financial services jurisdiction. Since that time the BVI offshore company has attained a model status in the offshore services industry. Since then BVI has been by far the most popular offshore tax haven with the greatest number of registered offshore companies among all the offshore jurisdictions in the world. Such is the dominance of the British Virgin Islands as an offshore corporate domicile, that in many regions of the world International Business Companies are called simply as “BVI’s”.
In 2005 the BVI introduced a further development in its corporate legislation by eliminating any discriminatory differences between international business companies (offshore companies) and domestic companies. All the companies in the BVI whether they operate locally in the BVI or internationally outside the BVI are registered in the same Register, regulated by the same law, all have the same rights and the same tax regime (tax-free). This is a great advantage as it is harder to determine whether a particular company is actually “local” or “offshore”.
By virtue of its legal and commercial reliability, constant and proficient modernization of corporate legislation and prompt reaction to global changes, BVI has retained a well-deserved reputation between the offshore jurisdictions. As far as offshore business jurisdictions go, BVI is clearly a premium “brand”.
CORNERSTONES OF SUCCESS
These are some of the general advantages of the British Virgin Islands over many other offshore jurisdictions:
US dollar is the official currency in the BVI – therefore, by definition, there can be no currency controls and no artificial manipulation of money supply by the local government.
BVI are a British Overseas Territory, which provides for an outstanding political stability. The country also maintains a low international profile and a clean reputation, thus avoiding the pitfalls experienced by some more publicised and less scrupulous offshore tax havens.
BVI has an independent judicial system based on English Common Law. Laws and regulations are routinely developed in consultation with the private sector. Offshore financial services sector contributes a very significant part to the country’s gross domestic product. Therefore, an inherent and pronounced interest exists both with the government and with the general public to maintain and develop the country’s status as a competitive offshore jurisdiction.
BVI is easily accessible by sea and air, has modern telecommunications and is on US Eastern Standard Time (1 hour behind EST in winters).
THE MOST IMPORTANT CHARACTERISTICS OF A BVI BC IN DETAIL
EXEMPTION FROM TAX
A BVI Business Company is exempt from the BVI income tax, the same exemption applies to all dividends, interest, rents, royalties, compensations and other amounts paid by a company, and all capital gains realised with respect to any shares, debt obligations or other securities of the company. No estate, inheritance, succession or gift tax is payable with respect to any shares, debt obligations or other securities of a BVI BC.
All transactions and instruments relating to transfers of any type of property of assets, shares, debt obligations or securities to or by a BVI BC are exempt from the stamp duty, with a sole exception for land-ownership transactions in the British Virgin Islands, in which case stamp duty remains payable.
LEGAL PERSONALITY
A British Virgin Islands Business Company has separate legal personality and the same powers as a natural person.
STRUCTURAL FLEXIBILITY
A BVI Business Company requires a minimum of only one owner, one shareholder, and one director. All of them can be one and the same person. Apart from the director, the company need not appoint any operating officers. The management structure of the BVI Business Company may be designed in accordance with the widest variety of requirements.
The shareholders, directors and officers of a BVI Business Company may be individuals or corporations and of any nationality. The shareholder’s or director’s meetings need not be held in the British Virgin Islands and there is no requirement for an Annual General Meeting.
Meetings can be held by telephone or other electronic means; alternatively, directors as well as shareholders may vote by proxy.
Where a Business Company has only one member who is an individual and that member is also the sole director, such sole member / director may specifically appoint a reserve director to act in his place in the event of his death.
Provisions against confiscation
If a foreign Government or authority seizes Company shares, or any other interest in the Company in connection with nationalization, expropriation, confiscatory tax, other governmental charge or with a similar cause the Company or a shareholder may apply to the BVI court for an order that the Company disregard the seizure and continue to treat the person from whom the shares were seized as continuing to hold the shares.
Keeping of accounting records/ FINANCIAL RETURN REQUIREMENT
BVI Business Companies must keep accounting records that are sufficient to show and explain the Company’s transactions; and will, at any time, enable the financial position of the Company to be determined with reasonable accuracy. The information required to be kept includes the records and the underlying documentation which means all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place, all sales and purchases of goods by the company and the assets and liabilities of the company.
Accounting records do not have to be kept in the British Virgin Islands and the location for keeping the records can be freely determined by the owners of the Company providing the Registered Agent with a written confirmation of the respective address.
BVI Business Companies do have an obligation to prepare and file Annual Financial Return (“Annual Return”) to their Registered Agent nine months after their company’s fiscal year-end.
The Annual Return is a simple balance and income statement. In summary, the balance sheet provides the company’s assets, debts, and shareholders’ equity, whereas the income statement provides details regarding a company’s earnings, expenditures, profits, and losses within a specific period. There is no accounting standard requirement, however, the directors of BVI Companies have the duty to exercise a standard of care and ensure the financial information of the company is determined with reasonable accuracy.
The Annual Return is filed only with the company’s Registered Agent, and the details of the Annual Return or financial information of the Company will not be publicly accessible.
There is no requirement for accounting records or the Annual Return to be audited.
BVI Economic Substance requirements
All BVI entities are required to prepare, report and file economic substance declaration about their business annually. The ESA Requirements were introduced in the Virgin Islands via the Economic Substance (Companies and Limited Partnerships) Act, on December 31st, 2018 which became effective on Jan. 1st, 2019.
Relevant activities include:
- Banking Business
- Distribution and Service Centre Business
- Insurance Business
- Fund Management Business
- Finance and Leasing Business
- Headquarters Business
- Shipping Business
- Intellectual Property Business
- Holding Business (Holding business’ in the Economic Substance Regime is defined to mean ‘the business of a pure equity holding entity’ which itself is defined to mean a ‘legal entity that only holds equity participations in other entities and only earns dividends and capital gains’.)
Companies not conducting business in the scope of relevant activity must submit a fully completed, dated and signed ESA Declaration form to us via email annually for Boss filing within 6 months of the Company’s financial year end.
Companies carrying on a Relevant Activity that is potentially within the scope of the legislation has three options:
- Ensure that the substance of the relevant activity is carried on within the BVI;
- Discontinue the activity, or modify it so it no longer falls within the scope of a relevant activity;
- Demonstrate tax residence in a jurisdiction outside the BVI which is not on the EU’s list of non-cooperative jurisdictions;
If the Company is conducting relevant activity, a fully completed dated and signed ESA Declaration form along with the requirements which must be complied with if the Company is claiming to be BVI tax resident.
Company which is not paying taxes outside the BVI is by default deemed to be tax resident in the BVI, unless it can be proven otherwise and is required to meet relevant substance requirements as laid out in the act in avoidance of legal enforcements actions being brought against the Company and its directors.
Various types of incorporations
A BVI Business Company may be incorporated as a company limited by shares, a company limited by guarantee (with or without authorisation to issue shares), an unlimited company (with or without authorisation to issue shares), a segregated portfolio company and a restricted purpose company.
No requirement to state operational objects
There is no requirement to specify the operational objects of the BVI Business Company in the foundation documents of the Company (Memorandum and Articles of Association). However, the company may choose to do so, as a specific type of a “restricted purpose company” is envisaged by the Business Companies Act.
Confidentiality
In order to register a company in the BVI, each beneficial owner, shareholder and director will be required to provide detailed information including legalized copy of identification document and proof of address to the Registered Agent and keep this information updated at all times. Information of the beneficial owners and shareholders stays confidential at the office of the Registered Agent. The Register of Directors is filed to the Registrar, and is available for public inspection through the BVI online registry system (VIRRGIN).
The only publicly available documents of the companies are the Memorandum and Articles of Association and register of directors, but these normally do not contain any indication as to the actual shareholders or the beneficial owners of the company.
However, in the modern world, almost all the countries have associated in common fight against international crime and fraud. Information sharing between the countries is inevitable and becomes more automatic and widespread each year. The few countries that do not cooperate are excluded from participation in global finance or face severe restrictions on international financial operations. BVI has always quickly reacted to the changes in the global trends to retain its excellent reputation and impeccable name in the finance sector. It means also more dedicated participation in information exchange. Nonetheless, any information is disclosed only strictly according to the procedure set forth in the respective laws or international agreements. Only limited amount of information is disclosed and NO information is disclosed to the countries that are not part of such agreements with the BVI.
Generally, two types of agreement are the most common basis for information sharing – Tax Information Exchange Agreements (TIEA) concerning tax matters and FATCA for USA residents or CRS for the residents of the countries committed to the CRS concerning banking information.
Regarding TIEAs, the BVI has these agreements in force with more than 20 countries, including USA, UK, Canada, China, France, Germany and others, you can find full list of such countries here. Information sharing according to these agreements is NOT automatic and the requesting party must follow complicated procedure to obtain it. It must identify the suspected person and demonstrate realistic grounds for believing that the requested information is held by the BVI. No information is disclosed based on mere suspicions of tax evasion. The disclosed information may not exceed the requested. So, basically it means that the BVI can only confirm the information that the foreign Government already has in its possession and would not provide any additional information.
As for the banking information, it is shared automatically strictly according to the procedures specified in the FATCA and CRS regulations. Here you can find more information about FATCA or CRS.
Company names
A BVI Business Company may not be registered under a name that is identical to the name of an existing BVI company, or is so similar to the name of an existing BVI Company, that, in the opinion of the Registrar, such name would be likely to confuse or mislead. As the BVI Registrar of Companies has a name-reservation system, a reserved name would also be considered as an already existing name.
Without obtaining a prior written consent of the Financial Services Commission, a BVI Business Company may not be registered under a name that contains a “restricted” word or phrase (according to a published list of such restrictions) – such as the words “Assurance”, “Bank”, “Building Society”, “Chamber of Commerce”, “Chartered”, “Cooperative”, “Imperial”, “Municipal”, “Royal”, “Trust” or any word conveying a similar meaning, as well as any name suggesting the patronage of the British Royalty, British, BVI or any other government or its department.
The Registrar may also refuse the registration of any particular name if, in the opinion of the Registrar, such name is offensive or, for any other reason, objectionable.
The name-endings denoting the type of company
The name of a limited company, shall end with the word “Limited“, “Corporation” or “Incorporated“; the words “Societe Anonyme” or “Sociedad Anonima“; the abbreviation “Ltd“, “Corp“, “Inc” or “S.A.“; or such other word or words, or abbreviations thereof.
The name of an unlimited company shall end with the word “Unlimited” or the abbreviation “Unltd”.
The name of a restricted purposes company shall end with the phrase “(SPV) Limited” or the phrase “(SPV) Ltd”.
The name of a segregated portfolio company shall end with one of the phrases “Segregated Portfolio Company Limited”; “Segregated Portfolio Company Ltd”; “SPC Limited”; “SPC Ltd”; or, in the case of a segregated portfolio company that is a restricted purposes company, one of the phrases specified in this paragraph with “(SPV)” inserted immediately before that phrase or immediately before “Limited” or “Ltd”.
Quite uniquely for BVI, the name of a BVI Business Company may comprise the expression “BVI Company Number” followed by its company number in figures and the ending required, as specified above – for instance “BVI Company Number 987654 Ltd”. A company name expressed in such fashion may also contain additional foreign characters between the company number and the ending.
Appointment of Agents
The directors of a BVI Business Company may appoint any person (including an existing director), to be an agent of the Company. Subject to the Memorandum and Articles of Association such agent has such powers and authority as the directors may prescribe, except that no agent shall have no authority to amend the Memorandum or Articles; to appoint directors or agents; to approve a plan of merger, consolidation or arrangement; or to make a declaration of solvency or approve a liquidation plan.
Annual renewal fees
After the incorporation, a BVI Business Company must pay the renewal fees every year to continue its legal existence. The minimum mandatory fees include Government renewal fee, Registered Agent fee (covers also the Registered Address), Compliance fee for regular document verification of the beneficial owners, shareholders and directors of the company and economic substance filing and review fee.
Apart from the fees above, other professional fees may be payable for the Company management and administration depending on the services you have ordered (third-party director/board member, shareholding/share custody, company secretary, business address, call handling or any other services). These services are optional.
All fees are listed in full detail in our Schedule of Fees. The annual fees are charged once a year following the renewal payment schedule of the BVI Company Registry. All the companies registered from January to June must pay the annual fees by the end of May every year starting from the next year after the company registration, and the companies registered from July to December must pay the annual fees by the end of November every year starting from the next year after the company registration.
If the company fails to pay any of our service fees, we will resign from providing the respective services to the company. The company will stay liable for any services already provided.
In case the Government fees are not paid, the penalty fees will apply according to the BVI Business Companies Act. If the company has not paid the renewal fees and/or the late penalty fees, the company name will be struck off the Register. Once the company name is struck off, the company cannot do any business and deal with its assets. Restoration of the company name to the Register is possible, however quite costly procedure.
Fixed Government fee
A BVI Business Company must pay the following annual license fees to the BVI Government:
FOR COMPANIES WITH REGISTERED SHARES ONLY:
USD 550 for Company with up to 50,000 shares, with or without par value.
USD 550 for Company limited by a guarantee or an unlimited company without shares.
USD 1350 for Company with more than 50,000 shares, with or without par value.
USD 8000 for a Restricted Purposes Company.
A SHORTLIST : MAIN CHARACTERISTICS OF THE BVI BUSINESS COMPANY
FACTOR | DESCRIPTION |
| Income tax in BVI | None |
| Conduct business internationally | Yes |
| Conduct business within BVI | Yes |
| Formally considered as resident in BVI | Yes |
| Official language / language of documents | English |
| Operational objects | No requirement to specify |
| Authorized capital | Not required as a concept |
| Minimum paid-up capital | No specific requirements |
| Considerations to the capital | In any currency or in kind |
| Most effective number of shares (maximum amount at minimum state fee) | 50,000 shares (with or without par value) |
| Bearer shares | Not allowed |
| Registered Agent in BVI | Required |
| Registered Address in BVI | Required |
| Minimum number of directors | One |
| Non-resident directors | Allowed |
| Corporate directors | Allowed |
| Register of Directors | To be filed with the Registry of Corporate Affairs |
| Register of Directors on public record | Yes. Available for public inspection through the BVI online registry system (VIRRGIN). |
| Minimum number of Members (shareholders) | One |
| Register of Members | To be kept by the Registered Agent |
| Register of Members filed for public record | Optional |
| Holding of Annual General Meeting | Not required |
| Convention of Meetings of Directors / Members | Anywhere in the world, also by proxy |
| Corporate Seal | Mandatory |
| Imprint of Corporate Seal | To be kept by the Registered Agent |
| Corporate Minutes and Resolutions | To be kept by the Registered Agent |
| Disclosure of beneficial owners to Registrar | No |
| Disclosure of beneficial owners to Agent | Yes (confidential due diligence) |
| Keeping of accounts | Yes. To be kept by the Registered Agent. All BVI companies will be required to provide their Registered Agent with an Annual Financial Return – effectively, a non-audited balance sheet and income statement. |
| Auditing of accounts | Not required |
| Filing of accounts | The Annual Return is filed only with the company’s Registered Agent, and the details of it will not be publicly accessible. |
| Double-tax avoidance treaties | Switzerland, Japan |
| Currency controls / restrictions | None |
| Available special types of company | Restricted purpose company Segregated portfolio company |
| Redomicile a foreign company into BVI | Yes |
| Redomicile a BVI company abroad | Yes |
| Net time to incorporate | 3-5 days |
| Ready-made (shelf) companies | Available |
How to Register?
From company order, name check and reservation, documentary requirements guidelines, feedback and timing. Step by step guide how new BVI offshore company registration is done.
