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British Virgin Islands Incorporation and BVI Banking: the Ultimate Guide

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A perfect blend of charm, culture and beauty, there are almost 60 isles in the scattered constellation that makes up the British Virgin Islands (BVI).

To the north lies Anegada with its serene beaches, while the beating heart of the BVI heart is Tortola, where the capital Road Town hums with life. If sailing is your bag, then the idyllic Jost Van Dyke offers an unparalleled experience.

Together, these islands provide just about everything an investor or nomad might dream of, but each island offers its own unique slice of paradise. Certainly, they’ve been attracting brilliant entrepreneurs for decades – just ask Richard Branson, who owns his own ‘bump in the ocean’ here, Necker Island.

It’s easy to see the appeal.

The weather is always perfect, the beaches are postcard-perfect, and the seas sparkle in shades of blue that almost seem too vivid to be real. Throw in lush rainforests, a laid-back lifestyle and a myriad of outdoor adventures, and you have the BVI experience.

Home to about 32,000 residents and welcoming roughly 800,000 visitors annually, the BVI successfully blends a close-knit community feel with the bustling energy of a tourist hotspot.

As a British Overseas Territory, English is the official language, and the US dollar is the currency, making it accessible and convenient for international guests and businesses alike.

Unsurprisingly, the BVI’s tourism sector is the largest employer and the backbone of the economy. But tourism isn’t the only industry—despite its small size, the BVI also boasts a flourishing financial services sector.

The transformative International Business Companies Act of 1984 set the stage for BVI to become the world’s premier offshore financial hub. With around 600,000 registered offshore companies, it leads the way among offshore jurisdictions, offering unmatched financial opportunities amid its breathtaking landscapes.

 In short, it’s a great place to locate your business. But incorporating here isn’t quite as straightforward as improving your tan on one of the sun-soaked beaches or catching a scuba trip.

Setting up here can be complicated, requiring local expertise and knowledge. That’s where we can help. The Nomad Capitalist team has years of expertise and experience helping people navigate the intricacies and complexities of embarking on a new, foreign adventure. Let us help you unlock the benefits of doing business in this incredible archipelago. Reach out to us and start planning the next step of your journey.

The British Virgin Islands BVI Best Countries to Set Up a Business

British Virgin Islands Business Company

Corporate Legislation

A significant reason why BVI is such a popular jurisdiction for company registration is its corporate governance. The country has introduced several bills to strengthen its corporate structures and procedures, including the registration, auditing and maintenance of foreign companies.

We have already mentioned the Business Companies Act, which details the establishment, tax liabilities, audit requirements and other matters related to a BVI business company. In 2005, the country also abolished any remaining differences between an international business company and a local company.

Since then, whether your BVI company operates locally or internationally, it has the same rights and tax advantages. All companies also share the same Corporate Register and are regulated under the same law.

Unlike offshore tax havens like Vanuatu, which has earned its fair share of notoriety owing to its zero tax, zero reporting and somewhat lax due diligence, BVI strives to operate according to international tax and corporate compliance rules.

The Economic Substance (Companies and Limited Partnerships) Act was introduced in 2018 and became effective a year later. This made it mandatory for all BVI entities to prepare, report and file economic substance declarations about their businesses annually.

Types of BVI Companies

The BVI Business Companies Act allows the establishment of the following types of companies:

  • Company Limited by Shares
  • Restricted Purpose Companies
  • Segregated Portfolio Company
  • Company Limited by Guarantee
  • Unlimited Companies.

Among the structures mentioned above, a BVI Business Company limited by shares is known to be the best option for foreign investors because it is easy to set up and operate business activities.

Characteristics of a BVI Business Company

A BVI business company is the preferred option for many investors and entrepreneurs owing to its quick registration process, streamlined incorporation, tax advantages and increased confidentiality.

Here are some of the main characteristics of a BVI business company.

Legal Structure

A British Virgin Islands company is a separate legal entity and thus is entitled to the same powers as a natural person.

A BVI company is required to have at least one director, one shareholder and one owner – all of whom can be one person. The director(s) and shareholder(s) can be of any nationality and can be natural persons or legal entities like corporations.

The company must have a registered address and an agent in the BVI. A BVI Company’s structure is quite flexible and can be designed according to the company’s management requirements. There is also no minimum capital paid requirement.

Reporting Requirements

BVI companies are not obligated to prepare or file their financial accounts. However, the company must keep a detailed record of its cash inflows, outflows, assets and liabilities.

Such records are not required to be kept in the BVI and, moreover, don’t have to be made public.

There are no audit requirements. However, it’s important to reiterate that all BVI entities conducting relevant activities according to economic substance rules must prepare, file and report their annual economic substance declaration.

The relevant business activities are banking, insurance, wealth management services or any activity that requires an investment business license under the Securities and Investment Business Act.

In BVI, your company’s Articles of Association are not required to explain the scope of your business activities. However, you may choose to do so depending on your business structure.

Increased Confidentiality

In a world where anonymity and privacy are under attack, highly respected offshore jurisdictions that also respect your confidentiality are rare.

Company registration in the BVI requires all shareholders, directors and beneficial owners to submit proof of identification to a registered agent. However, all this information remains confidential since the Register of Directors is not publicly available.

The only publicly available company document in the BVI is the Memorandum and the Articles of Association. However, these usually don’t contain the identity details of the directors and, therefore, provide an extra layer of confidentiality.

The country has signed up to several global information-sharing codes, such as the Tax Information Exchange Agreements (TIEA) and Common Reporting Standards (CRS).

Note, however, that BVI doesn’t automatically share information under TIEA regulations. According to the agreement, the country can only confirm the information the foreign government already has and would not provide any additional information.

Banking information is treated differently and shared automatically under the Foreign Account Tax Compliance Act (FATCA) and CRS regulations.

Tax Advantages

By far, the biggest advantage of starting an offshore company in BVI is the lack of taxes. BVI companies don’t have to pay taxes on income or capital gains.

The same applies to dividends, interest, rents, royalties, compensations and other expenses paid by a company. The only tax liability is 10% payroll taxes for companies that employ local employees.

A BVI business company is also exempt from stamp duty on transactions relating to transferring any property, assets, shares, debt or securities.

However, land-ownership transactions are subject to a stamp duty of either 5% or 12%, depending on the size of the transaction. 

Documents Required to Open a BVI Bank Account

How to Set Up a BVI Business Company?

Register Company Name and Type

You must first register your company name in the Registrar of Companies. Your company name must not be similar to that of an existing BVI company. The Registrar will provide a list of words that must not be a part of your company name.

You must also select an entity type supported by the country’s legislation. It’s vital to select a business structure that best serves your requirements. If you need help, Nomad Capitalist’s company formation specialists are ready and waiting. Get in touch to find out more.

Submit Your Application

After that, you will need to submit supporting documents, including the Memorandum and the Article of Association. You will also need to provide certain information about your business directors, shareholders and other key roles, such as passport copies and proof of address for all shareholders.

Apply for a Business License

You must apply for a business license as a sole trader or a registered business. Your business structure, sector and scope will determine how easy or complex this step may prove to be. Some business activities can result in additional scrutiny and due diligence.

Open a Bank Account

Once you get your business license, you must open a BVI bank account (you don’t have to be present in the BVI to do that). After setting up a corporate bank account in BVI, your company is ready to operate.

Stay on the Right Track

The BVI Government has been trying for years to move away from the tax haven label, which attracts unwanted attention from both the authorities and unscrupulous investors who might damage the jurisdiction’s reputation. 

In BVI, compliance is paramount. Whether it’s your economic substance declaration or CRS regulations, you must comply at all times with the relevant authorities to ensure ease of doing business. 

Still, the country makes compliance very easy with no annual returns, audited reports, tax filing or annual general meetings.

Opening a Bank Account in the British Virgin Islands

Opening a bank account is a crucial part of BVI company registration. It’s also critical for managing your finances and carrying out the operations of your business smoothly.

The BVI Financial Services Commission manages all financial services providers there. 

BVI may be a famous offshore financial centre and offer tax advantages, but it’s different from jurisdictions like Vanuatu or, indeed, jurisdictions on the Organisation for Economic Co-operation and Development (OECD) blacklist because of its more stringent compliance rules. 

As one of six commercial banks, CIBC is a popular choice for foreigners setting up accounts for their offshore companies.

As with any credible bank, BVI banks require specific documents to open a corporate account. The more detailed and accurate your records, the easier your bank account opening journey will be.

Documents Required to Open a BVI Bank Account

You can expect to present the following documents when opening your bank account:

  • Bank account application forms
  • Bank statements
  • Bank reference letter
  • Certified copies of passports and proofs of address of all directors/shareholders
  • Business plan, activities and scope
  • Business trading proofs (sales/purchase orders, invoices)
  • Certified copies of BVI company documents
  • Government certification of company good standing status.

The list above includes only the generally required documents. Depending on the nature of your business structure and activities, you may be asked to submit additional documents.

British Virgin Islands Incorporation: FAQs

Is the British Virgin Islands a good place to incorporate?

Yes. BVI is a long-established and reputable jurisdiction in the offshore industry where approximately 600,000 offshore companies are registered. That’s around 40% of the world’s offshore companies. 

What are the benefits of BVI incorporation? 

Company formation in the BVI offers multiple benefits. There are no corporate taxes in the BVI and no requirement to file a corporate tax return. It’s also easy and affordable to establish a company there with limited reporting requirements and complete privacy. 

Are there any taxes in BVI?

Yes. The payroll tax rate is 10% for small companies and up to 14% for large businesses with more employees. Up to 8% of these taxes can be reimbursed at the expense of employees, and the first US$10,000 paid to an employee each year is exempt. Stamp duties ranging from 4% to 12% are levied on land-ownership transactions.

Is it expensive to incorporate in BVI?

Compared to other offshore jurisdictions, setting up BVI Company is considered to be cost-effective. The costs vary depending on the company type, services required and provider chosen. The process is made more cost-effective by having no annual reporting and tax-filing obligations. 

What are the confidentiality benefits of BVI incorporation?

As long as your documents reflect the actual owner, they are permitted to act on behalf of the ultimate beneficial owner. The only publicly available record is the Register of Directors, which can only be disclosed upon lawful request. No company records need to be kept within BVI. 

Do I have to open a corporate bank account in BVI?

Unlike other jurisdictions that require you to open a local bank account as a condition of incorporation, this is not the preferred option for incorporating a BVI entity, as you need to have economic substance there to do so. Therefore, many open bank accounts elsewhere and bank overseas.

Should You Consider British Virgin Islands Incorporation
British Virgin Islands

Are You Considering British Virgin Islands Incorporation?

The British Virgin Islands is one of the most business-friendly jurisdictions in the world, with substantial tax benefits to setting up a company there. 

In a world where many low and no-tax jurisdictions are under pressure from the international community to reform, BVI has improved its compliance record yet still offers enhanced privacy and plenty of tax advantages.

It’s also a preferred jurisdiction for foreign investors for the simplicity of establishing a company there. As a British Overseas Territory and member of the Commonwealth, it has strong ties to the United Kingdom and the US. 

In fact, the British Virgin Islands is one of the most business-friendly jurisdictions in the world, with substantial tax benefits to setting up a company there. 

It offers a versatile corporate structure for establishing various business entities, such as listing vehicles for both operating and holding companies. In many ways, it’s an ideal place to establish a tax-friendly offshore presence. 

However, this will require careful planning.

That’s where Nomad Capitalist comes in. We help seven- and eight-figure entrepreneurs and investors create a bespoke strategy using our uniquely successful methods. We’ll help you keep more money, create new wealth faster and protect yourself from whatever happens in just three steps. Become a client today and get started. 

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