Those entrepreneurs who want to enter the international market often choose the British Virgin Islands (BVI) for registering companies there. It is one of the most popular offshore jurisdictions and establishing a legal entity there brings several important advantages.
About the BVI in brief
The BVI is located in the Caribbean Sea and it is a British overseas territory. Even though it is an offshore jurisdiction, resident companies enjoy respect on the part of their international partners. The BVI is a reputable offshore jurisdiction trusted by all government agencies as well as banks in all countries of the world.
The official language is English in the BVI, which simplifies building partner relationships and registering companies.
Transactions are made in US dollars and no currency control is applied in the BIV.
The key sectors of the economy are tourism and financial services. The largest number of companies operate in these sectors. The number of offshore companies registered in the BVI is growing and it currently exceeds 400,000 companies.
Ove 95% of the population are literate and finding qualified personnel in the BVI is not a problem.
Advantages of the BVI
International entrepreneurs register companies in the British Virgin Islands for the following main reasons:
- Fast and simple company registration. If you do everything right, a company can be registered within 5 days.
- Minimal requirements to the company founder: one director and one shareholder is enough and a citizen of any country can act as the company founder.
- Light tax burden: many taxes are not charged in the BVI
- The BVI is on the ‘white’ list with the EU. This allows cooperating with European companies and banks
- High level of confidentiality protection: company UBOs’ personal data can be disclosed only on a court decision.
- Flexible corporate legislation: it is regularly adjusted and its main goal is protecting the interests of company owners.
- Wide corporate potential: restrictions are minimal for entrepreneurs.
- Large list of legal business activities: most segments of economy are open for foreigners without any tough requirements.
- Spotless reputation of the commercial court: all disputes are solved fast and within legal frameworks.
- Nominee services are legal. Companies can have nominee directors and nominee shareholders.
Advantages for investors
The BVI offers the following benefits to investors from other countries:
- It is possible to purchase a ready-made company in the BVI. Please follow this link to learn more about this opportunity.
- Transparent company purchase process.
- It is possible to work with partners domiciled in the jurisdictions where currency control is applied.
- Foreign stocks are recognized.
Many foreign investors put money in startups in the BVI. However, they do it at the stages when the prospects are already clear.
Requirements to company founders
The requirements are not burdensome at all. First of all, there has to be at least one company director and shareholder who has to be identified.
Companies registered in the BVI shall:
- Have an office in the jurisdiction.
- Keep the corporate documents on the islands.
- Hire local personnel (the number of locals working for the company has to exceed the number of foreigners).
- Suggest several company names when applying for company formation.
You have to bear in mind the fact that foreign companies are not allowed to own land or real property in the BVI. Renting land and office space is perfectly legal, however.
The personal identification procedures have become tougher in recent years. Now you have to supply a letter of reference from any bank that you have used for more than 6 months.
Company maintenance costs
The BVI is not an inexpensive jurisdiction. A company domiciled there would entail certain costs including the following ones:
- Office rent.
- Office maintenance.
- Salaries.
- Accountant’s fee.
Office rent is rather expensive in the BVI. A 20-square-meter room can cost you US$ 2,000 per month. Utilities (office cleaning, Internet, telephone, electricity, and water supply) are going to come up to US$ 300 to US$ 500 per month.
If you have employees, a payroll accountant will be required. If he/ she does not have any other duties, you’ll have to pay him/ her US$ 200 per month. If the accountant has more work to do, the pay is going to be higher.
Choice of bank
Normally, it is not a problem for a non-resident to open a bank account in the BVI. However, the choice of banks is wide and you have to take several important factors into consideration when choosing where you want to bank:
- Service cost: it can be very different and it may depend on the types of operations that you perform.
- Availability of package services: using a service package helps to economize on banking services.
- Commissions charged on transactions: each bank will have its own commissions and you have to inquire about them.
- Availability of loans: some banks in the BVI offer loans at low interest rates, which could help you grow your business fast.
If you rely only on yourself when choosing where to bank, you might make a bad choice. An experienced professional who knows the BVI banking system very well can help you choose the best bank.
When you have chosen the bank, you have to prepare the application documents required for opening an account. Again, every bank will have its own list of documents and the length of the lists can be different. Normally, bank managers want the following documents:
- Personal ID.
- Company’s statutory documents.
- Proof of registered office (legal address) in the BVI.
If the bank does not have any additional questions to the applicant, an account will be opened within 1 or 2 days.
Taxes in the BVI
International business people appreciate the opportunity to register companies in the BVI because the tax rates are very low in the jurisdiction. Moreover, residence companies are exempted from many taxes such as the following ones:
- Profit tax.
- Capital gains tax.
- Property tax.
- Sales tax.
- VAT.
Taxes that have to be paid in the BVI include the following ones:
- Stamp duty – charged on some transactions.
- Payroll tax – the rate is up to 14%.
The payroll tax is shared between the employer and the employee so the tax burden is not too heavy for the company.
A mandatory payment in the BVI is the annual company registration fee. It is set at US$ 350. It has to be paid every year before the date of the company formation.
Possible difficulties associated with registering a company in the BVI
The company registration process normally runs smoothly. Potential problems may arise in connection with the following choices:
- The most suitable form of company ownership.
- The most suitable bank.
You need to involve an expert to make the right choice in both situations. He or she will analyze your needs and expectations and suggest the best form of company ownership and the most suitable bank.
Besides, finding a company office might be a challenge. There are many offices for rent in the BVI but the prices are most often high.
You also should not forget that you would need a registered agent and an accountant when registering a company in the BVI. Involving a professional in the process is crucially important.