The British Virgin Islands are a popular Caribbean offshore destination. The English-speaking islands offer a recognized business regime and attractive features for BVI offshore company incorporation.
Investors can open a foundation in BVI or choose to incorporate an international business company. Regardless of the chosen business structure, there is no corporate income tax.
What are the characteristics of the BVI foundation?
A foundation in the British Virgin Islands benefits from the taxation and confidentiality benefits according to the local laws and can be used for asset protection or transfer services for inheritance or succession planning or for charitable purposes. There is a wide variety of purposes for which the foundation can be used and we list some of the charitable purposes below:
- – the advancement of education;
- – poverty relief;
- – community benefits;
- – the advancement of religion;
- – the advancement of science.
Investors in the British Virgin Islands can use the foundation for charitable and non-charitable purposes. As a result, this can be a suitable investment vehicle and entrepreneurs can use it to hold various types of assets. Among these, we can list stocks or bonds, bank assets, intellectual property, personal assets for inheritance purposes or immovable property. In some cases, the foundation can also be used to own private trust companies, more specifically to own shares in these types of companies.
The foundation is set up, controlled and funded by an individual and/or his family or a business and it does not rely on public fundraising. A foundation can make grants to public charities when it is not in itself founded for charitable purposes. The fact that they are self-funded (through the assets of an individual as opposed to deriving assets from the public) makes them less or susceptible in general (or not susceptible at all) to the control of regulatory entities. A private foundation, such as those that can be incorporated in BVI, will typically make its charitable distributions when applicable throughout the tax year. Foundations are not engaged in commercial activities, however, they can be used to run programs or engage in direct charitable activities. The founder alone can govern the foundation, although in most cases it will include a board or council. Our agents who specialize in BVI company incorporation detail the elements if a foundation below and can give investors more information about the management schemes that would best suit their foundation, according to its purposes.
In general, the foundation’s founder/s will be the beneficial owner/s, nevertheless, there are no requirements for them to be residents and in some cases, the foundation can be established with no beneficiaries at all, but with a clear purpose specified in the foundation’s documents. These documents will also include other information, like the registered office of the foundation, which will be located in the British Virgin Islands, and the duration of the foundation.
We invite investors to watch a short video about foundations in BVI:
What are the requirements for opening a BVI foundation?
The main elements that need to be considered when opening a foundation are the following:
- the founder: this is the individual or corporation that creates the foundation and provides it with the initial assets.
- the charter: this is the Memorandum of Establishment, the constitutive documents for the foundation that will be used for registration.
- the managers: the foundation’s managers or council, the executive body concerned with its well-functioning.
- the beneficiaries: by definition, a foundation much as a trust will have beneficiaries, the group of individuals or the individual for which the foundation was established.
- the guarantor: the individual appointed to act as the one who guarantees the that the foundation meets its scope.
The guarantor, sometimes referred to as the protector, is the individual who controls the foundation and the assets and he is appointed by the council.
The foundation does not have By-Laws in the traditional sense of the term, like it would be expected for BVI company formation. Instead, a document that includes the manner in which the foundation will ne used is drawn up by the founder. This will also state whether or not the foundation will continue after the death or the incapacitation of the founder and how the assets will be distributed to the beneficiaries. When the founder wishes to do so, he has the power to include a successor and indicate how he will be appointed. In most cases, this founding document for the foundation is not made public, especially when the legal entity is used for inheritance purposes. Those who choose to do so – for example investors who use the foundation for charitable or philanthropic purposes – may choose to state their names publicly. However, most founders and the beneficiaries choose to remain anonymous.
Some investors may prefer to maintain their anonymity when acting as the protector in a foundation and our team of BVI company incorporation agents can offer the help needed to act as third-parties or nominees for this purpose. By doing so, the name of a nominee will appear in the constitutive documents and the identity of the guarantor will remain anonymous. The relationship between the nominee and the guarantor will be one directed through a power or attorney that will be drawn up and notarized accordingly so that the guarantor maintains the control of the foundation.
What are the advantages of a BVI foundation?
The British Virgin Islands are an attractive destination to base an offshore legal entity. Foundations incorporated here offer a number of advantages, among which we highlight the following ones:
- no taxation: the foundation is exempt from taxation in the BVI and this is one of the main reasons that make the jurisdiction attractive.
- asset separation: the assets placed in a foundation are separate from those of the founders and they cannot be used to satisfy any legal claims.
- share ownership: the foundation is not involved in business activities itself but it can be used to own shares in other corporation.
- usage: the foundation is a flexible vehicle that can be used for a number of purposes, charity or non-charity included, but also for the protection of assets.
- continuity: the foundation can be set up with no expiration date, thus when it is used for charitable purposes it can be engaged perpetually.
The objective of the foundation should be determined before its incorporation. The private offshore foundation is the one used for asset protection or for tax minimization and it is also used by those who want to protect their capital as well as those who are interested in inheritance options. This means that the foundation can be used by those who wish to distribute capital to their heirs in a tax-efficient manner and, perhaps, according to their own wishes and not necessarily as determined by the inheritance laws in their country of residence.
The special foundation it is used for philanthropic purposes and it is different from the charitable foundation which is set up as previously mentioned for a predetermined charitable purpose. The common characteristic for these two purposes is that in these two particular cases the foundation do not need to have beneficiaries, as their activities will be centered around a beneficial purpose.
The foundation is not registered with the BVI Financial Services Commission.
Opening a natural foundation in BVI is relatively simple even the easy incorporation rules and the minimum administrative requirements. Moreover, the foundation can be used together with and with an offshore company in BVI and it can act as one of the owners of such a company meaning that it will receive profit transfers.
What are the general conditions for offshore businesses in BVI?
The British Virgin Islands company formation is an accessible one and there are no restrictions on nationality for investors. The legislation for company incorporation offers many advantages, from an easy set-up process to no taxation and a high degree of confidentiality.
A requirement for BVI company incorporation is to have a local registered agent and this service is provided by our team of company formation specialists. The registered agent is not the same as the company secretary, although at times the two roles may overlap. The agent is appointed as one of the first few key steps once the decision to open an offshore company in BVI is made. This is important because he will be involved in the actual incorporation process. The agent is based at the registered address, a location that is provided to the Registrar or Companies and remains public (one of the few pieces of information that is disclosed to the public). The agent is the one who will keep the company’s documents in order, will have administration and management attributions which may be stipulated or described further in the Memorandum and the Articles of Association. He is also the one who will register any changes to the company particulars, as they appear and will make a statement of insolvency and/or approve a plan of liquidation, if and when needed.
While the Register of Directors and the Register of Members are not directly available to the public through the Registrar of Companies, the Agent is the one who will be well aware of their identities.
The special attributions that the Registered Agent has for the BVI company make it ideal to appoint a company that will undertake this role. Our firm that specializes in BVI company formation can easily provide these services. In fac, may investors prefer to use a company because of the fact that the registered agent’s address is publicly available and he needs to be available for inquiries and any types of submissions during regular work hours – a task that is easily accomplished when the role is undertaken by a professional firm which provides these services customarily.
Having a registered agent is mandatory for all companies in the British Virgin Islands, whether onshore of offshore. As seen above, the agent fulfills an important role in the everyday management of the BVI company. Essentially, he is a much-needed intermediary between the offshore company, the Government and other third parties and one without which the BVI company would not be able to lawfully and fully fulfill its duties.
The role of the registered agent covers some secretary services that may commonly be needed for companies. While appointing a secretary is not mandatory for a BVI company, some business owners will also choose to go through with this step, in addition to having the registered agent. The two can collaborate for optimal business functioning purposes.
Most investors will also choose a nominee director services, which can also be provided by our team. The main advantage of a nominee director system is that it allows the beneficial owner of the company to remain anonymous. This means that any fiduciary relationship between the owner of the company and the appointed nominee is confidential and the public will not be aware of their relationship and the fact that the nominee acts on behalf of the beneficial owner. This is useful for those who wish to keep their involvement in a company private and this may take place for a number of reasons, form political implications to issues that have to do with taxation. The nominee’s role is determined and extends as far as the beneficial owner indicates. For example, he may be involved in the daily activities of the company or his role may be limited to a few key functions. Likewise, he can merely fill in the position of the director while other activities are handled by the client/beneficial owner himself by using a power of attorney and acting as a representative. The beneficial owner remains involved in the decisions regarding the company at all times. Clients who are interested in knowing more about their options when choosing a nominee director service can reach out to our BVI company incorporation specialists. In some cases, a nominee can also be part of the foundation council and take on the role in the name of a beneficiary – we can provide more details upon request.
Our team offers complete company formation services in the British Virgin Islands and we do provide tailored services for those who are interested solely in opening a foundation that will be used according to a chosen purpose. As previously mentioned, the incorporation phase is relatively simple for all legal entities in BVI and this is also true for the foundation. Our team can help those interested draw up the foundation documents and assist with bank account opening, among others. In practice, the procedure will take a few days, approximately 3 days for the foundation and in most cases 2 more days are required to open a bank account in BVI. Opening a BVI offshore company or a foundation is a good option as in some cases the presence of the founders is not mandatory. Our agents are able to handle part of the procedures in you name and you can reach out to us to find out more about how we can assist you and what documents you will need to provide us with.
Filing, taxes and fees for the BVI company
Along with the main advantage regarding tax neutrality, another key feature of a BVI company is that is had minimum filing requirements. As previously mentioned, the public record does not include much information about the business, and because the company is not subject to taxation in the traditional sense, like applicable in other jurisdictions, the traditional annual tax filing and report submission is not applicable. The registered capital amount, as well as the types of shares and the order of their allotment is however provided in the Articles of Association and will thus become information that can be accessed. The company Directors may keep any financial records they see fit, according to the type of business they engage in, in order to justify certain transactions. However, these do not need to be made available to BVI authorities and there is no need to keep the records at the registered address in the Islands, as the requirement commonly applies for companies in other locations.
Although there are no corporate or income taxes (and no taxes for individuals), there are certain costs related to the upkeep of the company, namely the government fees that are mandatory. However, compared to other offshore centers, where these fees can be higher, the British Virgil Islands impose manageable annual costs for companies. The fixed government fee depends on the type of company: companies with registered shares are required to pay a fee of 350 USD. Companies that have more than 50,000 shares issued will pay a larger fee, of 1,100 USD. Restricted purpose companies pay a fee of 5,000 USD. Investors should keep in mind that these fees can be subject to change and in addition to these other costs for running the business will add up, such as those for the registered agent services and the fees for keeping a registered address (here, investors have the possibility to also select a virtual office service with variable costs according to the provided facilities).
The British Virgin Islands are not part of the double tax treaty network as they are a zero-corporate and income tax jurisdiction.
The British Virgin Islands offer a good taxation regime as well as fast and easy incorporation procedures. A BVI offshore company can be incorporated in a matter of days and this is also available for a foundation, when using our services to facilitate the incorporation. The foundation can be a suitable vehicle for handling the management of personal assets or involving in a number of charitable purposes. Investors interested in establishing this type of structure should take the benefits of a private foundation in BVI into consideration.
Contact us for complete details on BVI company formation and more information about the services we provide to foreign investors.