BVI Economic Substance Act

On January 1st, 2019, The Economic Substance (Companies and Limited Partnership) Act 2018 (“ES Act”) came into force in the British Virgin Islands to address tax system concerns by the European Union and the Organisation for Economic Co-operation and Development (OECD).

All BVI companies and limited partnerships are required to report certain information about their activities on an annual basis via their BVI Registered Agent.  The information is assessed by the BVI International Taxation Authority to establish whether the entity performs a “relevant activity”.

For entities formed on or after 1st January 2019 conducting “relevant activities”, the economic substance requirements will apply from the date that the company commences the relevant activity. 

In-Scope Entities

The ES Act applies economic substance requirements to the following “In-Scope” activities: 

  • Financing and Leasing
  • Headquarters
  • Distribution and Service Centres
  • Banking
  • Insurance
  • Shipping
  • Fund Management
  • Holding Company
  • Intellectual Property

Out-of-Scope Entities

Companies that deem themselves to be non-tax resident in the BVI are required to state the jurisdictions in which they are tax resident and provide sufficient evidence as proof. For companies that are not carrying out any relevant activity they should notify their Registered Agent on an annual basis to confirm this.

Economic Substance Assessment Requirements

In terms of assessment, companies will fall under one of three categories as follows:

Category A: Companies that do not fall under the scope of the ES Act.

These companies are only required to submit their filings to confirm that they do not fall under the scope of the ES Act, supported by a resolution of the directors and independent legal assessment.

Category B: Companies that fall under the scope of the ES Act that are not tax resident in any jurisdiction.

These companies are required to become tax resident in the BVI and show substance in the BVI by proving that they are:

  • Managed and directed from the BVI and have an physical office in the BVI
  • Conduct their core income generating activities in the BVI

Filings with the International Tax Authority should be supported by a resolution of the directors and independent legal assessment, (particularly since an entity can fall under more than one relevant activity).

In order for an entity to be tax resident in the BVI it must obtain a trade licence subsequently apply for a tax ID and register with Social Security and National Health Insurance.

Category C: Companies  that fall under the scope of the ES Act but are tax resident in another jurisdiction.

These companies are required to submit evidence of their tax residency, which should be in an EU approved jurisdiction, supported by a resolution of the directors and independent legal assessment.

Evidence of tax residency can be a letter or certificate from the tax authority or copies of the last tax returns filed in the foreign jurisdiction.

Beneficial Owners Substance Requirements

For new companies incorporated from January 1st, 2019 the deadline for filing Economic Substance status will be one year after incorporation with a six-month filing extension. The company will have a further six months to make their filing.

The filing period for companies incorporated prior to January 1st, 2019 begins June 30th, 2019 and ends June 2020, with a six-month extension for filing.

Once we have determined whether your entity performs a “relevant activity” we will further assist you in how to comply with economic substance laws in the BVI.

We work with you to ensure we gather the necessary reporting information required. 

 


BVI Fees to Incorporate
  • Company Formation - £480
  • Provision of Registered Office and Resident Agent - £420
  • Government Fee - US$450
  • Shareholder Due Diligence 3 or more - £40 each
  • Directors Register Maintenance - £175
  • Company Secretary recommended - £400
BVI Annual Maintenance Fees
  • due by 01 Jan or 01 July
  • Provision of Registered Office and Resident Agent - £420
  • Government Fee - US$450
  • Company Secretary recommended - £400
  • Directors Register Maintenance - £175
BVI Advantages
  • Time - 2-3 days to incorporate your BVI company
  • Company Name - your company name can end in Ltd, Inc, Corp, SA
  • Directors - only 1 director of any nationality and residence is necessary for your company
  • Shareholders - only 1 shareholder is required
  • Share Capital - there are no minimum share capital requirement
  • Accounts - no requirement to file accounts or financial statements with the public registry
  • Confidential - the names of the directors and shareholders do not appear on public record
  • Support - using our 20 years experience we guide you throughout every step of the company formation process
Required to Proceed
  • Company Name - We can check your company name is available
  • Passport - colour scan of your passport
  • Documents - copy of a utility bill, credit card or bank statement showing your private address
  • Start now - complete here
  • Upload - proof of address & copy passport can be uploaded here