STEP

Title Research

British Virgin Islands

2. Sources of Law

a. Trust creation and administration

The Trustee (Amendment) Act 2003 introduced amendments to earlier Trustee Acts and provided more convenient rules for legitimate commercial dealings by trustees. The Virgin Islands Special Trusts Act (effective since 2004) facilitates the creation of special trusts (VISTA trusts) in which the underlying assets are shares of a company incorporated in the BVI, thus permitting directors of the underlying company to retain control of the company without trustee intervention in management and investment decisions in respect of the company and its assets. Further, trustees may hold shares in such companies as part of the trust until the directors consent to selling them.

b. Property, estate and probate

Shares in an IBC are deemed to be BVI-sited property and may be disposed of by will, but the will in respect of these shares is subject to probate in the BVI under the Non-Contentious Probate Rules 1986. Where the executor or administrator resides outside the territory, the grant may be made to an attorney and the power of attorney must be filed at the Registry. In the case of intestacy, common law heirs may apply to the Registrar for grant of letters of administration of the intestate’s estate. Any party may oppose grants of probate or letters of administration upon the filing of a caveat; the matter is dealt with under the Civil Procedure Rules.

The requirement prior to March 2005 for a bond and sureties was abolished by the Supreme Court (Non-Contentious) Probate (Amendment) Rules 2005.

c. Company law

Since 1 January 2006, BVI companies are incorporated only under the Business Companies Act 2004, as amended (BCA). These companies are referred to as Business Companies (BCs) to distinguish them from companies incorporated under the former IBCA (IBCs).

d. Taxation

Income tax in the BVI is zero-rated. The Payroll Taxes Act 2004 (PTA) (effective 1 January 2005) generally imposes tax of up to 8 per cent on employees’ remuneration, with employers generally subject to tax of up to 6 per cent of this remuneration. Employers whose payroll does not exceed USD150,000, whose annual turnover does not exceed USD300,000 and who employ fewer than eight persons are subject to tax of 2 per cent of total payroll. The PTA does not apply to trustees except to the extent that the trustee, in its capacity as trustee of the trust, has employees rendering services to the trustee wholly or mainly in the BVI. The liability to such taxes of a professional service provider trustee is imposed on the trustee in its personal capacity and cannot be satisfied from the trust’s assets. The PTA applies to all companies incorporated in the BVI except for BCs, which do not employ BVI residents or carry on business within the BVI.


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