Tax

Residence and domicile

How does an individual become taxable in your jurisdiction?

There are no forms of income, corporate or capital gains tax in the British Virgin Islands (BVI). However, an individual is taxable in the BVI if they are employed or own BVI property.

Income

What, if any, taxes apply to an individual’s income?

Income tax in the BVI is zero-rated and no individual is taxed unless gainfully employed in the BVI. Payroll tax and social security is charged on every self-employed person or employer who carries on business in the BVI. Payroll tax at the rate of 10 per cent is chargeable for small employers and up to 14 per cent of remuneration for large employers. Eight per cent of the total remuneration may be reclaimed from the employee. Employees also pay 4 per cent social security contributions and employers pay 4.5 per cent. The first US$10,000 of remuneration is free from payroll tax.

Capital gains

What, if any, taxes apply to an individual’s capital gains?

There are no capital gains taxes.

Lifetime gifts

What, if any, taxes apply if an individual makes lifetime gifts?

There are no gift taxes.

Inheritance

What, if any, taxes apply to an individual’s transfers on death and to his or her estate following death?

There is no estate duty or inheritance tax payable.

Real property

What, if any, taxes apply to an individual’s real property?

BVI stamp duty is payable on the purchase of real estate in the BVI at different rates, depending on whether the purchaser is a foreign national or a BVI national.

Land and house taxes are collectively called property tax. For land owned by a BVI national or a BVI company, there is a land tax of US$3 per year on the first acre or part thereof, and US$1 for each subsequent acre or part thereof.

On land owned by a foreign national, there is a tax of US$50 per year for the first half acre or part thereof, and US$150 for the second half acre and an additional US$50 per year for each subsequent half acre.

House tax amounts to 1.5 per cent per annum on the notional annual rental value of the house.

Non-cash assets

What, if any, taxes apply on the import or export, for personal use and enjoyment, of assets other than cash by an individual to your jurisdiction?

Generally, import duty ranges from 5 to 20 per cent of the market value of the imported goods, subject to a number of exemptions.

Other taxes

What, if any, other taxes may be particularly relevant to an individual?

There are no other applicable taxes, such as value added tax, in the BVI.

Trusts and other holding vehicles

What, if any, taxes apply to trusts or other asset-holding vehicles in your jurisdiction, and how are such taxes imposed?

Corporate tax is zero-rated. Trust duty of US$200 is payable on the establishment of a trust governed by BVI law. The income received by the trustees is not subject to any BVI tax. No BVI fiscal implications arise out of transactions entered into by trustees or distributions to beneficiaries.

Charities

How are charities taxed in your jurisdiction?

Charities are not taxed.

Anti-avoidance and anti-abuse provisions

What anti-avoidance and anti-abuse tax provisions apply in the context of private client wealth management?

The type of anti-avoidance provisions that are common to onshore jurisdictions are not present in the BVI. The BVI is, however, subject to various regulatory regimes that aim to prevent multinational tax avoidance. The BVI participates in the automatic exchange of information regimes provided by the US Foreign Account Tax Compliance Act and the Common Reporting Standard.

Economic substance legislation has also recently come into force, which requires certain legal entities that are registered and tax resident in the BVI and that carry out specified activities to report on and maintain substance in the BVI (eg, by way of adequate personnel, physical premises or operating expenditure). Private wealth structures are often unlikely to be subject to such requirements as the entities within these structures would typically not be carrying on any of the specified activities that trigger the requirements. However, if they do undertake such activities, the relevant entity will often be subject to reduced requirements, which can be satisfied through the maintenance of a registered office and the completion of mandatory filings.