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Individual taxation

Residence and domicile

How is residence/domicile determined for tax liability purposes in your jurisdiction?

The British Virgin Islands does not have any form of income, corporate or capital gains tax. There are no inheritance or gift taxes.

There is no official tax year and the concept of residence and domicile is not applicable.

Income

Describe the income tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).

There is no income tax.

Capital gains

Describe the capital gains tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).

There is no capital gains tax.

Inheritance and lifetime gifts

Describe the inheritance and gift tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).

There is no inheritance tax.

Real estate

What taxes apply to individuals’ acquisition and disposal of real estate in your jurisdiction?

The acquisition and disposal of property in the British Virgin Islands (BVI) gives rise to a stamp duty liability. The primary legislation governing matters of stamp duty under BVI law is the Stamp Act (Cap 212). Stamp duty is payable on instruments, as opposed to transactions. Stamp duty is a voluntary tax, but with two important caveats that:

  • unless a document that is stampable has been duly stamped as required by law, it cannot be admitted into evidence at court, making it effectively unenforceable; and
  • if the instrument that is to be stamped requires registration at the Land Registry for it to be effective (as the vast majority of instruments relating to the acquisition and disposal of interests in property in the BVI do), then it must first be stamped, since stamping is a prerequisite to registration.

It is the transferee who typically assumes the obligation to pay stamp duty since it is the transferee’s risk where stamp duty that is payable is not duly paid. 

Under the Stamp Act, a transfer or assignment amounting to a conveyance on sale of any property attracts an ad valorem rate of duty of 4% of the market value or consideration, whichever is higher.  Transfers and assignments that do not amount to conveyances upon sale attract nominal stamp duty at the rate of $5. 

The provisions of the Non-belongers Land Holding Regulation Act (Cap 122) are also relevant to the matter of stamp duty, because every instrument that conveys any right, title or interest of any property in the BVI, to a non-belonger, shall be liable to stamp duty at the rate specified in the Non-belongers Land Holding Regulation Act, in lieu of the duty chargeable under the Stamp Act. A ‘non-belonger’ is someone that does not ‘belong’ to the BVI, as that term is defined in the Virgin Islands Constitution Order 2007. For present purposes and in very general terms, a ‘belonger’ is a person that has a connection with the BVI by virtue of birth and/or ancestry, or who otherwise acquires belonger status under the BVI immigration rules.  

Under the Non-belongers Land Holding Regulation Act, conveyances upon sale of interests in property attract an ad valorem rate of duty of 12% of the market value or consideration, whichever is higher. Conveyances of interests in property to which the Non-belongers Land Holding Regulation Act applies and which are otherwise than upon sale attract an ad valorem rate of duty of 5% of the market value of the property.  

The Non-belongers Land Holding Regulation Act provides for a limited range of circumstances in which the transfer of property or an interest in property to a non-belonger attracts nominal stamp duty at the rate of $5, rather than the ad valorem rate of duty previously described. Those circumstances include:

  • a transfer, otherwise than for value, of property or an interest in property by an individual to that individual’s legal spouse, children or grandchildren exclusively; and
  • a transfer, otherwise than for value, of property or an interest in property by an individual to a trustee of a trust where at the time of the transfer the beneficiaries of that trust are the individual’s legal spouse, children or grandchildren exclusively.

Under the Stamp Act, a different rate of duty applies to the grant of a new leasehold interest in property. Where a new leasehold interest in property is granted to a belonger, the Stamp Act provides that for a lease with a term of 20 years or more, the rate of duty is 1% of the total rent payable for 20 years and any other money consideration to be paid under the lease, however described. For a lease with a term of 20 years or less, the rate of duty is 1% of the total rent payable for the duration of the term and any other money consideration to be paid under the lease, however described.

Under the Non-belongers Land Holding Regulation Act, the basis for calculating duty on the grant of a new lease to a non-belonger is the same as that described above for a belonger, other than the rate of duty is 1.5% instead of 1%. 

There are no capital gains or inheritance tax in the BVI and, therefore, the disposal of real estate in the BVI is not subject to these taxes.

Non-real estate assets

Do any taxes apply to the acquisition and disposal of other assets apart from real estate?

There is no sales tax or value added tax levied on the acquisition and disposal of assets in the BVI. Most goods that are imported into the BVI are, with certain limited exceptions, subject to the payment of customs duty at varying rates, depending on the nature of the goods in question. 

There are no capital gains or inheritance tax in the BIV and, therefore, the disposal of assets in the BVI is not subject to these taxes.

The acquisition and disposal of non-real estate assets in the BVI potentially gives rise to a stamp duty liability. Under the Stamp Act, a transfer or assignment amounting to a conveyance on sale of any property (which the Stamp Act does not limit to real property) attracts an ad valorem rate of duty of 4% of the market value or consideration, whichever is higher. Transfers and assignments that do not amount to conveyances upon sale attract nominal stamp duty at the rate of $5. 

While stamp duty liability is a factor that should be considered in relation to the acquisition and disposal of any asset, it is often the case that no such liability arises in relation to the acquisition and disposal of non-real estate assets. This is partly because such assets are generally transferred by way of delivery, meaning there is no instrument of transfer on which the stamp duty liability arises. It is also because the acquisition and disposal of some assets, such as ships and vessels, is exempt from stamp duty liability under the Stamp Act and this is the case even where the transfer is effected by way of an instrument.

Other applicable tax regimes

Are any other direct or indirect tax regimes relevant to individuals?

Persons carrying on business in the BVI are subject to payroll tax that is payable by every self-employed person or employer. Payroll tax may go as high as 14% of remuneration, 8% of which may be reclaimed from employees. The remaining 6% is payable by the employer. No payroll tax deduction shall be made in respect of the first $10,000 of actual remuneration paid to an employee in any financial year.

Planning considerations

Are there any special tax planning considerations for individuals with a link to your jurisdiction?

The BVI remains the leading jurisdiction for the incorporation of business companies. While BVI companies are used as tax-neutral vehicles, the territory’s sophisticated and user-friendly trust legislation provides practitioners with the perfect toolkit for structuring private wealth.

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