The British Virgin Islands are a collection of roughly 50 small islands in the Caribbean, of which around 16 are inhabited. They are located a few miles east of the U.S. Virgin Islands. The North Atlantic Ocean lies to the north of the islands, and the Caribbean Sea lies to the south.
The largest islands of the group are Tortola, Virgin Gorda, Anegada, and Jost Van Dyke. Road Town, the capital and largest town, is situated on Tortola.
B.V.I. is a self-governing U.K. colony. It is a member of the British Commonwealth.
The Economic Substance (Companies and Limited Partnership) Act, 2018 (“ESA Act”) was enacted in the British Virgin Islands (“BVI”) on December 28th, 2018 to began enforcement on January 1, 2019. The BVI Substance Act is supplemented by the BVI’s Economic Substance Code (BVI Substance Code) which is currently in draft form and is expected to be finalised by May 2019.
The regime applies to the following “legal entities”:
Companies and foreign companies incorporated/registered under the BVI Business Companies Act, 2004 (as amended), excluding companies which are not resident in the BVI; and
Limited partnerships and foreign limited partnerships formed/registered under the Partnership Act, 1996 or the Limited Partnership Act, 2017, excluding limited partnerships which are not resident in the BVI or which do not have legal personality.
The regime does not include: An investment fund (within the meaning of applicable BVI legislation); nor a non-resident company and a non-resident limited partnership.
An entity is a “non-resident company” or a “non-resident partnership” if the company/partnership is resident for tax purposes in a jurisdiction outside the BVI which is not on Annex 1 to the EU list of non-cooperative jurisdictions for tax purposes.
Some structures which include B.V.I. entities will require assessment. Kindly contact us for guidance and possible alternatives or solutions.
For more details on these changes to the B.V.I. company, check out our guide:
What is the BVI Economic Substance Legislation?