Overview The Benefits of a BVI BC Case Study Potential Issues
The British Virgin Islands (BVI) are considered to be one of the premier offshore jurisdictions in the world. Companies incorporated in the BVI are utilised the world over for international trade, property holding, personal service companies and asset holding vehicles. They are generally considered to be one of the most flexible corporate entities available. The jurisdictions itself benefits from a British style legal system, common law legislation and has an excellent reputation for professionalism and credibility.
The most commonly utilised Company is the BC that are able to trade and bank globally whilst retaining a zero tax status. BC’s have no requirement to file annual accounts with the authorities and pay a fixed Annual License Fee to the BVI Government of US$350 to US$1,100 (depending on share capital structure) per annum. However, OCRA Worldwide recommends that all Companies prepare annual accounts in the interests of good corporate governance.
Mr Khan is resident in Saudi Arabia and is looking for a corporate vehicle with which to invest in the UK property market and invoice clients in various Middle Eastern countries for his consultancy work in the oil and petroleum industry. Mr Khan would also like to avail himself to the flexibility of a Common Law jurisdiction.
OCRA Worldwide incorporates a Company in the BVI for Mr Khan and arranges banking facilities with a prominent world bank in London. Mr Khan is appointed as the sole Director and Shareholder of the Company and arranges finance, with OCRA Worldwide’s assistance, through the bank for the purchase of a £1,000,000.00 property in Chelsea. The BVI Company is the registered owner of the property and registers itself under the Non Residents Landlord Scheme as the property is to be rented out to cover the finance payments. The BVI Company can also claim UK tax relief on the interest of the loan to set against any possible rental income profit.
3 years later, Mr Khan decides that he would like to sell the property as the UK housing market has shown good growth. The House is sold for £1,500,000.00 and has made a Capital Gain of £500,000.00. No UK tax is levied on this gain as the property is owned by a BVI Company and the monies are able to be held with the bank in London for further use or reinvestment.
Throughout this time, Mr Khan has also been providing consultancy services to major oil and petroleum companies in the Middle East. These Companies insist on being invoiced by a registered corporate entity. Mr Khan is able to invoice them monthly through his BVI Company and have the fund remitted directly to his London based bank account without attracting taxation. Allied to this, Mr Khan is also benefiting from the Limited Liability that a BVI Company affords him, so any threat of damaging litigation is greatly reduced. Mr Khan is able to utilize his accumulated funds anywhere in the world as he is able to access his bank account over the internet and utilize a globally acceptable bank cards on the account.
Mr Khan has been able to realize the Capital Gain on the property and remove any possible tax burden on the UK rental income. He has also been able to utilize a world renowned bank in London to finance the property purchase.
His consultancy services have been provided through an excellent corporate entity that is able to invoice globally and remit his fees to the London based bank account. He has protected himself against any potential litigation and is able to utilize the BVI Company in many countries.
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