British Virgin Islands: Practical Uses Of British Virgin Islands International Business Companies

Asset holding is one of the most popular uses of IBCs. The assets that may be held by an IBC range from real property to personal assets, including intellectual property rights. One of the major benefits of holding property through an IBC is on the ultimate disposal of the property. Shares of the IBC may be transferred rather than the property itself. Capital gains and inheritance tax may be reduced or avoided entirely. Moreover, the structure of an IBC preserves the confidentiality of the owners of the IBC.

An IBC may be used to own a shipping vessel and the vessel may apply for British Registration.

An IBC may act as a holding company of another entity. The addition of an IBC to a corporate structure allows for a measure of tax planning within the corporate organisation. Profits may accumulate in the holding company within a tax neutral environment. The holding company may be used as a finance vehicle to issue loans to subsidiaries. As well, the IBC adds a layer of confidentiality and at the same time provides flexibility upon the disposal of the underlying entity.

Trading companies may be used to defer taxation and regulation and to minimise liability. Trading operations may be established so that the offshore entity maximises its profit by buying and selling at a markup. Ultimately onshore taxation may be reduced subject to the application of transfer pricing laws.

IBCs are a vehicle of choice for offshore electronic businesses. The use of an IBC may limit liability and taxes and avoids undue regulation. Operating an E-biz through an IBC allows a company to become more flexible, profitable and efficient.

The flexible nature of the IBC allows for a good measure of planning specifically with respect to the management structure and the ownership structure.

Captive Insurance companies are insurance subsidiaries of non-insurance parent companies or associations formed to write some or all of the risks of the parent. They are a valuable tool in risk management and financing since tailored solutions may be developed to accommodate premium cashflow and other economic advantages as well as solve problems of coverage availability.

Trust structures may be used for several purposes including estate and tax planning as well as asset protection. An IBC may hold some assets and the trust may in turn own the shares of the IBC. The control and management of the assets remain with the IBC. The legal owner of the assets is the trust. In specific circumstances, including family and corporate group trusts, an IBC may act as trustee of a private trust.

The tax neutral status of an IBC makes it an attractive vehicle to minimise the tax exposure of a mutual fund and enhance its returns. The BVI Mutual Funds legislation enables sponsors to establish funds on an attractive cost scale within a clearly defined regulatory system.