The trust system in the British Virgin Islands
British Virgin Islands trust law is based predominantly on English trust law but has developed beyond English law to permit purpose trusts, extend the perpetuity period to 100 years and most notably to create the unique VISTA trust.
Trusts have many applications and advantages, including the protection and preserving of assets, tax planning or just avoiding the expense and delays of obtaining probate under a will. They also provide a high degree of confidentiality. The BVI’s innovative, modern and user-friendly legislation, Virgin Islands Special Trust Act (VISTA) 2003 and Private Trust Company (PTC) legislation have enhanced its position as a jurisdiction for trust settlements and operations. VISTA allows a shareholder to establish a BVI trust over a BVI company, which disengages the trustee from administrative and managerial responsibility in relation to that BVI company. Considerable use is also made of the 2007 regulations to establish PTCs for holding and consolidating family wealth whilst retaining significant control over the trustees’ decisions by being directors of the PTC.
Since the introduction of the VISTA legislation, it has been said by leading practitioners that the British Virgin Islands has the most modern and coherent trust legislation globally. Policies and legislation have been developed in close partnership with the private sector, and as a result respond well to the needs of business and demonstrate a sophisticated and cutting edge approach.
Trusts in the British Virgin Islands are exempt from registration under the Registration and Records Act and trustees are exempt from any reporting and filing requirements, ensuring a high degree of confidentiality. Protection for trusts is ensured by the requirement that companies carrying on trust company business must obtain a licence and conform to various requirements under the Banks and Trust Companies Act 1990.
Components and general features
Registration requirements: There is no requirement for the registration of trusts in the British Virgin Islands.
Settlor: The Settlor does not need to be a permanent resident of the British Virgin Islands.
Beneficiary: The Beneficiary does not need to be a permanent resident of the British Virgin Islands.
Trustee: There is no requirement for the trustee to be licensed or resident in British Virgin Islands.
Protector: The appointment of a Protector is optional.
Perpetuity period: The maximum duration of trusts in the British Virgin Islands is 360 years, except for Charitable Trust – unlimited in duration.
Property: There is no restriction on the property of a British Virgin Islands Trust.
Confidentiality: As there are no registration requirements for a trust in the British Virgin Islands the details of the Settlor and Beneficiaries are not disclosed to any person other than the Trustee.
Taxation: Trusts in the British Virgin Islands are exempt from taxation if all the beneficiaries are non-British Virgin Islands residents. Distributions to beneficiaries from a British Virgin Islands Trust are not taxable in the British Virgin Islands in the hands of the beneficiaries.
Asset protection: There is no specific legislation providing asset protection for trusts in the British Virgin Islands.
Reporting requirements: There are no reporting requirements for a trust in the British Virgin Islands.
Further information on these alternative structures is available on request.
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