International Trade – Case studies

Using the British Virgin Islands for International Trade

They are generally considered to be one of the most flexible corporate entities available. The jurisdiction itself benefits from a British-style legal system, common law legislation and has an excellent reputation for professionalism and credibility.

The most commonly utilized Company is the BC that is able to trade and bank globally whilst retaining a zero tax status. BCs 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, TBA recommends that all Companies prepare annual accounts in the interests of good corporate governance.

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Benefits of BVI Business Company (BC)

Operational International Trade BVI case study

Mr Hassan is resident in UAE, Dubai 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 industry. Mr Hassan would also like to avail himself to the flexibility of a Common Law jurisdiction.

TBA incorporates a Company in the BVI for Mr Hassan and arranges banking facilities with a prominent world bank in London. Mr Hassan is appointed as the sole Director and Shareholder of the Company and arranges finance, with TBA’s support, through the bank for the purchase of a £1,000,000.00 property in Kensington.

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.

Two years later, Mr Hassan 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.

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.

Potential issues for this BVI option

• Perceived lack of credibility by countries;
• Should not create a permanent establishment in another country as this could trigger a tax charge;
• You should allow for the preparation of accounts in line with accepted corporate governance.