Before going deep into forming a British Virgin Islands (BVI) Holding Company, let us first understand it and why an entrepreneur should opt for that. It is a business entity whose main purpose is to control and own other companies, also known as subsidiaries.
These can be international or national and can operate in various sectors. The following are the primary goals of a parent company:
- Property Protection: The holding companies play an important role in asset protection. If any subsidiary encounters legal problems or financial difficulties, the parent company and the others might not be affected.
- Tax Planning: Tax planning can also be facilitated by the holding companies to distribute their profits and losses efficiently among the subsidiaries.
- Efficient Management: Holding companies can simplify the decision-making process of a group of companies and the management by centralizing ownership and control.
- Investment and Finance: Investors are attracted more easily by the holding companies, and they can obtain financing more easily compared to an individual subsidiary. It benefits the business growth to a large extent.
BVI Offshore Company Registration – Note the Benefits
The BVI is a popular jurisdiction if you plan to set up a holding company, as there are numerous benefits for a BVI Offshore Company Registration:
Corporate Tax Exemption
No corporate tax has to be paid by a BVI holding company on their profits, capital gains, or dividends.
Low Maintenance and Establishment Costs
The maintenance and establishment cost for a holding company in BVI is low when compared to other offshore jurisdictions.
Security
There are strict confidentiality laws in BVI regarding the privacy protection of the directors and the shareholders.
Flexibility
A BVI holding company structure can be flexible in many ways depending on their owners’ needs.
Reputation
The British Virgin Islands has a strong track record of corporate governance and is a highly reputable jurisdiction.
The British Virgin Islands Company Registration – A Brief Overview
The BVI Offshore Company Formation process is quite simple, but as the registration procedure is constantly amended by the government, professional assistance is important. The latest amended rules are quite stricter, but our experts can guide you efficiently as they are well-versed in the laws.
Company formation in the BVI is a reliable source of yearly revenue for the government of this jurisdiction, accounting for more than half of the licensing costs paid by firms. The British Virgin Islands (BVI) is a respected offshore regulatory authority.
The Business Companies Act 2004 in BVI is the legislative framework in the British Virgin Islands that governs company creation, regulation, and other incorporation-related activities. The government is a constitutional monarchy governed by political democracy.
Furthermore, on January 1, 2019, The Economic Substance (Companies and Limited Partnerships) Act, 2018, in BVI (BVI Substance Act) went into effect. The Economic Substance Code (BVI Substance Code) supplements the BVI Substance Act.
This law applies to the following legal entities:
- Companies and foreign companies registered/incorporated under the Business Firms Act in BVI, 2004 (as amended), with the exception of firms that are not resident in the BVI; and
- Limited partnerships and foreign limited partnerships created or registered under the Partnership Act of 1996 or the Limited Partnership Act of 2017, except limited partnerships that are not residents of the BVI or do not have a legal presence.
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How to Set Up a BVI Holding Company?
Mentioned below are the crucial steps that need to be followed while setting up a holding company in the British Virgin Islands.
Choose a ‘Trade Name’
Choosing a ‘trade name’ is one of the most essential steps for your business setup. The name has to be unique and must not be similar to any other BVI-registered company. The availability of the names can be found on their registered government website.
Choose a Registered Agent
A registered agent is essential for every BVI company. A local resident should be a registered agent who will receive the official correspondence on behalf of the business.
Prepare the Company Papers
The following documents are important to set up a BVI holding company:
- Association Protocol showing the company name, purpose, headquarters, and share capital
- A register of members and directors
- ID Proof or passports of the directors and shareholders
- Filed Amendments
- Certificate of Good Standing.
For more information regarding the essential documentation, reach out to our business setup experts.
Submit the Documents
The company documents need to be filed, and those have to be processed by the BVI Financial Services Commission. After that, the certificate of incorporation will be issued if the requirements are met.
Open a Business Bank Account
After your company is incorporated, it is essential to open a business bank account. You can proceed with your bank account opening either in the BVI or any other offshore jurisdiction.
Register for Taxation
Though corporate tax payment is not there, the holding companies in the BVI need to register for tax. The reason is that the BVI has a territorial tax system, which means that the taxes have to be paid by the businesses only on profits generated within the jurisdiction.
Get Legal and Tax Advice
You should consider seeking legal and tax advice before starting your holding company operations. It is important to ensure that the right steps are being taken and you are complying with all the applicable laws and regulations.
After following the steps mentioned above, your holding company in BVI will be ready to operate.
BVI Company Incorporation – Choose GC for Your Business Venture
Incorporating a holding company in the British Virgin Islands offers various benefits. These are asset protection, tax efficiency, global recognition, confidentiality, etc. However, an entrepreneur should approach this process with careful compliance and planning with all regulatory and legal requirements.
As you have chosen BVI as your offshore jurisdiction, a strategic structure can be created effectively to manage your investments, assets, and subsidiaries. Though the country offers numerous advantages, you should be up-to-date with the changing tax laws and regulations. It is to ensure the success of your holding company and the ongoing compliance.
So, being an expatriate, it is advisable to connect with expert company formation professionals like Gryffin Capitalist. Get in touch with us and kick-start your entrepreneurial journey.
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