BVI Foundations and Trusts Formation

Foundation and Trust Setup

If you are looking for a perfect destination for setting up your foundation or trust, the British Virgin Islands is one of them. It offers you low taxation and confidentiality in your operations. To get these benefits, you must consider the BVI foundation and trust formation.

Forming a trust or a foundation in BVI is not so daunting. But there are chances of making errors like missed steps, wrong documentation, and others. So, partnering with a professional services provider like FAME is better. FAME can help you with BVI foundation and trust setup for wealth management, asset protection, estate planning, or charitable activities.

Your asset protection and wealth management planning got a fitting answer.

Get in touch with FAME’s advisors for BVI foundation and trust formation.

Benefits of BVI Foundation and Trust Formation

There is no foundations regime in BVI. The BVI Trustee Act 1961 governs the formation and operation of trusts in BVI. There is also the Virgin Islands Special Trusts Act 2003, called the VISTA legislation, governing a special kind of trust in BVI. With all these laws, you can achieve the following benefits by setting up a trust in BVI:

International Financial Centre

BVI is a preferred destination for offshore holding structures. Its business-friendly ecosystem, advanced infrastructural facilities, and expert professional services attract many investors from worldwide. Its stable economy makes it a global financial centre.

Legislative Depth

BVI understands the needs and ideas of global businesses, families, and individuals. To cater to these complex needs, it has introduced many laws and regulations to make trust formation easier and smoother.

Several Purposes

Forming a foundation or a trust in BVI can be your perfect solution for succession planning, asset protection, wealth management, business continuity, tax optimization, or philanthropic activities.

Tax Exemptions

If you do not conduct business in BVI, don’t have a property here, and none of your beneficiaries are BVI-residents, you are free from taxes. The corporate tax and income tax are zero for you. You are also exempt from inheritance, gift, estate, and succession taxes. But you need to pay specific fees to establish your foundation and trust. So, you just have to pay relevant taxes in your home jurisdiction and the country where you hold your assets.

No Registration

You do not need to register your trust in BVI with the Registrar. Companies operating a trust company business must get a license. Your physical presence is not mandatory to open a foundation or a trust in BVI.

Easy Trust Structure

The settlor can be the beneficiary or co-trustee in certain cases. However, they cannot be the sole beneficiary or sole trustee. The trustee can be a foreigner. You can have a maximum of four trustees, and there is no lower limit.

Fast and Easy Process

BVI has the fewest administrative and legal requirements for BVI foundation and trust setup. So, the process is easy and fast.

Confidentiality and Privacy

BVI permits anonymity of the founders and beneficiaries, unless and until they themselves want to go public. No registry for trusts exists, so the existence of a trust is unknown to the public. It is just a private agreement between the parties of the trust. Depending on your jurisdiction, you need to comply with AEOI reporting.

Foreign Ownership

100% foreign ownership is permitted in trust formation in BVI. You do not need to appoint local directors or representatives.

Allowance for Nominees

You have the flexibility to appoint nominees to ensure anonymity. The guarantor or the investor can remain confidential by appointing a third party or nominee. The foundation’s documents contain the names of nominees. The guarantor controls the foundation and draws a power of attorney directing the relationship between the guarantor and the nominee.

No Recording and Reporting Requirements

You do not have to file annual tax returns and submit annual financial reports. You can create and maintain financial records per your requirements. You do not need to maintain these at the registered address or submit them to authorities.

Types of Trusts in BVI

BVI allows various types of trust structuring. You can select the structure based on your objectives and purpose.

Discretionary Trust

In a discretionary trust, the trustee decides the distribution of trust assets among the beneficiaries. So, beneficiaries do not have any direct legal rights over the trust assets. However, they will benefit when the trustee distributes the capital and income.

Fixed-Interest Trust

In a fixed-interest trust, the trust deed defines the specific beneficial interests of each beneficiary. Like a principal beneficiary receives a specific amount for the entire lifetime. The trustee has limited rights over deciding the distribution of trust funds.

Charitable Trust

You can create a charitable fund separately or contribute to other charitable purposes or institutions. You can set up a charitable trust in BVI for any of the following reasons:

Poverty relief
Spread of religion
Public benefit purposes
Education advancement
Community benefit purposes

Non-Charitable Purpose Trust

You can set up a non-charitable trust in BVI if you meet the following conditions:

You have a specific, possible, and reasonable purpose
Minimum one of the trustees must be a designated person
The purpose must not be unlawful or immoral

Reserved Power Trust

In such a trust, the trustee does not hold all the powers. The settlor reserves a certain amount of control over its administrative elements. The settlor can also choose a family member, advisor, or friend to hold these reserved powers. Such a protector holds certain powers in the following:

Removal and appointment of trustees
Approval and refusal of capital and income distributions
Determination of the law governing the trust
Exclusion or inclusion of beneficiaries

VISTA (The Virgin Islands Special Trusts Act)

BVI allows the creation of a special kind of trust where the trustee is not responsible for handling the managerial and administrative activities. It is a kind of a BVI company held in a trust structure so that the owner has the power of the company’s management and control despite divestment of their ownership.

You can hold shares in a VISTA trust for an indefinite period. You can establish any type of BVI trust as a VISTA trust except reserved powers trust. The settlor can give a specific role or duties to the trustee. One of the trustees of a VISTA trust must be a designated trustee (a BVI private trust company or a trust company with a BVI trust license). Generally, investors create VISTA trust for the following purposes:

Family succession planning
Matrimonial settlements
Shareholding in private trust companies
High-risk asset protection
Commercial purposes

Features of Foundations and Trusts in BVI

By setting up a trust in BVI, you can access many benefits. But the BVI government requires you to fulfil the below conditions for BVI trust formation:

You can establish a foundation or trust for charitable or non-charitable purposes.
You can hold assets like immovable property, intellectual property, shares in private trust companies, stocks or bonds, personal assets for inheritance purposes, and bank assets in any country worldwide.
Whether you are an individual, a family, or a business, you can form a trust in BVI.
You cannot engage in commercial activities, provided you perform these activities for charitable purposes of your trust.
If your BVI trust is built for non-charitable reasons, you can make grants to public charities.
It is not necessary to have beneficiaries in a trust; in such cases, the documents must mention the clear purpose.
Trustees must maintain records and other documentation of the trust for at least five years. You must maintain all documents related to contracts, invoices, and financial records. These accounts relate to your assets and liabilities, sales and purchase of goods, and money received and expended by the trust.
The Articles of Association must mention the details on the registered capital amount, share types, and allotment order. You must file this article of association and memorandum in public.

Need assistance in BVI foundation and trust formation?

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FAME’s Support in Setting up the BVI Foundation and Trust

FAME is a professional services firm handling your creation and operations in BVI. We have an experienced team of consultants and legal experts to help you with BVI foundation and trust formation. You also get ongoing support to run and maintain your foundation or trust.

Our consultants ensure your purpose is clearly understood before setting up the foundation. After this, we advise you on the structuring, procedure, and documentation. We handhold you in the entire journey of trust setup from start to finish.

First, we help you, the settlor, determine the trust’s purpose. After this, you must select the trustee and decide the beneficiaries, if any. Based on the purpose, you can decide on the type of trust. We help you select the best structure for your purpose and to achieve your objectives. The last step is creating the trust deed with details on the management of the trust.

So, you can run through this process smoothly with FAME’s consultants.