Bulletin Allgemeines No. 19 · November 2009 Treuunternehmen since 1929

British Virgin Islands – favourite choice for incorporations and the creation of trusts

Anguilla – a boutique jurisdiction with unique expertise offered by ATU

Authors ATU General Trust (BVI) Limited to offer a range of financial services Brigitte Gerster (ATU) is a British Virgin Islands trust from the world’s most popular corporate Dr. iur. Christoph Gutmann company which holds a Class I Trust jurisdiction, the British Virgin Islands. ATU General Trust (BVI) Limited, License, allowing it to offer and provide Road Town, British Virgin Islands trusteeship and corporate management In 2004, ATU General Trust (BVI) services. The company has been success- Limited incorporated its Anguillan fully operating in this jurisdiction since subsidiary ATU Corporate Services 1995. It is a subsidiary of Allgemeines (Anguilla) Inc. The Company holds a Treuunternehmen (ATU), established Company Management License under in 1929 as one of the first trust compa- the Company Management Act (c.75) nies in Liechtenstein. For 80 years, the in Anguilla, allowing it to incorporate, ATU Group has served the needs of a domicile and administer International discerning international client base with Business Companies in Anguilla. a careful and professional approach to financial consultancy. ATU in the BVI ATU General Trust (BVI) Limited has draws on this tradition and experience been granted the status of an Over- seas Agent of ATU Corporate Services (Anguilla) Inc. Hence, the administra- tion for Anguilla-based companies is entirely performed by our experienced administrative service team from within our BVI office.

In the meantime, due to the considerable success of ATU’s Anguilla operation, ATU Corporate Services (Anguilla) Inc. has been promoted to a sister company of ATU General Trust (BVI) Limited and now operates under the name of ATU General Trust (Anguilla) Inc., authorized to offer a full range of finan- Building of ATU General Trust (BVI) Limited in Road Town, BVI cial services.

Establishment and management of enterprises and foundations, use of companies subject to different jurisdictions, trusteeships, family office, advice on legal and tax matters, finan­ cial advice, Focus on: British Virgin Islands and Anguilla. Processing of business transactions, advice on investment fund and insurance matters, advice on inheritance and successor arran­ gements, «A reliable connection – even in times of continuous change», since 1929. Establish­ ment and management of enterprises and foundations, use of companies subject to different jurisdictions, trusteeships, family office, advice on legal and tax matters, financial advice pro­ cessing of business transactions, advice on investment fund and insurance matters, advice on 1. British Virgin Islands «Belongers», and expatriates from other 1.6. Economy Caribbean islands as well as expatriate 1.1. Geography professionals employed in the financial The British Virgin Islands is amongst services and tourism industries. the most prosperous countries in the The British Virgin Islands consist of Caribbean region with an estimated approximately 60 islands, rocks and cays per capita GDP of around US$ 46,000 of which around 21 are constantly inha- 1.3. Language (2006). bited, with a few more privately owned. The archipelago is part of the northern The official language is English, with a The territory’s economy is almost enti- Leeward Islands and lies approximately colloquial dialect spoken by Virgin Islan- rely based on two industries; tourism and 100 km to the east of Puerto Rico. With ders. the financial services industry. Although the exception of Anegada, a coral atoll, tourism is arguably more important given the islands are of volcanic origin. They that a lot of tourism related enterprises are mountainous with the highest point 1.4. Religion are locally owned, the financial services on Tortola, the biggest island of the industry is economically more important group, being Mount Sage which lies 543 The islands are predominantly Prot­ with nearly 50% of the government’s meters above sea level. Road Town on estant Christian, with the largest indi- income derived directly from license fees Tortola is the capital. vidual Christian denominations being for British Virgin Island Business Compa- Methodist (33%), Anglican (17%), and nies and other licensed structures. at a lesser percentage Catholic (10%). The tourism industry contributes approx­ imately 45% of the territory’s income. 1.5. Politics The islands are known for their beau- tiful beaches and world-class sailing and The British Virgin Islands are a British are a popular destination for US holiday Overseas Territory, part of the British makers. Many of the islands visitors Commonwealth. A Governor appointed are cruise ship passengers but these by the Crown holds office in Road Town generally enjoy only a few hours on the and a local Premier is appointed by local islands and produce far less income for election at least every four years. There the territory. are two political parties, the Virgin Islands Party (VIP) and the National The currency used in the British Virgin Democratic Party. The former won the Islands is the US Dollar (since 1957). elections in August 2007, with The Hon Ralph O’Neil currently serving as the 1.2. Population territory’s first Premier. Both political 1.7. Tax Regime parties are benevolent to and appreciate At the time of writing the total popula- the benefits brought to the economy Traditionally, the former International tion was around 23,000 of which most of the territory by the financial services Business Company and the International people live on Tortola. The population industry. Limited Partnership were never subject is made up of Virgin Islanders, so called to any income taxes in the British Virgin Islands.

The introduction of the British Virgin Island Business Companies Act, 2004 which came into force on 1 January 2005 abolished income tax for local companies as well. Nowadays, Business Companies incorporated as local businesses and such used for international clients pay a due to the government in the form of a registra- tion fee on incorporation and thereafter in the form of an annual government fee. BVI Trusts are subject to a stamp duty of Carnival Scene in Road Town House in Road Town US$100 on creation.

2 Government Building of the British Virgin Islands

Taxes in relation to capital are unknown former IBCs which did not prior to that Trust Companies, to apply for a Restricted in the territory. date re-register voluntarily have automati- Trust License and may be incorporated cally been re-registered and are operating as Segregated Portfolio Companies. Perhaps of little importance to the under the new act. The introduction of reader but nevertheless interesting, some this new corporate legislation proved a The issuance of bearer shares is sensibly forms of taxes exist in the British Virgin phenomenal success with over 70,000 new regulated, whereas bearer shares must be Islands, namely payroll tax of 8% above incorporations in the year 2007 alone. deposited with an authorized custodian. US$10,000. It should be noted, however, that ATU The British Virgin Islands remain one of has not opted to obtain the status of the preferred jurisdictions for the incor­ such an authorized custodian. Anguillan poration of a company. Advantages for incorporated International Business 2. Services offered by incorporating a BVI company are the Companies are offered as an alterna- ATU in the jurisdiction’s English speaking nature, tive to our clients. These companies are British Virgin Islands its stability, long-established and expe- introduced later in this Bulletin. rienced professional workforce. The 2.1. The Business Company company registration system (VIRRGIN) is a fast and highly efficient tool used 2.2. The Standard BVI Trust Most professionals will be familiar with for both incorporations (usually within the huge success the British Virgin Islands 24 hours) and post-incorporation trans- Trusts may be created under comprehen- enjoyed with the introduction of the Inter- actions. sive and contemporary trust legislation in national Business Companies Act in 1984 force in the British Virgin Islands. under which approximately 550,000 so Confidentiality is guaranteed with the called IBCs were incorporated. details of directors and shareholders not A BVI trust may convey life interests or publicly available information. may be of a discretionary nature. A life With time enhancement and moder- interest trust combined with overriding nization became evident and as men- Business Companies may be used in discretionary powers conferred on the tioned, the British Virgin Islands Business conjunction with VISTA Trusts, Share trustee is also a possibility. Charitable Companies Act, 2004 came into force on and Purpose Trusts. They may also be or non-charitable trusts may also be 1 January 2005. Since 1 January 2007 all used as Special Purpose Vehicles, Private created.

3 The maximum perpetuity period appli- On the settlor’s death and the subsequent In August 2007, the BVI enacted regu- cable to trusts created under the laws of transfer of the shares in accordance with lations which permit unlicensed PTCs the British Virgin Islands is 100 years. the trust documents, a Share Trust is in the jurisdiction. Incorporations are terminated. as fast and efficient as the incorporation The fact that the BVI has passed strong of a standard BVI Business Company, anti-forced heirship rules will be of special with the only stipulations being that interest to a client domiciled in a Civil 2.5. A Restricted Class II the designation «PTC» is contained in Law jurisdiction. Trust License for a the name of the company and that the Business Company memorandum of association states the company’s purpose as acting as a private 2.3. The Virgin Islands The holder of a Restricted Class II Trust trust company. Special Trust License is allowed to provide trusteeship (VISTA Trust) services to a maximum of 50 trusts. In A BVI PTC may act as trustee of more contrast to the regulations attached to than one trust as long as a settlor is related The introduction of the Virgin Islands a Private Trust Company, these trusts to the beneficiaries of the trust. Trusts with Special Trust Act, 2003 («VISTA») need not be related trusts and receipt of a different settlor may be administered by brought a solution to a trustee’s problems remuneration is not restricted. the same PTC as long as these settlors also when holding company shares for succes- have a family connection. sion purposes. Traditionally, the old It is not compulsory for a Business English rule of the «prudent man of Company applying for such a restricted Settlors and their families are often reluc- business» enforces a trustee to preserve license to appoint resident directors. tant to relinquish control over assets to a the value of trust assets and in addi- Alternatively ATU can provide a resident trustee in a far away country, a trustee they tion, requires a trustee to monitor and director. The holding of a Restricted Class may well never have met. PTCs allow for intervene in the affairs of an underlying II Trust License may provide a strong a settlor and or family members to be on company. marketing tool for a service provider in the board, therefore retaining the desired another jurisdiction. control over assets put into a trust. Confi- The provisions set out in VISTA dentiality is ensured with the details of the conquered the problem, respecting the directors not being information publicly settlor’s wishes and his involvement 2.6. The Private Trust available. when a family business is placed in a Company («PTC») trust structure, at the same time alle- Care must be taken concerning the share- viating some of a trustee’s inherent duties. PTCs provide an excellent wealth and holding of a PTC in order to ensure that VISTA provides not only a solution but succession planning tool and have become there are no succession problems. Favoured presents a perfect tool for complex succes- more and more popular in their use when structuring involves a BVI Purpose Trust sion planning of a client’s assets. planning for wealthy families. whose sole purpose is to hold the shares in one ore more PTC. 2.4. The Share Trust 2.7. The International This is a fairly recent product on the Limited Partnership market; very innovative and extremely time and cost efficient. 1996 saw the introduction of the Partner- ship Act. The Share Trust is exclusively used for succession planning of shares in a British An International Limited Partnership is Virgin Islands Business Company. Based exempt from any taxes in the BVI but on the principles of VISTA, it provides may not carry on business within the that the trustee’s sole duty is to ensure jurisdiction, nor with resident persons. that the shares held in trust are passed on in accordance with the wishes of International Limited Partnerships are the settlor on his demise. During the registered with the Registry of Corporate settlor’s lifetime, the underlying Business Affairs and a limited partner may at the Company is managed under his control same time also be a general partner. The and he may even revoke the placement of identity of the partners is not informa- shares into the Share Trust. Beach near Road Town tion publicly available.

4 3. Anguilla 3.2. Population country is governed by an Executive Council of ministers appointed from the 3.1. Geography The population of Anguilla is made up Legislative Council of elected members, of approximately 13,000 inhabitants. All presided over by a British appointed inhabitants live on the main island of Governor. Anguilla with no permanent population on the other islands and cays. 3.6. Economy

3.3. Language Less prosperous than other islands of the Caribbean, Anguilla’s estimated GDP The official language is English. Apart per capita amount was approximately from other languages spoken by immi- US$ 8,800 in 2004. However, Anguilla’s grants, the most common tongue spoken economy is rapidly expanding, especially is a Creole language termed «dialect» or in the tourism sector with major deve- «Anguillian». lopments booming.

Other main industries include the finan- 3.4. Religion cial services industry and fishing. The financial services industry is growing stead- The main island of Anguilla is a flat Anguilla’s population predominantly ily with the introduction of new legisla- island, made of corral and limestone. Its follows Protestant Christian believes, tion, introduced to attract business. highest point is Crocus Hill at an eleva- with the largest denominations being tion of 65m. The island covers roughly a Anglican (29%) and Methodist (24%). The currency used in Anguilla is the East mere 90 square kilometers. Apart from Other religions include Seventh Day Caribbean Dollar with an exchange rate the smaller Dog and Scrub Islands, there Adventists, Members of the Church of that is fixed to the US Dollar at EC$ 2.68 are more than 20 other, even smaller God, Baptists and 5.7% are Catholic. per US$. The US Dollar itself is widely islands and cays. Anguilla is one of the accepted. most northerly Leeward Islands, situated east of Puerto Rico and just north of the 3.5. Politics French and Dutch owned Saint Martin/ 3.7. Tax Regime Sint Marten. The Valley on the island of Anguilla is a British Overseas Territory, Anguilla is the capital. part of the British Commonwealth. The Anguilla is truly a neutral tax jurisdiction. There are no income, capital gains, estate, profit or other forms of direct taxation on either individuals or corporations, whether resident in Anguilla or not.

Stamp duty, however, does exist and is regulated in accordance with a Stamp Act.

Beach on the main island of Anguilla

5 4. Products offered by generally agreed amongst professionals tion of existing foundations as well as the ATU in Anguilla that Anguilla’s law provides for the most establishment of new ones. effective Protected Cell Company form 4.1. The International Busi- on the Caribbean market. The autors of this article, Brigitte Gerster ness Company («IBCs») and Dr. iur. Christoph Gutmann, will be happy to assist you, should you require Perhaps not as well known and legendary 4.2. The Foundation further information. Please contact them as the former British Virgin Island IBCs at: (now Business Companies), they offer a Foundations are well known and under- very competitive alternative. The Corpo- stood in Civil Law countries and offer a ATU General Trust (BVI) Limited rate Ordinance provides the incorpora- convenient alternative for clients finding 3076 Sir Francis Drake’s Highway tion of IBCs since the mid 1990ies. it difficult to understand the Anglo- P.O. Box 3463 Saxon concept of trusts. Road Town, Tortola Anguilla was the first jurisdiction to British Virgin Islands realize that a fast and efficient 24 hour Anguilla being an Anglo-Saxon juris- T +1 284 494 1100 online system for incorporations and diction enhances the advantages of an F +1 284 494 1199 post-incorporations transactions is impe- Anguilla Foundation. Contrary to Civil [email protected] rative to the success of a financial center Law, Anglo-Saxon Common Law and www.atubvi.com offering company registry administra- legislation provides for asset protection tion. In 1998 ACORN was successfully and estate planning in general. It should launched, allowing for new companies to be noted that Anguilla does not reco- be incorporated very quickly. gnize forced heirship, but rather has anti- forced heirship laws enacted. In contrast The details of the directors and sharehol- to a trust, the foundation has a legal ders are not available to the public and personality and no perpetuity period, it confidentiality is therefore guaranteed. may last as long as desired.

An Anguillan IBC may still opt to issue The Anguillan government, with intense shares to the bearer, as long as these are assistance from industry specialist, in held in custody by ATU directly or by a so particular ATU, drafted and passed the called Professional Service Client of ATU. Anguilla Foundation Act, 2008. ATU is able to market this new boutique product Readers interested in the creation of funds as the service provider with specialist should note that an IBC may take on the knowledge of Anguilla foundations and form of a Protected Cell Company. It is offers clients easy and swift re-domicilia-

The ATU Bulletin is published in English, German, French and Italian on an ad hoc basis by Allgemeines Treuunter- nehmen, Vaduz. The content is purely for the purpose of general information and is no substitute for legal advice.

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