Offshore Trusts Report: British Virgin
Legal Framework and Formation Rules
BVI Trusts are formed under the Trust Ordinance 1961 (based on
the English Trustee Act 1925), as updated and amended by the Trustee
Amendment Act 1993, and the subsequent Trustee Amendment Act, 2003.
Since the 1993 Act, there is no requirement for registration of
trusts in the BVI, and there is no public disclosure of information
regarding trusts. Trust duty is payable on each trust instrument,
which is achieved by buying and affixing stamps, creating no record.
BVI trusts are exempt from all taxation provided that there is
no resident beneficiary and no BVI assets.
Due to the Amendment Act, the regime for trusts in
the BVI is very flexible. The following are some of the main features
of BVI trust law:
the proper law of a trust can be specified by the trust instrument;
in the absence of a specified jurisdiction, a trust will be
under BVI legislation if the trustee or the trust administration
is situated in the BVI;
trusts can migrate into and out of the BVI; but outwards
migration is only possible if the 'receiving' jurisdiction
recognizes the validity of the trust;
purpose trusts are permitted in perpetuity and must have
at least one BVI trustee (resident professional or equivalent);
the perpetuity period can be set at 100 years, but 'lives
in being' is still possible;
'wait and see' provisions are included as standard;
'protectors' are explicitly permitted, and their powers are
forced heirship provisions are excluded;
trustees may be given wide discretionary investment powers.
The BVI's trust regime was substantially updated in 2004 with the
following three pieces of legislation. In addition, new laws on
private trust companies came into force on January 1, 2007.