Seychelles vs BVI - Battle of the offshore companies
Jordans Trust Company
07 April, 2016
If you're looking to form an offshore company, one of the biggest decisions you'll need to make is which jurisdiction you would like to set it up in.
At Jordans Trust Company, we are responsible for setting up offshore companies across many jurisdictions in financial centers around the world. The Seychelles and the BVI are two jurisdictions which are very popular when it comes to forming offshore companies.
Below is some background on these competing jurisdictions
The Seychelles are a collection of 115 islands located in the Indian Ocean, east of mainland East Africa. The economy in Seychelles is mostly made up of commercial fishing, tourism and its booming offshore financial services industry.
A stable and independent political and economic environment means the Seychelles is a good choice for Seychelles offshore company formations.
The main type of offshore company that you can set up in the Seychelles is an International Business Company (IBC). I think the Seychelles is an offshore jurisdiction which has been up-and-coming in recent years. It's now gaining popularity and really starting to take off.
The British Virgin Islands are made up of 60 Caribbean islands. The British Virgin Islands (BVI) are set within the Virgin Islands cluster, with the North Atlantic Sea north and the Caribbean Sea to the south of the islands.
The two main industries in the BVI are the tourism and financial services industry. Also known as the 'twin pillars' of the economy.
The BVI is one of the world's most popular offshore financial centres. Much the same as the Seychelles, the main type of offshore company that you can set up in the BVI is an International Business Company (IBC).
If you're still finding it hard to decide between the two, below are some more comparisons of the features of companies in both jurisdictions.
The Seychelles is an independent republic, hence is not affected by the politics or legislation of another country.
The BVI is a British Overseas Territory, with a Governor appointed by The Queen. As a result, legislation relating to the UK may apply to the BVI, for example, the EU Savings Tax Directive.
The final court of appeal for the BVI lies with the Privy Council, which can be very reassuring for owners/directors of BVI companies.
The BVI boasts a broad selection of globally recognised firms of accountants, law firms and corporate services providers. The Seychelles lacks this sort of infrastructure apart from Jordans Trust Company (Seychelles) Limited.
The Seychelles has a large Chinese Embassy that provide local legalisation facilities. BVI companies are required to send documents to London for verification and use in China.
The BVI pioneered "IBC" style legislation providing international business with an inexpensive, reliable and flexible legal framework in which to operate. Many other financial services centres replicated this model, but the BVI legislation is recognised and familiar to financial institutions globally.
The BVI and Seychelles have both agreed a broad range of Tax Information Exchange Agreements. However, the BVI has very few Double Taxation Treaties whereas the Seychelles have over 20 DTA's in place.
The Seychelles have similar IBC style legislation but also have a facility to issue companies with "special licences". These are local companies that enjoy a low corporation tax rate of 1.5% and gives them access to this network of over 20 double taxation treaties.
Both BVI and Seychelles have signed up to the Common Reporting Standard and are following modern standards of record keeping and due diligence.
The Seychelles permit the creation of Foundations. The BVI has no such provisions.
The BVI have a unique form of trust, known as VISTA which limits the responsibility of the trustees to the distribution of assets on the death of the settlor, but not to the operation of underlying businesses.
Reserve directors the BVI has a provision to appoint reserve directors. This is useful where a company has a sole shareholder and director. In the event of the death of the director/shareholder, the reserve directors appointment comes into effect. This avoids probate in BVI and ensures continuity in the running of the business. The Seychelles have no such provisions, although this is probably going to be included in the new Companies Act.
Seychelles companies pay a marginally lower annual licence fee - $100.00 as opposed to $350.00 in the BVI. Incorporation fees are equally comparable.
Almost a million companies have been incorporated in the BVI since 1984. If a particular name is important, there is therefore a better chance of obtaining it in Seychelles.
So, why do people choose the Seychelles?
- Those seeking to keep costs to an absolute minimum.
- Those seeking to trade with China, or other treaty countries and take advantage of the double taxation agreements.
- Those seeking to establish foundations.
- Those that do not wish their companies to be affected by supranational legislation.
Why do people choose the BVI?
- Those wanting to take advantage the legacy, recognition and reputation of the BVI.
- Those seeking security in the knowledge that disputes may end up being resolved in the UK courts.
- Those wishing to establish VISTA trusts.
- Those wishing to appoint reserve directors.
So, I hope you've now got a better idea of what setting up an offshore company in either of these jurisdictions would mean for you.
We incorporate offshore companies in most of the principal offshore financial centres, including Seychelles and BVI. We have extensive knowledge of these jurisdictions, and plenty of experience managing businesses for tax planning and dividend routing. So if you have any questions that you need answering, please get in touch. Our friendly team would love to help!
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