EU Savings Tax Directive effect in the BVI

The EU Savings Tax Directive applies only to individuals and therefore interest payments to companies fall outside the scope of the Directive. So it does not concern BVI IBCs.
This Directive does not apply to individuals, who are resident outside the EU, including EU nationals.

This scheme affects mostly banks, custodians, registrars and other financial institutions dealing with making interest payments to individuals in appropriate territories. Also, it can affect market operators purchasing money debts from individuals in prescribed territories or redeem money debts held by the above-mentioned individuals. This applies also to individuals holding or administering money debts on behalf of others or advising paying agents, for example, tax advisers, solicitors, accountants, etc.

The BVI government also declared that all private, professional and public mutual funds (excepting only a new class of public funds - restricted public fund) that are recognized or
registered under the Mutual Funds Act 1996 shall be treated by the BVI as non-UCITS
equivalents. Therefore they are are outside the scope of the Directive. As to restricted public funds – only they will be treated by the BVI as UCITS equivalents and, accordingly, they are within the scope of the Directive.

In accordance with Article 6 of the EU Savings Tax Directive and Article 9 of the BVI model agreements, “interest payment” is only income from UCITS or UCITS equivalents.
So, BVI non-UCITS equivalents fall outside the scope of the EU Savings Tax Directive. This means that BVI paying agents will not be required to apply a withholding tax or report information on income payments to investors.

More information about:

• The British Virgins Islands and EU Savings Tax Directive
• Automatic exchange of information option
• Withholding tax option in the BVI