Introduction

Property tax in the British Virgin Islands is quite low, relative to property-related taxes levied in many other countries. Having said that, interest on late payments can quickly accrue and where payments are missed over several years, it is not uncommon for the interest due on those missed payments to exceed the underlying property tax liability.

The BVI’s Inland Revenue Department does not issue property tax invoices or reminders and property owners must therefore remember to pay the required tax when it becomes due.

Download a PDF of our Guide to Property Tax.

The Period Covered

Property tax is payable on 1 September in each year and covers the calendar year in which the relevant payment falls due.

Property tax that falls due on 1 September in any given year therefore covers the period 1 January to 31 December in that year.

While property tax falls due annually on 1 September, property owners are allowed a grace period of three months to pay. This means that property owners will not be in arrears provided the applicable property tax is paid on or prior to 30 November in each calendar year. If the property tax remains unpaid after the three month grace period, interest at a rate of twenty per cent per annum on the amount payable and unpaid shall be charged and such additional sum shall be deemed to be part of, and shall be recoverable with the tax remaining payable and unpaid.

The Two Elements of Property Tax 

Property tax comprises the following two elements:

• A tax levied on every acre or part of an acre of land in the BVI (commonly referred to as land tax); and
• A tax levied on the assessed value of every house in the BVI (commonly referred to as house tax).

Note that the definition of “house” under the relevant legislation includes any kind of building. Property owners should therefore not fall under the mistaken belief that property tax applies in respect of residential properties only.

The element of property tax attributable to land is calculated at differing rates, determined by whether the land in question is owned by a British Virgin Islander, or an expatriate.

For the purposes of the relevant legislation and broadly speaking, a British Virgin Islander is: (i) a person who is deemed to belong to the BVI under the Immigration and Passport Act; and (ii) a BVI company that is owned and controlled by a British Virgin Islander.

The definition of an expatriate includes any person who is not a British Virgin Islander and any company that is not owned and controlled by a British Virgin Islander.

How Property Tax is Calculated 

The element of property tax attributable to land is chargeable at the following rates:

Where the land in question is owned by a British Virgin Islander:

• US$10.00 on the first acre or part acre of land; and
• US$3.00 on each additional acre or part acre of land.

 Where the land in question is owned by an expatriate:

• US$50.00 on half an acre of land or less;
• US$150.00 on more than half an acre of land but not exceeding one acre of land; and
• US$50.00 on each additional acre or part of an acre of land exceeding one acre of land.

Where a person holds land under a lease from the Crown with a term exceeding one year, the land is taxed at the rate applicable to a British Virgin Islander, irrespective of whether the lessee is a British Virgin Islander or an expatriate.

The element of property tax attributable to houses/buildings is calculated at the rate of one and a half percent per annum on the notional annual value of the building in question. The notional annual value is an amount, not in excess of the rent, which the building might reasonably be expected to yield from year to year.

The Annual Assessment 

The Inland Revenue Commissioner assesses and reassesses all property in the BVI liable to the payment of property tax annually and prepares an assessment list which includes the names of property owners and the amount of property tax due for any given year.

The assessment list is required to be published in each inhabited island and in such parts of each inhabited island as the Minister responsible for finance deems expedient.

The assessment list is to be accompanied by a notice advising the owners of the properties referred to in it, that they may appear before a hearing of the Magistrate at the date and place referred to in the notice if they wish to object to the assessed value of their property as detailed in the assessment list.

Property owners who do not agree with the contents of the assessment list as it relates to their property may appear before the Magistrate on the dates and at the times of the hearings stated in the assessment list and state their objections.

At the hearing, the Magistrate will enquire into the assessment, hear and determine the objection and confirm, and alter, or amend the assessment list as is necessary.

Conclusion

Property owners are encouraged to set a reminder to check the assessment list and to pay the property tax attributable to their property on time to avoid the imposition of avoidable interest.

For some BVI property owners it can be challenging to check the amount of property tax that is due and to make timely payment, particularly where they are unable to be in the BVI when the property tax becomes payable. We regularly help property owners ascertain the amount of property tax due and facilitate timely payment to ensure they remain compliant with their property tax obligations. Our service includes annual reminders at the appropriate time to give BVI property owners one less thing to think about.

Please contact us if you would like any assistance with ascertaining and paying your property tax.

 

For more information or if you require any assistance with your BVI property, please feel free to email us or reach out to one of our BVI real estate lawyers using the contact details here.

 

 

Introduction

The Stamp (Amendment) Act 2020 (the Act) is now in force, having been granted assent by the Governor on 23 July 2020 and is anticipated to have a positive impact on the number of property transactions taking place in the British Virgin Islands.

Download a PDF of our Guide to the Stamp (Amendment) Act 2020.

The Exemption

Stamp duty is a documentary tax that is levied in connection with certain specified legal documents. The primary legislation governing the assessment of stamp duty in the BVI is the Stamp Act. The Act amends the Stamp Act by exempting certain Instruments effecting the sale or transfer of BVI property from the obligation to pay stamp duty.

The exemption applies only in respect of the sale or transfer of BVI property:

• to Belongers; and
• where the Instrument in question is executed between 7 May 2020 and 31 May 2021.

The exemption under the Act is expressed to apply to Instruments effecting both the sale and the transfer of BVI property to Belongers. The exemption under the Act therefore captures transfers of property in consideration of natural love and affection, notwithstanding only nominal stamp duty is typically payable in connection with such transfers.

In the context of BVI property transactions, stamp duty is typically paid by the purchaser.

Belongers and Non-Belongers

In broad terms, Belonger status is a legal classification that is associated with a number of British Overseas Territories, though the requirements to attain this status and the rights that such status confers, vary from territory to territory.

As far as the BVI is concerned, a Belonger is a person deemed to belong to the BVI according to the Virgin Islands Constitution Order 2007.

The Stamp Act

Instruments effecting the sale or transfer of BVI property to Belongers executed (i) prior to 7 May 2020; or (ii) after 31 May 2021 will not be covered by the exemption under the Act.

Where the exemption under the Act does not apply, the stamp duty payable in connection with the sale of BVI property to a Belonger shall be calculated at a rate of 4% of the higher of the purchase price and the market value of the property in question.

The Non-Belongers Land Holding Regulation Act

In general terms, the rate of stamp duty payable in respect of Instruments effecting the sale or transfer of BVI property to Non-Belongers is higher compared with that payable by Belongers.  For example, the Non-Belongers Land Holding Regulation Act (the NBLHR Act) provides that the stamp duty payable in connection with the sale of BVI property to a Non-Belonger is calculated at a rate of 12% of the higher of the purchase price and the market value of the property in question.

The Act does not apply to Instruments effecting the sale or transfer of BVI property to Non-Belongers and the provisions of the Stamp Act in conjunction with the NBLHR Act will continue to govern the stamp duty regime in respect of such Instruments.

Reimbursement

As a consequence of the retrospective nature of the legislation, the Act provides for the reimbursement of any stamp duty already paid from 7 May 2020 in respect of Instruments covered by the exemption.

Conclusion

The Act provides for significant stamp duty savings for Belongers in a position to take advantage of the exemption and the Act does not include any limits on the amount of the exemption available or the number of persons that may benefit from the exemption.

Belonger purchasers wishing to take advantage of the exemption should bear in mind that the Act provides that where a Belonger benefits from the exemption under the Act and subsequently sells or transfers the property to a Non-Belonger within a period of seven years, the stamp duty waived by way of the exemption shall become due.

Anecdotally there appears to be a lot of local interest in the Act and it will be interesting to ascertain at the end of the qualifying period what impact the Act has had on the volume of property transactions taking place in the BVI.

 

For more information or if you require any assistance with your BVI property transaction, please feel free to email us or reach out to one of our lawyers using the contact details below.

 

 

Click here to download a PDF of this guide

Following a recent initiative by the BVI Government, a number of individuals have been granted Belonger status or Certificates of Residence.

Broadly speaking, the term ‘Belonger’ is the legal term for a person of BVI ancestry or who has otherwise been granted Belonger status under the relevant immigration legislation.

A Certificate of Residence records and certifies that the holder is a permanent resident of the BVI.

A change in an individual’s status can have an impact on his or her employment, business, and property interests. While the exact nature of any impact will be determined by individual circumstances, we have outlined several areas for consideration below.

Immigration

Persons that have either been granted Belonger status or issued with a Certificate of Residence are entitled to enter and remain in the BVI indefinitely and are not subject to monitoring by the Immigration Department.

Trade and business licensing

Trade and business licences are granted for a calendar year and renewed annually at the beginning of each year, with a fee payable on collection and subsequently on renewal of the licence. The annual Government fee charged for a licence varies, depending on the nature of the trade, business or profession in question and whether it is owned by a BVIslander/Belonger, or by a Non-Belonger. The annual fee for a licence issued to a business owned by a BVIslander/Belonger is less than the fee for a licence issued to a business owned by a Non-Belonger.

To benefit from lower annual licence fees, the Department of Trade, Investment Promotion and Consumer Affairs should be notified of any change of status of the individuals that own the trade, business or profession in question. The lower fee will then be charged on subsequent renewals of the licence.

Work permits

Individuals that have been granted Belonger status or issued with a Certificate of Residence do not require a work permit in order to undertake paid or unpaid work in the BVI. It will typically therefore be more cost-effective to employ an individual who has been granted Belonger status or issued with a Certificate of Residence. It should be noted that under the provisions of the Labour Code, both BVIslanders and Belongers (but not individuals issued with a Certificate of Residence) have first preference with regards to new employment opportunities.

Non-belonger land holding licences

Non-Belongers (which for these purposes includes companies deemed to be under Non-Belonger control for the purposes of the Non-Belongers Land Holding Regulation Act) are required to apply for and obtain the requisite Non-Belongers Land Holding Licence prior to taking title to property in the BVI.

The grant of Belonger status to property owners may mean that certain previously issued Non-Belongers Land Holding Licences are no longer required. In these circumstances and where appropriate to do so, the Ministry of Natural Resources, Labour and Immigration should be contacted regarding the revocation of the relevant Non-Belongers Land Holding Licence.

The position is not quite so straightforward where a property is owned by both Belongers and Non-Belongers, or where the property is owned by a company where not all the directors and shareholders of that company have Belonger status and it may be the case that some Non-Belongers Land Holding Licences are still required.

Property ownership structuring

Existing property owners who have recently been granted Belonger status should review any existing property ownership structure and consider if it remains suitable. A periodic review of a property ownership structure is sensible in any event, regardless of whether the owner is a Belonger or a Non-Belonger to ensure that the structure remains appropriate, particularly with regards to the owners’ estate planning objectives.

Property acquisition/taxes

The process of acquiring property in the BVI is a little more straightforward for Belongers compared to Non-Belongers since Belongers do not need to apply for and secure the grant of a Non Belongers Land Holding Licence before they take title to the property.

The stamp duty position is more favourable for Belongers acquiring BVI property compared with Non-Belongers. Stamp duty is payable in connection with the transfer of BVI property and is calculated as a percentage of the higher of the purchase price and the market value of the property in question. For Belongers this is 4 per cent and for Non-Belongers this is 12 per cent. In each case a copy of a recent appraisal must be submitted as evidence of the market value.

The property tax attributable to property in the BVI comprises two elements, as follows:

• A tax levied on every acre or part of an acre of land in the BVI (sometimes referred to as land tax); and
• A tax levied on the assessed value of every house in the BVI (sometimes referred to as house tax).

The element of property tax attributable to land is calculated at a lower rate for properties owned by Belongers and for properties owned by companies that are in turn owned and controlled by Belongers. Persons who have recently been granted Belonger status should therefore contact Inland Revenue so that the property tax records can be updated accordingly.

The right to vote

Under the Virgin Islands Constitution Order 2007, Belonger status is an important prerequisite to being able to register as a voter for elections in the BVI.

For more information and to discuss these and any other ways in which a change in your status may have an impact on your employment, business, and property interests please feel free to email us at ghp@ghpbvi.com or reach out to one of our lawyers using the contact details below.

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The content of this guide is intended for general information purposes only and is current as at the date of publication indicated. This guide does not constitute legal advice and should not be relied upon as such. You should always seek specific legal advice that takes into account your individual circumstances.

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