Investment Entitles Webinar
February 28th 2024
Presentation Slides
Q&A
The BVI no longer has a 7-year intervening period for struck off entities. Please check the status of your entity as it may have been statutorily dissolved due to the changes in the BVI BCA. As such, the entity will need to deregistration, if the entity still exists in the BVIFARs portal it will be subject to the fee.
Yes, but the Primary User must hold a position within the RFI.
The place of birth is not required to be reported for pre-existing and new accounts unless the RFI is otherwise required to obtain and report it under domestic law and it is available in the electronically searchable data maintained by the RFI.
A GIIN is a Global Intermediary Identification Number assigned to Foreign Financial Institutions (FFI), Financial Institution (FI) branches, direct reporting non-financial foreign entities (NFFE), sponsoring entities, sponsored entities, and sponsored subsidiary branches. An Institution or Entity assigned a GIIN can use it to identify themselves to withholding agents and tax administrators for FATCA reporting purposes. This, however, is not a TIN in the USA. A Tax Identification Number (TIN) for the USA is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. The US is the only jurisdiction that issues GIINs for FATCA purposes but other jurisdictions issue TINs for tax purposes. The OECD has issued overview of TINs issued by member jurisdictions https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-identification-numbers/
Yes, the proof/depends on the reason for deregistration.
If the entity is set up and meets the definition of an FI then it must be registered. If it has no reportable accounts then it will file a Nil filing. The entity will need to consider whether funding affects it being classified as a FI or not.
The entity would need to reach out to the BVI ITA by email to change the name of the entity. Additionally, re-registation is not allowed for an existing entity, a change of primary user is the only option.
No, there is FATCA guidance issued specifically for US nationals. This webinar was specifically related to CRS requirements. If you have questions concerning FATCA guidance on account holder etc. please reach out to our offices info@bviita.vg.
No, what you are describing is a TDT relationship. Where the RFI (the Trustee) that manages the Trust has agreed to complete all reporting on behalf of the Trust due to the way the BVIFARs portal currently works the reports of the Trust will still have to occur under the Trusts profile. Please see the BVIFARs updated guidance concerning TDT reports on our website.
A FI that is not resident for tax purposes in any other jurisdiction, will have to register in the BVI FARs portal and report to the ITA where it is incorporated or established in the BVI. The only exception to this rule is where the entity can demonstrate that it is resident for tax purposes in another jurisdiction.
The ITA is working on upgrades to the BVIFARs portal. This change will be considered during this upgrade process.
The Virgin Islands requests that NIL filings be completed in line with the NIL filing instructions outlined in the BVIFARs user guide.
Please see the BVIFARs user guide which has step by step guidance on “Change of Reporting Obligation” on page 11.
Yes.
The Standard at Section 1. Subparagraph A(4) – Account balance or value states that “in the case of an equity or debt interest in a Financial Institution, the balance or value of an Equity Interest is the value calculated by the Financial Institution for the purpose that requires the most frequent determination of value, and the balance or value of debt interest is its principal amount.” It is generally the balance or value that is calculated by the Financial Institution for purposes of reporting to the Account holder. As such if the year end account value is the value calculated by the FI for the purposes that requires the most frequent determination of value, then that will suffice for CRS reporting.
If at the end of the reporting period the Account Holder was no longer a tax resident in Jurisdiction A, then the account holder ceases to be reportable person for Jurisdiction A. Therefore, the account holder should not be reported to Jurisdiction A for that period.
The account holder should only be reported to Jurisdiction B for the reporting period, if the Financial Institution identified this person to be tax resident of Jurisdiction B at the end of such period.
The payment is not applied based on the filings, all registered RFIs must pay the annual fee.
No, we currently do not have that option.
Yes, the secondary user will be able to view the payment along with all other filings made for the RFI.
Currently it is only for Primary Users, however, this may change by the time the portal becomes Live. Further updates will be provided once the portal is complete.
That is correct, the annual fees is applicable to the FI only.
Yes, they are.
Yes, the entity name and FI number has to be entered manually. There is no maximum amount of entities per bulk filing. The ITA recommends that where you are creating a bulk filing that this be limited to 60 entities at a time so that the system is not overwhelmed.
Yes. Once the payment portal is live full guidance on making payments will be issued and made available to all portal users.
The payment is not applied based on the filings, all registered entities must pay the annual fee.
A RFI can make a payment at any time before the due date of each filing year.
All FIs in the BVIFARs portal have a reporting obligation. Whether they have reportable accounts or not. The Mutual Legal Assistance (Tax Matters) Act, Revised Edition 2023 requires all FIs to file a report. Those FIs that have no reportable accounts will have to complete a NIL filing. As such all RFIs registered in the BVIFARs will be subject to the annual fee. It must be noted that the fee applied is not an annual filing fee, it is simply an annual fee imposed on each registered entity.
Yes, there will be a bulk payment functionality for multiple FIs. For entities that were in the portal awaiting deregistration, the fee will not apply if that deregistration application was made before the end of January, 2024.
Once the payment portal is live full guidance on making payments will be issued and made available to all portal users.
No, it is not yet live. Once it becomes live an update will be provided to all users, including guidance on how payments can be made.
On or before 1 June, 2024.
The last applicable tax year of an entity that is liquidated in 2022 would be the TY ending in 2022. There is no need to file a report for 2023. You can proceed with the deregistration application once all reports have been made from registration of the entity until the last applicable tax year i.e. 2022.
The de-registration process is a filing that can made using the BVIFARs portal. Please refer to page 7 of the BVI FARs User Guide for the steps to complete this process.
No, the FI only reports for applicable financial periods. For instance, if the deregistration is due to the FI being liquidated in 2022, even if the application remains pending in 2023, the FI will only be expect to file up until of liquidation.
A VIFI can only be deregistered if 1) it no longer meets the definition of a VIFI; or 2) it is no longer in existence, for example by liquidation or no longer resident in the Virgin Islands, for example by means of continuation to another jurisdiction, and it has met all reporting obligations for years prior to which it ceased to be a VIFI.
No, the BVI template is just a guide for Financial Institutions. If a Financial Institution decides not to use the BVI’s template, the FI must note that for a self certification form to be valid the FI must collect at a minimum the required information as outlined in the law (this includes, the Account Holder’s (i) name, (ii) address, (iii) jurisdiction(s) of residence for tax purposes, and (iv) tax identifying number for each Reportable Jurisdiction). The FI must ensure that the self-certification form is signed or affirmed by the account holder or the persons authorised to do so on the account holder’s behalf.
The FI can rely on the information included in the self-certification unless they know or have reason to know that the circumstances affecting the correctness of the self-certification have changed or cannot be relied upon.
This is true for discretionary beneficiaries. It is important to note that the Implementation Handbook makes a distinction between beneficiaries entitled to ‘mandatory’ distributions and those who are discretionary without any enforceable rights to receive trust property. As such, the RFI must identify whether their beneficiaries are discretionary or mandatory and report according.
A discretionary beneficiary will be reported in the year when the distribution is made, however, a mandatory beneficiary is reported regardless of whether or not the distribution is made. The handbook continues to outline that where the FI does not otherwise calculate the account value, the financial activity that should be reported in the case of a mandatory beneficiary is the total value of all trust property and the total gross amount paid or credited to the beneficiary in the reporting period.
Section 32A (10) of Mutual Legal Assistance (Tax Matters) Act, Revise Edition 2020 allows Reporting Financial Institutions to align the scope of Beneficiaries as controlling Person with the scope of beneficiaries treated as a reportable persons.
If the reporting FI elects this approach, Section 32A (11) and (12) of the MLA indicates that the Reporting Financial Institution must have appropriate procedures in the place to identify when a distribution is made. Additionally, an internal record of this option should be kept as part of its policies and procedures. There is nothing to report to the ITA when this option is used by the RFI but the RFI must be ready to demonstrate that it has elected to use this option where it is subject to a compliance review by the Compliance Unit.
An investment entity only has to report on a Financial Account and according to the standard an Investment Entity’s Financial Account is any equity or debt interest in the Financial Institution. Interest and Dividends are to be reported in case of a Custodial Account and interest paid is to be reported in the case of any Depository Account. An investment entity only has to report on a Financial Account and according to the standard an Investment Entity’s Financial Account is any equity or debt interest in the Financial Institution. Interest and Dividends are to be reported in case of a Custodial Account and interest paid is to be reported in the case of any Depository Account.
The standard does not base the calculation or value of a Financial Account (Trust Property) on the local laws of the BVI. The Standard at Section 1. Subparagraph A(4) – Account balance or value states that “in the case of an equity or debt interest in a Financial Institution, the balance or value of an Equity Interest is the value calculated by the Financial Institution for the purpose that requires the most frequent determination of value, and the balance or value of debt interest is its principal amount.” It is generally the balance or value that is calculated by the Financial Institution for purposes of reporting to the Account holder. As such, the RFI makes its own calculations of the value, as we are discussing a Trust, then the Trustee must, based on his common law obligations, know the value of the Trust Property etc. As the person required to calculate these balances and report to the ITA is the Trustee it is unclear who the “we” in the question is referring to and why the Trustee who is responsible for all of the actions of the Trust will not be aware of these circumstances to be able to calculate the balance.
In Section V and Section VI of the CRS Commentary the following must be noted:
Section V. C. Entity Accounts with respect to which reporting is required. With respect to Preexisting Entity Accounts described in paragraph B, only accounts that are held by one or more Entities that are Reportable Persons, or by Passive NFEs with one or more Controlling Persons who are Reportable Persons, shall be treated as Reportable Accounts.
As you aware under CRS an Entity Account may become reportable twice. That is based on the residency of the entity itself (for which the CRS standard considered a Trust to be an Entity) or where the Entity is also a Passive NFE, then the look through provisions applies and if the controlling persons are reportable persons then the account become reportable again based on the Controlling persons. Section VI. A. 2. has a similar provision and a similar requirement.
Looking at the Implementation handbook, the conclusions there are the same. The Implementation handbook gives an example on page 121, paragraph 283, which speaks to a Trust that is also a Passive NFE. In that case because the Trust is also a Passive NFE then the look through approach has to be applied. It then goes on to identify who can be identified as Controlling persons of a Trust [who is a Passive NFE]. If however, the Trust is not a Passive NFE, there is nowhere in the Implementation handbook that suggests that the look through approach has to be applied simply because the account holder is a Trust.
The BVI Investment Entity can make that decision. What should be noted is under BVI law the RFI remains responsible for any failure identified if any with the due diligence and reporting done by the Trustee.
If these persons exercise ultimate effective control over the trust, they must always be treated as controlling persons of a trust or an account holder and as such must be reported. If they do not, then they are not account holders or controlling persons.
The account will not be reported since it has no account holder. As stated in our presentation the only account holder (settlor) has passed away, therefore, for the moment the RFI will treat the account as an excluded account. When circumstances change (i.e. the distributions have been made to the beneficiaries), then the account will become reportable to the ITA if the beneficiaries are reportable persons.
The Closure of any financial account that is held by a reportable person must be reported. If the closure of the account and withdrawal of the fund means that the entity no longer meets the definition of an investment then, then the RFI must also make an application for deregistration to the BVI with the information outlined in the presentations.
The relationship manager only becomes relevant where the account is a high value account. A relationship manager is an officer or other employee of an FFI who is assigned responsibility for specific account holders on an on-going basis (including as an officer or employee that is a member of an FFI’s private banking department), advises account holders regarding their banking, investment, trust, fiduciary, estate planning, or philanthropic needs, and recommends, makes referrals to, or arranges for the provision of financial products, services, or other assistance by internal or external providers to meet those needs.
The location of a Trust (as an RFI) will depend on where the trustee(s) is resident. If the Trustee of the Trust is located in Barbados, then the Trust must register with Barbados and report its financial accounts there. The Trust will not register in the BVI.
The settlor(s), Trustee(s), the protector(s) (if any), and the beneficiary/beneficiaries or class of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership), must always be treated as controlling persons of a trust, regardless of whether or not any of them exercises control over the activities of the trust. In short where they exist they must be named as controlling persons.
Given the fact that settlors are listed because they exercise ultimate effective control over the trust, they will have to be named. In a case where they do not have such control then they are not an account holder.