Israel – British Virgin Islands Tax Treaty

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Israel – British Virgin Islands Tax Treaty

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-4
Road Town
English
39,596
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+1- 284
.vg

Business Activity in the British Virgin Islands

The British Virgin Islands is one of the most desirable destinations (s) in the Caribbean for work and investing. Its economy is mainly based on tourism and international financial services, augmented to over 70% of the GDP, together. Although light, agricultural, and fishing industries have some limited activity, the GDP per capita of the territory was projected to be $38,975 in 2006.

Key advantages of the British Virgin Islands include:

A leading international corporate domicile
Competitive administrative costs
Tax exemptions for International Business Companies
No capital gains, gift, wealth, or inheritance taxes
Absence of exchange controls
Established trust laws
Reliable global communication infrastructure
Minimal bureaucracy and red tape

Details about Israel’s embassy in British Virgin Islands

Israel does not have a consular or diplomatic mission established in the British Virgin Islands. Instead, consular services are covered by the Israeli Embassy in London, United Kingdom.

Address: 2 Palace Green, 15 Old Ct Pl London W8, UK
Phone: +44 20-7957-9500
Website: Click Here
Email: info@london.mfa.gov.il

Details about British Virgin Islands Embassy in Israel

British Virgin Islands does not maintain its own embassies or consulates abroad. Instead, the United Kingdom Embassy in Israel manages its international diplomatic and consular affairs.

Address: 192 Hayarkon Street, 6340502, Tel Aviv, Israel
Phone: +972-3-725-1222
Website: Click Here
E-mail: webmaster.telaviv@fco.gov.uk

Applicability of the MLI

Israel has signed the Multilateral Convention, commonly known as the MLI. The MLI is a convention that is meant to fix double taxation treaties according to the BEPS framework.

Israel signed the MLI on the 7th of June 2017, with its provisions entering into force on the 1st of January 2019. British Virgin Islands, on the other hand, has not proceeded with the signing of the Convention.

Residency for Tax Purposes in the British Virgin Islands

Residence of an Individual

Given that there is a zero-rate income tax regime for individuals in the British Virgin Islands (BVI), it does not impose personal income tax, and as such, the concept of individual tax residency in the jurisdiction is not relevant for tax purposes.

To read about how an individual is considered a resident of Israel, click here.

Residency of a Company

British Virgin Islands do not apply criteria for corporate residence, as the corporate income tax rate is 0%. However, legal entities engaged in certain activities are required to demonstrate economic substance in the BVI.

To learn about how a company is considered a resident of Israel, click here.

The Tax System in the British Virgin Islands

British Virgin Islands Tax Authority is called the Inland Revenue Department.

Income Taxation: 0%

Taxation of Companies and Branches: 0%

VAT: NA

Capital Gains Tax: NA

Withholding Tax

	British Virgin Islands Internal Tax Rate	Israel Internal Tax Rate
Personal Income tax (Tax brackets)	0%	Up to 50%
Corporate Income Tax	0%	23%
Capital Gains Tax Rate	0%	25%-30% (plus exceptional income tax for high earners at 3%)
Branch Tax	0%	23%
Withholding Tax (Non-Resident) Dividends	NA	25% or 30%
Interest	NA	15%/25%/23%
Royalties	NA	23%-40%
VAT	NA	18%

Inheritance Tax in the British Virgin Islands

The British Virgin Islands do not apply an inheritance tax.

Relocation to the British Virgin Islands

The British Virgin Islands (BVI) offers a unique mix of financial and lifestyle benefits. With no income, capital gains, or inheritance taxes, it’s an attractive option for individuals and entrepreneurs looking to optimize their finances.

The BVI is known for its stunning beaches, vibrant sailing culture, and safe, welcoming community. It provides a high standard of living, excellent international schools, and reliable healthcare.

For businesses, the BVI is a trusted offshore financial hub, offering global opportunities and a stable legal framework. Whether you’re seeking a relaxed lifestyle or business growth, the BVI provides a secure and rewarding environment.

Real Estate Taxation in the British Virgin Islands

The British Virgin Islands imposes property tax, which includes land tax and house tax:

Land Tax:

For land owned by a British Virgin Islander or a British Virgin Islands company:
First acre (or part of it): USD 10
Each additional acre (or part of it): USD 3

For land owned by an expatriate:

Half an acre or less: USD 50
More than half an acre up to 1 acre: USD 150
Each additional acre (or part of it): USD 50

House Tax:

Charged at 1.5% per year based on the “notional annual income value” of the property. This value reflects the reasonable annual rent the property could generate.

Property tax is due on September 1 each year, with a payment deadline of November 30.

Transfer of Funds from Israel to the British Virgin Islands

According to section 170(a) of the Israeli Income Tax Ordinance, all payments transferred to non-Israeli residents are subject to a 25% withholding tax. However, this tax can be reduced or even waived if certain conditions are met. Our firm handles withholding tax matters with the Israeli Tax Authority. 

In addition to assisting with withholding tax matters, our firm also helps with other issues related to transferring funds abroad. This includes providing an accountant’s approval regarding the payment of taxes, reviewing additional actions required under the CRS standard, and more. 

Moreover, banks often raise many difficulties and charge high fees for converting shekels into other currencies. Therefore, consulting with a specialist before transferring the funds is highly recommended, click here to contact us. 

For more information on money transfers abroad, click here.

Types of Business Entities in the British Virgin Islands

Company Limited by Shares: This is the most prevalent type of company in the BVI, where members’ liability is limited to the amount unpaid on their shares.

Company Limited by Guarantee: Typically used for non-profit organizations, members’ liability is limited to the amount they agree to contribute to the company’s assets if it is wound up.

Unlimited Company: In this structure, members have unlimited liability for the company’s debts and obligations.

Restricted Purpose Company: Designed for specific, limited purposes, often used in structured finance transactions.

Segregated Portfolio Company (SPC): Allows for the segregation of assets and liabilities between different portfolios within the same company, commonly used in investment funds and insurance companies.

Incentive Laws in the British Virgin Islands

The British Virgin Islands attracts expatriates and digital nomads through tax advantages. Such incentives include tax exemption on foreign income, exemption from tax on capital gains and intestate inheritance, and property tax reduction for real-estate purchase buyers. Expatriates must not be domiciled in the British Virgin Islands and work less than 183 days per year, whilst digital nomads operate from outside the BVI and have a fixed working base in the jurisdiction. In this context, those measures have the goal of providing support to highly qualified professionals and stimulating economic development.