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Saint Vincent and the Grenadines
Company formation in brief
Saint Vincent and the Grenadines (SVG) is a tax haven and offshore jurisdiction with a recognised concept of a tax exempt company (and/or offshore company, International Business Company, trust, foundation etc.) registration.
The corporate law of SVG provides for the establishing of offshore companies of various organizational and legal forms on the islands, but in practice, only classic offshore Business companies (BC) and offshore Business trusts may be of interest to a potential foreign investor.
A Business company (BC) is characterised as follows:
– one physical or legal person may own and manage a Business company;
– a Business company name may end with such words as Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima, Aktiengesellschaft, Anonima, A/S, SA, AG, GmbH, NV, BV or their abbreviations;
– names may not include words or their derivatives reflecting activities to be licensed, such as Assurance, Bank, Building Society, Chamber of Commerce, Chartered, Cooperative, Imperial, Insurance, Municipal and Royal;
– minimum charter capital, which may be expressed in any currency, is not required to be paid;
– a certificate of incorporation, where directors’ names are specified, may be issued;
–·a company may be established both for a specific period of time and without restricting its period of existence;
–·registered shares (of such classes, types and fractions as the company owners decide) may be issued ;
– offshore company may set up its own office in the SVG;
– directors’ and shareholders’ meetings may be held in any country and their minutes and financial documents may be kept anywhere in the world.
– an offshore Business company is required to maintain the directors and shareholders register, and although the company's documents are not subject to public verification, they may be verified by its shareholders;
– directors and shareholders data is not kept by the Registrar of Business companies in the SVG;
– an offshore BC may not do business with SVG residents or invest funds in any property located in the islands, other than for its registered office maintenance. A Business company may not be engaged in banking or trust activities, insurance or reinsurance, or provide its registered office address for other companies’ needs. In fact, such companies may operate outside the SVG only;
– an offshore Business company has guarantees for repatriation of 100% of its capital and profit from operations outside the Republic;
– an offshore Business company is not subject to taxation in the SVG and is released from filing annual financial and statistical statements. The tax exemption is guaranteed for 25 years by the relevant certificate issued by the SVG Registrar of Companies.
If an offshore company does not pay annual state fees for renewing its registration, it will be deleted from the Active SVG offshore Companies Register one year after the date of the last fee payment. The Companies Act clearly explains that an offshore company excluded from the Register may not continue its business activities and, in particular, manage its bank accounts, although the offshore company’s directors and shareholders continue bearing full responsibility for the company’s debts and obligations.
An offshore company may be re-registered in the SVG Companies Register but after a certain period of time, the company may be re-registered only through the local court which may take either a positive or a negative decision.
Any foreign companies may move (re-domicile) to the SVG, and offshore Business companies registered here may change their legal addresses by duly observing relevant formalities.
The SVG law provides for registering various types of trusts including those which have no specific beneficial owners.
An offshore Business trust is registered in the SVG confidential Government Register. One of the Trusts’ specific features is that any trust agreement registered here continues being valid if it has been formally declared invalid in accordance with the laws effective in the jurisdiction of the founder’s permanent or temporary residence.
As a result, for example, the founder’s bankruptcy or insolvency has no legal consequences for an SVG offshore trust since legal claims against it are considered in the SVG only within 2 years from the date of establishment. A creditor’s claim may be satisfied only if the creditor manages to prove that the offshore trust was established with a deliberately fraudulent purpose and its very creation in the SVG caused the founder’s insolvency. Beginning the process of the trust prosecution in a local court, the plaintiff has to make a deposit of USD 25’000 to be used to cover legal costs if the plaintiff loses the case.
Saint Vincent and the Grenadines has enacted the Economic Substance Act and the Beneficial Ownership Register Act which enables a relevant Government authority to implement a tool whereby local registered agents will be required to enter data of beneficial owners of all offshore companies into the protected Central Online Register.
All SVG' offshore Business companies must mandatory file a Notice of Directors and Members now with the Financial Services Authority (“FSA”). Once filed, Directors and Members information go on to the public registry.
Each time there is a change to the directors or members including a change of name or change of address of any director or member such information must be filed with the FSA.
There is a fine of US$20,000 for failing to file changes with the FSA.
Each offshore BC must file a tax return with the Inland Revenue Department ("IRD") of Saint Vincent and the Grenadines within three months of the BC's financial year end commencing in 2022.
If an offshore company's financial year end is December 31, 2021 then the Company must file a tax return with the IRD by March 31, 2022. The period to which taxes are applicable is July 1, 2021 to December 31, 2021.
If a company's financial year end is June 30, 2022 then the Company must file a tax return with the IRD by September 30, 2022. The period to which taxes are applicable is July 1, 2021 to June 30, 2022.
There were no taxes applicable before July 1, 2021 and taxes are only applicable to income earned in the jurisdiction.
Each offshore BC which is a large company must file financial statements with the FSA on an annual basis. A large company is one that has assets greater US$744,000.00 or earns revenues greater than US$1,488,000 per year.
Each offshore BC which is a small company must file a Declaration of Solvency with the FSA on an annual basis. A small offshore company is one that has assets less than US$744,000 or earns revenues less than US$1,488,000 per year.
The financial statements or declaration of solvency must be filed within 5 months of the balance date of the company. Balance date in relation to a business company, means-
(a) the close of 31 December; or
(b) such other date as the board by resolution adopts as the balance date of the company, with the approval of the Registrar:
Offshore Business companies involved in any of the nine (9) activities mentioned below are obligated to comply with Saint Vincent and the Grenadines' economic substance requirements:
1. Banking business
2. Distribution and services centre business
3. Finance and leasing business
4. Fund management business
5. Headquarters business
6. Holding entity business
7. Insurance business
8. Intellectual property holding business and
9. Shipping business
All offshore Business companies are required to keep financial records according to the Saint Vincent and the Grenadines Business Companies (Amendment and Consolidation) (Amendment) Act, 2018. See attached section 72 (1) of the Act and please read it carefully as there are substantial fines for not complying with these requirements.
The financial records of an offshore company must be kept either at the Registered Agent's office or such other place as the directors determine by resolution. Companies which keep hard copies of their financial records outside of SVG will be required to keep financial records at the registered office that disclose with reasonable accuracy the financial position of the company at intervals not exceeding three months.
The Financial Services Authority (FSA) of SSaint Vincent and the Grenadines has published a formal notice regarding new requirements for SVG offshore companies engaged in Forex trading and Brokerage businesses.
All these companies must, by Friday, March 10, 2023, submit a legalised copy of the appropriate license/approval from the jurisdiction where their business activities are conducted. If an offshore company does not need a license to conduct Forex/ Brokerage activities in a particular jurisdiction, the company can provide the FSA with a confirmation letter issued by the competent authority in that jurisdiction.
Offshore SVG companies that fail to comply with these new requirements will be subject to sanctions in accordance with the SVG FSA Act.
No government fees will be incurred for these new filings in SVG.
All Registered Agents and Trustees which are licensed in SVG should apply AML and KYC/DD practices when on-boarding clients who wish to set up offshore companies in Saint Vincent and the Grenadines.
A company formation in Saint Vincent and the Grenadines could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Saint Vincent and the Grenadines. To set up a company in Saint Vincent and the Grenadines is possible by correspondence, but to open a bank account in Saint Vincent and the Grenadines will, most probably, require a personal visit.
The Republic of Saint Vincent and the Grenadines did not sign any double taxation agreements with any country of the world but is a party to certain international treaties on information exchange.
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