BVI Investment Funds

British Virgin Islands
BVI Funds

Start a Tax-Free Offshore Investment Fund

Advantages of setting up a BVI fund

The British Virgin Islands (“BVI”) is the second largest offshore jurisdiction for hedge funds globally and a prominent and flourishing jurisdiction for establishing offshore investment funds, generally. The BVI’s flexibility in offering alternative regulatory regimes for small to mid-sized hedge fund groups makes it an efficient proposition to establish investment managers and advisers in the BVI. This is one of the many advantages that makes the BVI a leading domicile for offshore hedge funds.

BVI offers a variety of fund types, suitable to cover a range of different investment products and investors. Hedge funds domiciled in the BVI make up approximately.

One quarter of all offshore hedge funds established worldwide

Closed-end funds are not subject to direct regulation in the BVI.

Benefits

Hedge funds domiciled in BVI make up approximately one quarter of all offshore hedge funds established worldwide. This popularity is due to the many advantages of establishing an investment fund in BVI including a tax neutral environment and a stable political and economic jurisdiction committed to remaining fully compliant with all supra-governmental bodies.

Additionally, there are no regulatory restrictions on investment policies or requirement to appoint local directors, local functionaries or local auditors.

Advantages of setting up a BVI fund

One of the leading offshore jurisdictions for investment funds
Perfect for small scale funds with no minimum requirements of assets under management
Cost effective jurisdiction for fund formation
Simplified due diligence procedures for investors
Flexibility in the choice of investment portfolio and internal structure of the fund itself
Minimum or zero taxes on capital gains, profits and dividends accrued to the fund
Well-regulated jurisdiction with a long and proven track record
No exchange controls
BVI Mutual Funds can be established in a wide range of organisational forms
Licensed and experienced professionals
Straightforward and flexible fund administration requirements

Mutual funds and non-BVI investors are exempt by legislation from all tax.

Types of funds

There are a number of BVI fund products suited to everyone from the startup manager setting up an incubator fund to established institutional fund managers with billions under management.

Incubator Fund
Approved Fund
Private Fund
Professional Fund
Public Fund

Key Features of BVI Funds
Regulatory Body

Investment funds in the BVI are regulated by the Securities and Investment Business Act (“SIBA”).

Unregulated Funds

Closed-ended funds such as private equity funds and established funds (incubator and approved funds)

Common Functionaries

BVI Funds, regulated by SIBA will generally be required to appoint the following functionaries (unless exempted):

Investment manager
Administrator
Custodian
Auditor

(NB: for Private/Professional Funds, custodian must be independent from the manager/administrator unless there are sufficient systems to ensure functional independence)

Application process

Applications for approval as an Incubator Fund or an Approved Fund are made to the Commission and must be accompanied by:

the constitutional documents;
details of the investment strategy;
a prescribed form of investor warning; and
an application fee of US$1,500.

An Incubator Fund or Approved Fund can commence business 2 days from the date of receipt of a completed application by the Commission.

Duration and conversion of incubator fund

An Incubator Fund has a limited life of two years which can be extended up to 12 months. An Approved Fund has no such limits. An Incubator Fund can convert to an Approved Fund, a private or professional fund, or may wind up at the end of its term. An Incubator Fund can convert to a private or professional fund or to an Approved Fund by making an appropriate application to the Commission.

Ongoing obligations

In keeping with the cost-efficient approach to these vehicles, service provider requirements are minimal. Each fund is required to appoint an authorized representative in the BVI, and an Approved Fund is required to always have an administrator. However, there are no mandatory custody requirements.

There is no requirement for the issuance of an offering document and where the fund determines not to issue one, the required investor warnings can be set forth in a separate term sheet.

Otherwise, an Incubator Fund and Approved Fund are required by the regulations to:

For 2026, pay an annual fee of US$1,200 on or before 31 March of each year – to the BVI Financial Services Commission (FSC) for both Incubator Funds and Approved Funds.
Always Have a minimum of two directors, one of whom must be an individual
Notify the Commission of any change to any of the information submitted to the Commission in its application; for instance, in relation to it or its conduct (which has or is likely to have a material impact or Significant regulatory impact), directors, etc.
Prepare and file annual financial statements to the Commission (with no requirement for an independent audit)
File bi-annual returns with the Commission

Since the introduction of the Regulations, we have had experience establishing a number of these funds and we expect that, as new potential managers learn about these structures, they will continue to prove attractive vehicles to start up managers, family offices and others looking for a simple, quick and cost-effective way to establish a lightly regulated investment vehicle.

For a BVI Incubator Fund or BVI Approved Fund, the application for recognition as a fund is made to the British Virgin Islands Financial Services Commission (BVI FSC); incorporation of the BVI company, handled through our BVI-licensed Registered Agent and the Registry of Corporate Affairs.

Our fund services
Our Business Development Managers will guide you through the whole process of obtaining your fund license and day-to-day management.

Our services include:

• Advice and assistance in setting up your offshore fund
• Ongoing support, from day-to-day administration to assistance with corporate, legal and tax matters
• Fund accounting and valuation
• Risk management and compliance services
• Domiciliation and office rental (if required)
• Audit services

All with the support of our local BVI Registered Agent.

We offer complete solutions for fund administration and support throughout the whole process.

Our one-stop shop approach allows fund sponsors more time to concentrate on asset growth and management. We comprehend the investment fund industry, and our experience and expertise will help you enhance your fund’s operations and build a secure relationship with your investors and counterparties.