Courses, educational materials BVI.

[agentsriba]

Is selling courses and educational materials a relevant activity in scope of ES requirements in BVI.

 

[Martin Everson]

No.

https://bvi.gov.vg/sites/default/files/resources/ita_rules_v2.pdf
See page 11 section 5.1

 

[agentsriba]

No.

https://bvi.gov.vg/sites/default/files/resources/ita_rules_v2.pdf
See page 11 section 5.1

Is this not an intellectual property business?

 

[Martin Everson]

Is this not an intellectual property business?

Does your business fit description in section 5.30 then?

 

[agentsriba]

Does your business fit description in section 5.30 then?

So creating a course and then selling it doesn’t qualify as an IP business?
5.30 (b)capital gains and other income from the sale of an intellectual property asset;
Sorry if what I am asking is stupid. Just can’t understand it.

 

[Martin Everson]

So creating a course and then selling it doesn’t qualify as an IP business?
5.30 (b)capital gains and other income from the sale of an intellectual property asset;
Sorry if what I am asking is stupid. Just can’t understand it.

It is actually not a stupid question.

Hummm...technically a training course can be protected by copyright and what you are selling is use of that potentially copyrighted material. So you are right and it can be considered IP. I would get a second opinion however as I am no expert in that line of business.

 

[agentsriba]

It is actually not a stupid question.

Hummm...technically a training course can be protected by copyright and what you are selling is use of that potentially copyrighted material. So you are right and it can be considered IP. I would get a second opinion however as I am no expert in that line of business.

An entity manufactures and markets a trademarked product to unrelated third parties. The entity is not an intellectual property business because its income is derived from the sale of finished goods to third parties, not the exploitation of intellectual property assets. The use of the trademark is an adjunct to the business.

Made it even more confusing.

 

[daniels27]

An entity manufactures and markets a trademarked product to unrelated third parties. The entity is not an intellectual property business because its income is derived from the sale of finished goods to third parties, not the exploitation of intellectual property assets. The use of the trademark is an adjunct to the business.

Made it even more confusing.

As I just explained you in the other thread, the main goal of ES is to prevent Amazon, Google, etc. from registering patents and trademarks on their BVI company and then licence those IP back to their US and EU motherhouse at ridiculous prices to lower tax. All the ES rules pertain to profit shifting, i.e. setting up a BVI conpany with the sole intent to have a lot of profit in the BVI that used to belong to a company in a high-tax jurisdiction.

Hence, please read the paper again with this in mind. It will be much easier to understand:

9.1 Income derived from intellectual property assets can pose a higher risk of artificial
profit shifting than non-IP assets. This higher risk is reflected in the presumptions
of non-compliance with the economic substance requirements which apply in the
two scenarios identified in ESA section 9(2).

In other words, the IP rules are there because it is very easy to use IP to shift profits (also note the direct reference to "profit shifting").

9.8 A “high risk IP legal entity” is defined in ESA section 2 as:
a legal entity which carries on an intellectual property business and which
(a) acquired the intellectual property asset
(i) from an affiliate; or
(ii) in consideration for funding research and development by
another person situated in a country or territory other than
the Virgin Islands; and
(b) licences the intellectual property asset to one or more affiliates or
otherwise generates income from the asset in consequence of
activities (such as facilitating sale agreements) performed by foreign
affiliates

Also here, imagine you have Amazon doing research in the US but then either selling the patents to the BVI company or directly applying for a patent in the BVI for research which was done in the US. And then licensing the IP back to the US.

I hope you now get the reason why those rules have been put in place and why they are being monitored. For your situation, I would not worry too much about ES. But you would need a director (a real one on paper) in an offshore jurisdiction. I do not think that you can do this reasobaly priced and believeable in BVI.

 

[Martin Everson]

Sadly without ES the BVI will share data with the UBO's home country as I mentioned below. If OP doesn't mind that then continue exploring this path otherwise forget about going down this path and look for another solution.

https://www.offshorecorptalk.com/th...es-with-no-substance-with-ubos-country.36103/

 

[agentsriba]

Sadly without ES the BVI will share data with the UBO's home country as I mentioned below. If OP doesn't mind that then continue exploring this path otherwise forget about going down this path and look for another solution.

https://www.offshorecorptalk.com/th...es-with-no-substance-with-ubos-country.36103/

What do we count as without substance. I just have to say to my agent if my company have engaged in relevant activities correct? I will still have a local director and a registered address there. My country doesn’t have history of hunting down such structures

As I just explained you in the other thread, the main goal of ES is to prevent Amazon, Google, etc. from registering patents and trademarks on their BVI company and then licence those IP back to their US and EU motherhouse at ridiculous prices to lower tax. All the ES rules pertain to profit shifting, i.e. setting up a BVI conpany with the sole intent to have a lot of profit in the BVI that used to belong to a company in a high-tax jurisdiction.

Hence, please read the paper again with this in mind. It will be much easier to understand:


In other words, the IP rules are there because it is very easy to use IP to shift profits (also note the direct reference to "profit shifting").


Also here, imagine you have Amazon doing research in the US but then either selling the patents to the BVI company or directly applying for a patent in the BVI for research which was done in the US. And then licensing the IP back to the US.

I hope you now get the reason why those rules have been put in place and why they are being monitored. For your situation, I would not worry too much about ES. But you would need a director (a real one on paper) in an offshore jurisdiction. I do not think that you can do this reasobaly priced and believeable in BVI.

Any recommendations where that would be reasonably priced?

 

[Martin Everson]

What do we count as without substance. I just have to say to my agent if my company have engaged in relevant activities correct?

Your best to confirm with your CSP or tax advisor. Oh and you need to ensure you consult one outside the EU. DAC6 requires EU et al providers to report the setting up of any structure that achieve a tax advantage.


https://www.offshorecorptalk.com/th...eporting-comes-into-effect-1-july-2020.29711/

My country doesn’t have history of hunting down such structures

There is no hunting needing to be done as the information is automatically shared each year by BVI.

 

[agentsriba]

You best to confirm with your CSP or tax advisor.



There is no hunting needing to be done as the information is automatically exchanged each year.

They exchange the information if I say that I have done a relevant activity and I do not pass substance tests correct? If I do not engage in relevant activities they do not report?

 

[Martin Everson]

They exchange the information if I say that I have done a relevant activity and I do not pass substance tests correct? If I do not engage in relevant activities they do not report?

You need to ask your CSP or tax advisor.

 

[intlman]

Yeah, the ES reporting really put a dent in the effectiveness of BVI structures (and the required annual financial reporting from this year also).

Additionally, the UBO reporting was the final nail in the coffin for me.

In the end I just found it easy to wrap up my BVI entities (cost me a bloody fortune) and do everything out of HK (which is not perfect, but easy enough to pay very little CIT).

 

[agentsriba]

Yeah, the ES reporting really put a dent in the effectiveness of BVI structures (and the required annual financial reporting from this year also).

Additionally, the UBO reporting was the final nail in the coffin for me.

In the end I just found it easy to wrap up my BVI entities (cost me a bloody fortune) and do everything out of HK (which is not perfect, but easy enough to pay very little CIT).

Let me ask did I get everything correctly until this point. ES reporting - just report that company didn’t engage in relevant activity. If company didn’t engage in relevant activity no UBO reporting. Annual financial return seemed really simple to fill.

 

[intlman]

Let me ask did I get everything correctly until this point. ES reporting - just report that company didn’t engage in relevant activity. If company didn’t engage in relevant activity no UBO reporting. Annual financial return seemed really simple to fill.

You should always get professional advice on the matter, but yes, you could report that you didn't engage in relevant activity.