When family offices, high net worth individuals (HNWIs), and ultra high net worth individuals (UHNWIs) are looking to purchase luxury assets (particularly yachts, art, and aircraft), there are several factors to consider. Consider the best structure for purchasing and holding such luxury assets.
When purchasing luxury assets, one of the first things to consider is the structure in which such luxury assets are purchased and subsequently held. One of the most popular options is to hold luxury assets through a special purpose vehicle (SPV) in the British Virgin Islands (BVI).
What is SPV? Why use SPV?
An SPV is generally a corporate structure (usually a BVI operating company) established solely for the purpose of purchasing and holding high-end assets, offering some or all combinations of (depending on the exact SPV structure used) There is a tendency to The following benefits:
Financing flexibility and risk limitations: SPVs can potentially be structured “off-balance sheet” to provide new luxury financing at the SPV level without increasing debt/security for the broader corporate group or high net worth/ultra high net worth individuals. Can be used to secure financing for assets. Directly (subject to any warranties given). Transfer/sale: If you wish to sell or transfer your luxury assets in the future, you can do so with minimal hassle as the SPV can be sold as a self-contained entity. This may also have additional benefits as permits and registrations (for yachts and aircraft) do not need to be transferred and remain in the name of the transferring SPV. Limited Liability: Most SPVs benefit from ‘limited liability claims’. This means that, in most cases, existing group companies or high net worth/ultra high net worth individuals are insulated from financial risks in the event of default or other issues related to luxury assets. (Subject to any warranties given).
BVI as primary jurisdiction of choice for luxury asset SPVs
The BVI is one of the most popular jurisdictions chosen when setting up an SPV to hold luxury assets. The BVI is one of the world’s leading offshore financial centers and offers the following key benefits:
Reputation: The BVI is one of the most well-known and well-established offshore financial centers and is known for its reputation as one of the most well-known and well-established offshore financial centres, with a number of lesser-known parties making claims such as: It offers significant advantages compared to unconventional offshore financial centres. offers similar benefits. Confidentiality: Details of the shareholders/members of the BVI SPV are not currently available to the public unless elected otherwise. Tax Neutrality: The BVI is tax neutral, meaning there is no income tax, corporate tax, or capital gains tax in the BVI. Furthermore, except in very special circumstances, the BVI does not impose stamp duty on the transfer of shares in an SPV where the SPV is sold as a self-contained entity holding high-grade assets. British Overseas Territories: Ultimate executive authority in the BVI is vested in the British Crown and is exercised on behalf of the Governor-General of the British Virgin Islands. Legal System: The BVI has a recognized and well-developed common law legal system with final appeal to the Privy Council in London. Legislation: The BVI has a very flexible and easy-to-use corporate legislation compared to some onshore/other offshore jurisdictions. Banking: The BVI is not subject to any exchange controls and uses the US dollar as its primary currency. Cost: Compared to most other established offshore financial centres, the cost of establishing and maintaining an SPV within the BVI is low.
BVI SPV structure
The main legislation governing BVI companies is the BVI Business Corporations Act 2004 (as amended) (BCA), which makes provision for several different types of BVI companies. However, for BVI SPVs formed to hold high-end assets, a BVI Business Company Limited by Shares (BVI BC) is commonly chosen, with the following key characteristics:
BVI BC has a separate legal personality. This means that in most cases the shareholder/member’s liability is limited to the unpaid amount, if any, of the shares in question. In most cases, such amounts are zero or only nominal. The day-to-day running of a BVI BC can be left to the company’s directors (who usually do not need to be physically based in the BVI). The SPV has a registered agent and registered office based in the BVI and handles certain day-to-day administrative aspects of maintaining the BVI BC on behalf of its clients, reducing their administrative burden*. BVI BC is a common SPV format that is widely recognized worldwide. BVI BC is not subject to statutory financial aid limitations.
conclusion
Purchasers of yachts, art, aircraft, and other luxury assets face important decisions regarding the structure of such acquisitions. Multiple options are available, including various forms of SPVs with different corporate addresses, allowing buyers to find the best combination of quality, flexibility, administrative convenience, cost/tax efficiency, and international acceptance. You need to find a jurisdiction that offers it. The BVI has emerged as the jurisdiction of choice for sophisticated family offices and high net worth/ultra high net worth individuals looking to acquire and hold luxury assets, offering a flexible, tax efficient and safe place to do business. We have and will continue to lead the way.
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