🇻🇬Offshore companies: BVI, Cayman, Seychelles

An offshore company stopped being a synonym for secrecy long ago. Today it is an ordinary corporate wrapper in a zero-tax jurisdiction, and all of its value rests on how cleanly it is built into the wider structure. Let's look at what a classic offshore company is, how economic substance and automatic exchange reshaped it, and where it still has a place.

Concept

An offshore company in its classic form is an IBC (International Business Company) or BC (Business Company): a company in a jurisdiction with zero corporate tax, minimal reporting and fast incorporation. The canonical examples are the BVI (British Virgin Islands), the Cayman Islands and the Seychelles. Legally it is an ordinary limited liability company; the whole specificity lies in the tax zero and in the fact that, historically, such companies gave the owner anonymity.

The phenomenon itself grew out of Swiss banking secrecy in the early twentieth century and flourished in the Caribbean in the 1980s–2000s, when dozens of island jurisdictions turned company registration into an export industry. The turning point came after the 2008 crisis and leaks such as the Panama Papers: the G20 and the OECD launched a wave of transparency, and the "secret offshore" model closed. We trace that arc in detail in the article on the history of tax havens.

What has changed

Since 2019 the BVI, Cayman, the Seychelles and other classic offshore jurisdictions have introduced economic substance requirements: a company carrying on a "relevant activity" — holding, financing, IP, fund management, shipping — must maintain a genuine presence in the jurisdiction: people, an office, expenditure and decision-making on the ground. In parallel, beneficial ownership registers and automatic exchange of tax information (CRS/AEOI) came into force. The banking anonymity offshore companies were created for has disappeared.

The regulatory bar keeps rising. In the BVI, amendments to the Business Companies Act moved beneficial ownership disclosure onto the VIRRGIN registry platform from January 2025, and from January 2026 economic substance reporting moved there too — the deadlines, thresholds and register access regime are covered in the article on the BVI company. In 2025 the Seychelles, through a separate amendment to its IBC law, also tightened disclosure requirements — the details on substance and lists are in the article on the Seychelles IBC.

Regulation and lists

Today an offshore company is judged first of all by the jurisdiction's reputation with banks and EU regulators, while the tax rate is secondary. The EU maintains two lists. On the "black" list (Annex I) at the end of 2025 there are 11 jurisdictions, including Russia (added in February 2023), Panama, Vanuatu, Samoa and the US Virgin Islands. On the "grey" watch list (Annex II) are the BVI, the Seychelles and several other countries; the Cayman Islands are off both lists. Annex I brings in defensive measures by EU states: increased withholding at source, denial of expense deductions and stricter CFC rules.

Beneficial ownership transparency does not, however, mean open data for anyone who wants it. After the Court of Justice of the EU ruling of 22 November 2022 in the Sovim case (C-37/20 and C-601/20), unrestricted public access to beneficial ownership registers was held to be a disproportionate interference with privacy, and access reverted to the "legitimate interest" model — for competent authorities, banks within KYC, the press and specialist NGOs. The state and the bank see the data on an offshore company's owner; a random person from the internet does not. Who a beneficial owner is, and why the fading nominee schemes have stopped working, we cover separately.

For large businesses the global minimum tax cancels out the zero rate. Under Pillar Two (the GloBE rules) international groups with revenue above €750 million top up to an effective 15% where profit is undertaxed, so keeping substantial profit offshore is no longer worthwhile for such a group. For private owners, CFC rules work the same way: the profit of a controlled foreign company is taxed in the country where the beneficial owner is tax-resident, even if the local rate is zero. In the Russian context this is the Russian CFC (KIK) regime.

Where it is appropriate

The choice between the three classic jurisdictions is made by the task and by how banks will accept the structure; the rate is zero everywhere and plays no part. The BVI is the cheapest and most flexible wrapper for a holding company or an SPV, valued for its speed and familiarity for joint ventures and asset holding. The Cayman Islands are the industry standard for investment funds and deals with institutional money, more expensive and stricter on regulation; the Cayman exempted company is examined in a dedicated article. The Seychelles is the budget option, but with noticeable reputational limits: some banks are reluctant to work with Seychelles IBCs.

An offshore company is not suited to situations that need access to tax treaties: dividends, interest and royalties routed through the BVI or the Seychelles will get no treaty relief — these jurisdictions have almost no treaties. Such flows are run through "white-collar" holding companies: Cyprus, the Netherlands or Ireland, which have a moderate rate, a treaty network and substance. The offshore company stays at the lower level of the structure: holding an asset, a neutral link between partners, a wrapper for a single transaction.

Where it is all heading is already visible: substance, data exchange and the global minimum are squeezing the room for tax magic. The offshore company keeps a modest place in the toolkit — a transparent wrapper for a holding, a fund or an SPV. Attempts to use it for anonymity or for the zero rate alone now end in bank refusals and back taxes.

This material is for informational purposes only and does not constitute individual legal advice.

Sources

• BVI FSC — British Virgin Islands Financial Services Commission
• CIMA — Cayman Islands Monetary Authority
• FSA Seychelles — Financial Services Authority