Where to set up an Unlicensed VASP Business Offshore

Are you looking to do a Crypto Token Launch?


Or to set up a Cryptocurrency Exchange?


Most Offshore jurisdictions have either passed (eg Caymans, BVI, Mauritius etc) or are in the process of passing VASP (ie Virtual Asset Service Provider) Legislation. The nett effect of VASP Laws is if you propose to do an ITO or IDO or to mint a new Crypto coin (or if you’re planning to set up a Cryptocurrency Exchange business), and if you want to incorporate in a country where such activity is now regulated you need to apply for a VASP License before you can incorporate.


Previously you could set up such a business in Belize or Seychelles or St Vincent without needing to apply for any form of Special License. Unfortunately. these jurisdictions have all announced that they intend to pass VASP legislation/regulations in the near future and until then, as a matter of policy, they won’t be allowing any business that looks or smells like a Virtual Asset Service Provider enterprise to incorporate in the jurisdiction.


Unfortunately to get your hands on a VASP license is not easy. You’ll need to have deep pockets (eg $US50,000+) to cover legal fees/set up costs and you’ll need to be patient as such a license can take 3 months+ to be approved.


But there is still a viable “Offshore” Incorporation option that does not require one to go down the VASP licensing road, ie the world’s second most popular “Offshore” Jurisdiction, the mighty Panama.


How Panama came into play as a VASP Enterprise locale is an interesting story.


The Panama Legislature in October 2022 passed a Bill that would have established a VASP regime in Panama for the following activities:

  • Exchange between virtual assets and fiat currencies.
  • Exchange between one or more forms of virtual assets.
  • Transfer of virtual assets.
  • Custody virtual assets or instruments that allow virtual asset control
  • Participation and provision of financial services related to the offer or sale of a virtual asset by an issuer, including, but not limited to security token offerings (STOs).
  • Financing through virtual assets
  •  Authorized virtual asset Liquidity Provider
  • Digital Wallet service provider


The bill proposed that the Superintendency of Banks would  be the regulator for VASP (virtual asset service providers), payment systems, and electronic money issuers.


The possibility of payments in crypto assets to the State was also to have been regulated by the bill.


BUT under the Panama model of republic such a law can be challenged by the President of Panama.


Which is exactly what happened…


And the Panama Supreme Court found for the President declaring the law Unconstitutional.


Which means that you can incorporate a VASP business in Panama without needing to apply for any form of Special License (ie providing you’re not planning to create/offer a “Security”)


Panama (which does not tax income earned outside of Panama) offers 2 low cost/low admin entities that could potentially be deployed to own and operate a VASP business ie:


A nil tax SA Company: https://offshoreincorporate.com/panama-offshore-companies/ ; AND


A nil tax Private Foundation: https://offshoreincorporate.com/panama-tax-free-foundations/


OCI specializes in assisting Blockchain startups and can assist you to incorporate in Panama should you wish to head down that road.


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DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.



This Guide focuses on the legislative enactments concerning the establishment of private trust companies in the British Virgin Islands (BVI) and illustrates the clarity of the new regulations following the wholesale repeal of the Banks and Trust Companies (Application Procedures) Directions 1991.




New rules relating to private trust companies (PTCs) known as the Financial Services (Exemptions) Regulations, 2007 (Regulations) came into force in the BVI on 1 August 2007 following amendments made on 15 January 2007 to the BVI’s Financial Services Commission Act, 2001 (FSC Act), the latter paving the way for the introduction of the Regulations. Further amendments to the trust legislation were introduced in 2013, enhancing the PTC regime.


In this Guide, we discuss the Regulations and outline the conditions which must be satisfied to enable a company to benefit from the exemption from the trust licensing regime in the BVI as well as, in particular, highlighting the new responsibilities imposed by the new rules upon the registered agent acting for a PTC.


Under the current regulatory framework, certain types of company are able to seek an exemption from the usual requirement to obtain a trust licence under the BVI’s Banks and Trust Companies Act 1990 (Act). It was the general intention of the BVI Government to create a system whereby specific classes of trust company are granted an exempt status.


Most unremunerated PTCs which do not offer trustee services to the general public (i.e. do not carry on the business of a trustee) are now able to benefit from the new exemption regime. Also, unremunerated BVI-incorporated companies which merely hold assets as nominees (or bare trustees) are automatically entitled to benefit from the exemption, provided that they do not carry on the business of a trustee.




A PTC is, essentially, a company which possesses trustee powers and which does not conduct trust business with the general public, its sole purpose being to act as a trustee of a family trust or a group of related trusts.


The Regulations define the term “private trust company” to mean a company:

  • That is a qualifying BVI company;
  • That is a limited company within the meaning of the BVI Business Companies Act, 2004 (BVIBC Act); and
  • The memorandum of which states that it is a private trust company


A “qualifying BVI company” in turn is defined to mean a company that:

  • has first incorporated under the BVIBC Act;
  • has been re-registered under Part II of Schedule 2 of the BVIBC Act;
  • has been re-registered under paragraph 6(1)(a) of Part III of Schedule 2 of the BVIBC Act and in respect of which an election to disapply Part IV of Schedule 2 has been registered; or
  • has been re-registered under paragraph 6(1)(b) of Part III of Schedule 2 of the BVIBC Act and in respect of which an election to disapply Part VI of Schedule 2 has been registered.




A PTC will not be required to obtain a trust licence under the Act where its trust business consists solely of either:

  1. Unremunerated trust business; or
  2. Related trust business.


For the avoidance of doubt, the business of a PTC shall be deemed to consist solely of unremunerated trust business, notwithstanding that part or all of such unremunerated trust business also qualifies as related trust business. The same rule applies in respect of related trust business.


What is Unremunerated Trust Business?


Unremunerated trust business is trust business which is carried on by a PTC where remuneration is not payable to, or received by, the PTC or indeed any person associated with the PTC, in consideration for, or in relation to, the services that constitute the trust business.


For the purposes of the rules “remuneration” includes money or any other form of property and it matters not whether such remuneration is payable, or is received, out of the assets of a “relevant trust” (defined by the Regulations to mean a trust with respect to which a PTC is providing services that constitute trust business), from the settlor or beneficiary of such a trust, or from any other person pursuant to an arrangement with the settlor or a beneficiary of a relevant trust.


Any remuneration paid to a director of the PTC or a person associated with the PTC is regarded as “remuneration” under the new rules unless it is paid or received by way of the director’s remuneration:

  1. With respect to professional director services provided to the PTC; and
  2. The director is not otherwise associated with the PTC, i.e. by virtue of having a direct or an indirect beneficial interest in it.


The Regulations make clear that payments which are made to a PTC to indemnify it for costs and expenses paid or incurred by the PTC (e.g. regulatory fees and registered agent fees) will not be regarded as “remuneration” within the meaning of the new rules.


What is Related Trust Business?


Related trust business is trust business provided in respect of a single trust or a group of related trusts where each beneficiary of a trust is either a “connected person” in relation to the settlor of that trust, or is a charity. The term “connected person” refers to any person whose relationship to another is established by affinity or consanguinity (which may also be established by adoption).


A trust is, in respect of another trust, a “related trust” where the settlor of the first trust is a connected person with respect to the settlor of the second trust. Thus, in a group of trusts, the trusts are “related trusts” if the settlor of each trust in the group is a connected person with respect to all of the settlors of the other trusts in that group.


A PTC will be treated as carrying on “related trust business” if it acts as trustee of:

(a) a single trust, all the beneficiaries of which are charities or have certain specified blood, marital or adopted relationships to the settlor or are the settlor; or

(b) more than one trust, each of the settlors of which have any of those relationships to each other and all the beneficiaries of which have any of those relationships to the settlors of the trusts, or are the settlors (or are charities).




A PTC will lose the benefit of the exemption under the Regulations where:

  • it fails to ensure that at all material times its registered agent holds a Class I trust licence issued under the Act (incidentally, where the registered agent ceases to hold such a licence, it has a period of four weeks’ grace from the date on which the licence ceased before the disqualification applies);
  • it carries on business that is not trust business;
  • it solicits trust business from members of the public; or
  • it carries on any trust business other than either unremunerated trust business or related trust business.




Where the exemption is lost and a company no longer qualifies as a PTC, there will be an obligation on the PTC’s part to ensure that it forthwith removes any reference in its constitutional documents to it being a PTC. The company will be regarded as carrying on unauthorised financial services business if it either carries on any trust business without having the benefit of the exemption or, having the benefit of the exemption, it carries on trust business which is not unremunerated or related trust business.


The Regulations impose strict duties on a registered agent which acts for the PTC where the exemption is lost (see section 7 below).




Unremunerated trust business and related trust business are both deemed to represent “financial services business” under the FSC Act. This means that the BVI Financial Services Commission (FSC) has available to it certain sanctions specified under the Act which will apply in the event that there is any breach or contravention of, or non-compliance with, a requirement on the part of a PTC. The PTC is effectively treated as a licensee under the FSC Act.


For example, section 32 (power to request information and documents) and the enforcement provisions of sections 36 (appointment of examiners), 37 (enforcement action), 37A (public statements) and 40 (power to issue directives) of the FSC Act all apply to a PTC subject to necessary modifications, although these provisions in no way restrict the powers of the FSC to take appropriate action against a PTC which is acting in breach of the Regulations.




A registered agent intending to act as such in respect of a PTC is obliged:

  • to satisfy itself that the company complies with the requirements of the Regulations;
  • on a periodic basis, to take all reasonable steps to satisfy itself that the company continues to comply with the requirements of the Regulations;
  • to take all reasonable steps to ensure that up-to-date records of the following documents in respect of the company are kept at the registered agent’s office in the BVI:

(a)   the trust deed or other document that creates or evidences a trust and any deed or document that varies the terms thereof, for each trust; and

(b)   documentation and other information on which the registered agent has relied to satisfy itself that the company complies with the requirements of the Regulations; and

(c)   to immediately notify the FSC in writing if at any time the registered agent forms the opinion that the company has failed to comply with the requirements of the Regulations.


As alluded to above, these duties call for continued vigilance on the part of the registered agent and the degree to which it adheres to these obligations will be an important measure as to its liability in the event that a PTC is found to be in breach of the Regulations.




There is no formal process for application to the FSC seeking approval for the grant of exempt status. Exemption will be automatic if the PTC meets the criteria laid down in the Regulations. Apart from an annual return which will need to be filed by the PTC, the only other document required to be filed publicly are the PTC’s Memorandum and Articles of Association.


The Memorandum and Articles of Association do not need to include the names of the directors or shareholders of the PTC. Such information is retained separately by the registered agent of the PTC and so those details are not a matter of public record in the BVI. Furthermore, none of the substantive documents relating to the trust, copies of which must be held by the registered agent (as mentioned in section 7 above), need to be presented to the FSC. Some clients may find this a particularly attractive aspect the overall BVI regime.




As mentioned previously, a company is not required to obtain a trust licence under the Act where it acts solely as a bare trustee or a nominee. The criteria for determining whether a trustee acts as a bare trustee for the purposes of the Regulations will be specified in the Regulatory Code (which is yet to be issued by the FSC).




PTCs enable family-controlled structures to be created whereby family members and/or trusted family advisers, who together have a wealth of knowledge about the family’s affairs, can become involved in the decision-making processes by assuming the role of director or consultant to the PTC. As the assets of the PTC are controlled by a board of directors comprised of the settlor and his family and/or persons who are familiar to the settlor and his family, this enables them to exercise more control over the trustee’s actions. The structure provides considerable comfort to those who are ordinarily reluctant to relinquish control of assets to third party trustees over whom they are able to exercise little or no governance. This added element of control, also affords greater privacy and confidentiality for the settlor and his family over their assets and activities.


Institutional trustees may not be prepared to take on the role of trustee where the trust is comprised of high risk assets because they may consider the potential liability resulting from their fiduciary duties over such assets as being unduly onerous. Where the PTC provides the trusteeship, there is still a role for the institutional trustee as it may be convenient for the board of directors of the PTC to delegate the PTC’s administrative function to a professional trustee services provider. The provider will be more inclined to take on this purely administrative function as it will have only a contractual relationship with the PTC (rather than a fiduciary relationship) with the consequent mitigated risk and restricted liability over the trust assets. This, in turn, is likely to result in a cost-saving for the family as lower risk invariably translates into lower professional fees.


Lastly, as it is a company, a PTC also offers the benefits of limited liability status.




The BVI’s highly acclaimed VISTA trust legislation was amended in 2013 to allow for co-trusteeship of VISTA trusts. A PTC may now be the qualifying trustee of a VISTA trust as an alternative to a licensed BVI trustee. Thus clients have a number of options when selecting trustees of VISTA trusts: the sole trustee may either be a licensed BVI service provider or a PTC; alternatively, one or more foreign companies or individuals may act as co-trustee together with the licensed BVI trustee or a PTC.




In the short time since their introduction, the Regulations have made a positive impact in the BVI as the BVI is now able to offer a more efficient and more cost-effective application process to those seeking to incorporate a PTC than that previously available under the old regime. applebyglobal.com 5 BVI-incorporated PTCs offer significant opportunities for families in their generic wealth planning and protection strategies. Provided that careful consideration is given to the incorporation of the PTC and the transaction is properly structured, a PTC can be a very useful vehicle for those who have previously felt reluctant to adopt trust structures because of traditional concerns regarding trustee control, cost and confidentiality issues. Indeed, it is becoming common practice in the BVI for structures to be established using a BVI VISTA non-charitable purpose trust (which is administered by a locally licensed trust company pursuant to a services agreement) to hold the shares of a PTC, which in turn will hold and deal with the shares of the holding or operating companies in accordance with the terms of one or more family trusts which the PTC is able to administer. As well as benefiting from the advantages offered by the BVI’s VISTA regime thus disengaging the trustee from any responsibility over the management of the PTC and providing an effective succession mechanism in regard to the directors of the PTC through the “Office of Director rules”, the purpose trust is an ideal vehicle for ownership of the PTC where personal ownership can give rise to tax or other problems for individual shareholders.


PTCs have become increasingly popular in offshore financial centres in recent times and the new BVI legislative framework for PTCs is intended to be the latest in a series of financial services-related statutes which have been enacted by the BVI government over the last few years and have established the BVI as one of the leading trust jurisdictions.


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DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.



How To Use a Tax Free Offshore Company To Sell Web Domains

With renowned privacy features, relatively low maintenance costs (ie compared to similar onshore entities) and ease of establishment the classic privacy haven International Business Company (eg Belize, Panama, BVI, Nevis, Samoa, St Vincent, Seychelles etc) has risen to become the preferred International Business entity for discerning investors and International/Digital entrepreneurs the world over.     


Advantages include:


  • Exemption from most taxes, including income/business tax, stamp duty and capital gains tax
  • Shareholder, Underlying Beneficial Owners and Directors’ details are usually not publicly available
  • No need to hold annual general meetings, or to file annual returns
  • No need to file annual returns
  • No need to keep audited accounts
  • Low set up and admin costs
  • Can carry out a wide variety of activities as of right


IBCs for selling Web Domains


IBCs are commonly used by Web Domain Resellers. 


It makes no difference whether you are producing/registering/selling new Domain names or whether you are buying existing Web domains from different providers, trading profits resulting from the sale of such Domains should be taxed in the country of incorporation. 


Generally speaking, pursuant to the principles of International Tax law:

1)         The purchase of the product in the above example should not give rise to taxation in Country 1; and 

2)         Provided that the IBC does not have a “permanent establishment” or a fixed business address/office in country B, then no tax assessment should be levied against the IBC in country B 


How it Works Practically


Here’s how such a setup usually works:


  • A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated to own/operate the business
  • You design/launch a website which is owned by the Offshore Company
  • The IBC creates or acquires all proprietary items (including also any Trademarks, Operating software/systems, Domain names and other soft products to be sold/delivered to customers etc)
  • The website ideally should be hosted in a nil tax/private Jurisdiction (Iceland is currently the most popular destination for such web hosting, Singapore is also often favoured)
  • The clients find you and/or contact you via the world wide web. All comms are web based. All products are delivered via the web
  • A web based business has no physical store that a tax man/regulator can point to as the point of sales generation. Hence such businesses are usually taxed in the country from which they are seen to be managed/controlled.
  • The IBC should seen to be managed and controlled from (and ideally beneficially owned from, see below) Offshore. This is achieved via the deployment of a (nil tax jurisdiction based) “Nominee” director.
  • You are appointed, via an  arms-length Consultancy Agreement, as the IBC’s authorised trader (ie you negotiate the deals and place the buy and sell orders on behalf of the Company)
  • Your Company’s standard sale agreement/website terms and conditions should provide (a) that a contract is not formed until the customers offer is accepted by you (ie the Offshore Company) and (b) that the source of the income is the contract. Before the client clicks buy he/she clicks on a button acknowledging that he/she has read and agrees to be bound by your terms & conditions
  • Acceptance of the buyer’s offer would be provided by the Company (which is seen to be managed from “Offshore” via a nil-tax-jurisdiction resident Nominee Director) sending an email to the buyer, after he/she has paid online; In simple terms what that means is that the situs of the Contract ie the place where the contract of sale (ie the agreement between you and the buyer for you to supply goods in consideration of the buyer paying), at law, is formed is the director’s location ie a nil tax environment…
  • Hence the income – from which the contract of sale is the source – has been/is derived, prima facie, in a zero tax jurisdiction (every time a client buys and you send an email thanking him for payment that concludes as contract of sale at law)
  • An Offshore account (which can/will also be set up to receive card payments via a merchant account) is opened in a nil tax banking centre
  • Customers/clients contract with and pay the IBC; All such monies are banked free of tax in the first instance
  • You or your local company would/could also be contracted by the IBC to manage sales/delivery of product/website maintenance/whatever
  • (If you need a regular income) You would invoice the IBC periodically (eg monthly) for this service which income would be assessable income in your home state – though a smart Tax Accountant should be able to assist you to claim a series of expenses against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income
  • Ideally once you start to grow you and to add substance you would be wise to set up your MD/Board and or a sales team to take orders and receive income in a low tax onshore environment (eg Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google model).


As alluded to, in order to minimise the chances of the IBC being taxed onshore, ideally, the IBC should/would be (and be seen to be) managed and controlled from Offshore. How this can be achieved is by including a (nil tax jurisdiction based) “Nominee” Director as part of the Corporate structure.


Ideally – so you can swear on oath in the event of a law suit, tax investigation, or regulatory inquiry – I am not the beneficial owner of this Company, (which should enable your lawyers to be able to argue, in the event of an investigation, sorry this is tax deferral not tax evasion) you might want to set up a Private Foundation to act as the shareholder of your IBC. (This should also assist you to get around CFC rules ie if you live in a country which has such regs).


With a bespoke legal/admin structure in place you should only be liable to declare and pay tax on income paid to you by the company (and/or on any distributions paid to you by the Foundation); as regards the remainder of your Offshore Company’s earnings you should be able to accumulate, and or reinvest, those Offshore in a nil tax environment. Tax should only be payable when you sell the business (unless at that time you’re living in a nil tax country) enabling you to grow your capital far quicker during the lifetime of your business thanks to the power of compounding.


Similarly, if a product that you sell doesn’t perform and a customer tries to sue you the good news is your personal assets should not be at risk as the customer has contracted with a limited liability Company (ie the Company carries the legal risk, not you personally). Moreover, having your business incorporated Offshore in a foreign/strange land is of itself a deterrent. (Have you ever tried to sue/get money out of an “Offshore” Company? It’s the Litigation Lawyers equivalent of climbing Mount Everest!)


Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an IBC for such purposes.


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