Briefing

British Virgin Islands (BVI) legislative update

The BVI has recently introduced various legislative measures affecting vessel ownership, operation and regulation. This is part of their push to expand access to the BVI flag, streamline yacht-related administration and reinforce the jurisdiction’s position as a well-regulated and internationally compliant maritime centre.

Broader access to the BVI flag under the Merchant Shipping (Amendment) Act, 2025

One of the most significant recent changes for the yachting industry comes in the form of amendments to the BVI’s Merchant Shipping Act, 2001, most of which took effect on 16 June 2025 pursuant to the Merchant Shipping (Amendment) Act, 2025. These reforms modernise key aspects of the BVI shipping register and, in particular, expand the range of owners who may register vessels in the BVI.

Previously, non-BVI owners frequently relied on a BVI holding company to register a yacht under the BVI flag. The amended legislation relaxes this position by permitting individual and corporate owners from a wider group of approved jurisdictions – including the United States, EU member states, the UAE, Commonwealth jurisdictions and other countries – to register vessels directly in their own name. Where the owner is not a resident of the BVI, the longstanding requirement to appoint a locally based representative continues to apply.

For yacht owners, this change offers greater flexibility in structuring ownership and removes a layer of complexity that was previously unavoidable. It is particularly attractive where ownership arrangements are already fixed for financing, tax or estate planning reasons.

The 2025 amendments also strengthen the statutory footing for the application of international safety conventions and codes within BVI law, further reinforcing the credibility of the BVI flag.

Import duty relief for qualifying yachts under the Customs Management and Duties (Amendment) (No. 2) Act, 2025

Alongside changes to registration eligibility, the BVI has introduced targeted customs reforms designed to encourage vessel registration and use of the BVI as a yachting base. The Customs Management and Duties (Amendment) (No. 2) Act, 2025 amends the Customs Management and Duties Act, 2010 to provide duty relief for certain vessels, including yachts, that meet specified ownership and registration criteria.

In broad terms, yachts that are both registered in the BVI and owned by a BVI company or a Virgin Islander may now be imported into the territory free of customs duty. The legislation also addresses the position of vessels whose usual place of mooring lies outside the BVI, clarifying the conditions under which temporary importation without duty is permitted.

From a practical standpoint, these changes may reduce costs for owners intending to cruise, charter or base their yachts in BVI waters, and provide clearer rules around the customs consequences of disposal or change of status.

A revised approach to tonnage duty under the proposed Tonnage Duty (Amendment) Bill, 2026

Further changes may soon follow with the introduction of the Tonnage Duty (Amendment) Bill, 2026, which proposes to amend how tonnage duty is charged in the BVI. The Bill moves away from an annual payment model and instead introduces a duty calculated on a per call basis, subject to an overall monetary cap.

Under the proposed framework, liability for tonnage duty would arise on each call to the BVI, calculated by reference to a vessel’s gross tonnage. Certain categories of vessels, including those registered in the BVI and owned by BVI companies, would be excluded from the charge.

For yachts that call at the BVI intermittently or seasonally, a per call system may offer greater alignment between actual use of the BVI and the duty payable, while avoiding annual charges where physical presence is limited. The precise impact will depend on ownership structure, trading patterns and final implementation details.

Ongoing alignment with international tax transparency standards

Recent amendments to the Mutual Legal Assistance (Tax Matters) Act are relevant to yacht ownership structures involving BVI entities. The Mutual Legal Assistance (Tax Matters) (Amendment) Act, 2026 updates the BVI’s framework for tax information exchange to reflect revisions to the OECD’s Common Reporting Standard.

The amendments expand and clarify key definitions, enhance reporting obligations, strengthen anti‑avoidance provisions and extend the regime to capture newer forms of digital financial assets. The revised standards took effect from 1 January 2026.

For yacht owners and financiers, these changes reinforce the position that the BVI continues to operate within a robust and well-established international transparency framework. While compliance obligations primarily affect financial institutions and service providers, the broader takeaway is that BVI based ownership structures remain consistent with global expectations around tax cooperation and disclosure – an issue of increasing importance in high value yacht transactions.

Commentary

Viewed together, the recent and proposed changes to BVI legislation illustrate that the BVI is seeking to make its shipping register more accessible and commercially attractive, reduce friction for yacht owners operating locally, and maintain strong regulatory and transparency credentials internationally.

For those involved in yacht ownership, management and finance, these developments warrant close consideration when evaluating flagging options, ownership structures and operational planning for 2026 and beyond.

Contact us

Our team of expert BVI lawyers regularly advise on yacht ownership and operation in the BVI. If you wish to discuss this article, or have other questions relating to BVI law, please contact the authors of this article or your usual HFW contact(s).

Lizzie Barrowclough, Trainee Solicitor and Oscar Podlewski, Trainee Solicitor assisted with the preparation of this article.