US VIRGIN ISLANDS Trends and Developments Contributed by: Marjorie “Jorie” Roberts, Sean Foster, Alexander Polinsky and Duncan J. J. Kessler, Marjorie Rawls Roberts P.C.
USVI Governor Albert Bryan has said that “[t]his is a major step forward for St Croix and for our broader economic development goals”, and that “[t]he reau - thorisation of the Opportunity Zone programme gives us the ability to designate new zones in 2026, and we are moving quickly to ensure that key industrial sites are prioritised for this incentive”. Benefits for Persons Who Are Naturalised in the USVI General rule The Code imposes estate taxes on the value of estates of US citizen decedents and taxes on gifts, defined as transfers for less than fair value. Persons who obtain their US citizenship by reasons of their birth or natu - ralisation in the USVI are treated for US estate- and gift-tax purposes as non-citizens not resident in the USA when they are resident in one of the possessions at the time a gift is made or are domiciled in one of the possessions at the time of death. Specifically, Section 2209 of the Code provides that a person who acquires US citizenship solely by reason of being a citizen of a US possession, or through birth or residence within such possession, is treated as a non-resident and not a citizen of the USA if they reside in a possession at the time of death. Under Section 2501 (c) of the Code, a person meeting these require - ments is treated as a non-resident for federal gift-tax purposes if they reside in a possession at the time of making the gift. Non-residents taxable on certain US situs assets The gross estate of a decedent is determined in the same manner as the gross estate of a US citizen or resident, no matter where the property is located. However, only the part of the gross estate located in the USA (ie, the 50 States and the District of Colum - bia) is subject to tax under Section 2103 of the Code. Federal estate tax rates for non-resident non-citizens are the same as for citizens, but a special credit applies The estate tax must first be computed (but only in respect of US situs assets) and then reduced by certain credits. For a non-resident non-citizen who resides in a US possession and was a US citizen
because of birth, residence or citizenship in the pos - session, Section 2102 (c) of the Code provides that the taxpayer’s estate qualifies for a credit that is the greater of USD13,000 or USD46,800 multiplied by the ratio that the value, at death, bears to the value of the decedent’s gross estate. For gifts made by non-residents and non-citizens, the federal gift tax applies to a transfer only if the property is situated in the USA, pursuant to Section 2511 (a) of the Code. For such gifts, the USD19,000 annual exclusion (2025) provisions apply. Naturalisation in the USVI requires residency in the USVI Even if a person has acquired their permanent resi - dent Green Card status through a means other than as an immigrant investor in the USVI, they can apply for naturalisation in the USVI. The IRS has not spe - cifically ruled on how long a person must reside in a possession in order to acquire citizenship “solely by residence within a US possession”. To become naturalised in the USVI, a person who has already attained permanent resident alien status must meet all the usual requirements for naturalisation in the USA and must reside in the USVI for at least three months preceding the filing of the application for naturalisa - tion. The usual requirements for naturalisation are that the permanent resident alien must: • have continuous residence in the USA for at least five years preceding the application; • be physically present in the USA for at least one half of the time of continuous residence; • reside continuously within the USA from the date the application is filed until the date of admission to citizenship; and • be a person of good moral character. A person who meets the above requirements may file their naturalisation petition with one of the United States Citizenship and Immigration Services offices in the USVI, and may become naturalised there once the application is approved. For the purposes of these naturalisation rules, “resi - dence” means a person’s dwelling place in fact, without regard to intent. The duration of residence
580 CHAMBERS.COM
Powered by FlippingBook