In many cases the U.S. federal estate and gift tax apply in the USVI to U.S. citizens and permanent residents domiciled there at death or at the time of the gift. There is an important exception, however: the federal estate tax does not apply to property located outside the United States which would otherwise be part of the estate of an individual who acquired his or her U.S. citizenship as a result of birth or naturalization in the U.S. Virgin Islands or another U.S. possession, so long as the individual resides in the USVI at the date of death. There is a similar exception for the gift tax. For persons considering becoming naturalized U.S. citizens, this provides an attractive planning opportunity.
Property located in the USVI, or stock of a USVI corporation (including a USVI exempt company) is not considered U.S.-situs property under the U.S. federal estate tax. Therefore it is not included in the estate of a non-resident alien of the United States.