DOING BUSINESS IN ISLE OF MAN
Isle of Man company registration is an appealing way for international business people to legitimately minimise their international tax liabilities. The Isle of Man is a secure and stable offshore jurisdiction, with strong confidentiality laws and an attractive tax regime.
The Isle of Man has a statutory body called the Financial Supervision Commission (FSC). The FSC is an independent body whose functions include: i) taking responsibility for the Isle of Man Companies Registry ii) the regulation and supervision of persons undertaking regulated activities, which includes company incorporation services; iii) management of the regulatory regime for the regulated activities; and iii) oversight of persons responsible for management, or affairs, of commercial entities. Further information can be found on the Isle of Man FSC website.
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Advantages and disadvantages
Advantages of Isle of Man company registration
- Isle of Man company formation is a reputable solution. The island is a highly regarded jurisdiction due to stringent compliance laws;
- If properly structured, Isle of Man company formation is an excellent way to book international profits without paying corporation tax;
- If the Isle Of Man company being incorporated is in any field other than banking, local retail or a business that deals in local real estate, the corporate tax rate is 0%. Banks and local retailers with more than £500,000 of Isle of Man revenue are taxed at 10%, while local real estate income is 20%. This tax regime is similar to the 0/10 system in Jersey, but with some differences on what is included at the 10% rate. The Isle of Man has no capital gains tax and no withholding tax is paid on dividends;
- For companies without any shareholders resident in the Isle of Man, there is no tax on retained profits;
- The Isle of Man is part of the EU’s customs union for industrial and agricultural goods, meaning that it is a good low-tax export jurisdiction;
- Under the Isle of Man’s Companies Act 2006, a company only needs one director, who does not need to be resident of the Isle of Man. The director may be a corporate body, i.e. corporate directors are permitted. However, there are limitations on the companies that may be corporate directors of Isle of Man companies. Only one shareholder is needed for a private company limited by shares or by guarantee;
- Businesses established in the Isle of Man can choose between a private limited company or an LLC, giving them greater flexibility on corporate structure;
- There are no exchange controls or other financial restraints imposed on an Isle of Man company;
- There are no authorised or issued share capital requirements for Isle of Man company formation. Shares may be issued with or without a par value, and in any currency;
- Many investors choose Isle of Man company registration as an appropriate vehicle to tap opportunities in mainland Europe.
Disadvantages of Isle of Man company registration
- The Isle of Man’s relationship with the EU does not include the free movement of services or capital. If these are important to your business, it may be better to consider registering a company in Gibraltar;
- Following Isle of Man company formation, annual accounts must be submitted to the Isle of Man government’s Income Tax Division;
- Isle of Man company registration requires a registered office to be maintained on the island;
- A licensed, professionally qualified registered agent is required, rather than a company secretary. The registered agent must hold an appropriate license issued by the Isle of Man Financial Supervision Commission. The purpose of the registered agent is to have someone in the Isle Of Man to administer the company.
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- Time to incorporate: Two weeks
- Cost to set up: £10,440
- Minimum capital: None
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: Yes (registered agent)
- Resident director: No
- Corporate tax rate: 0%
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: limited company
Useful links for Isle of Man
Government and public authority websites:
- PwC tax card 2013/2014
- Isle of Man Country Profile
- Duties and Responsibilities of Directors
- Corporate Governance Principles
- Guide to the European Savings and Tax Directive
- KPMG – Thinking Beyond Borders
- Isle of Man Companies Act