DOING BUSINESS IN ISLE OF MAN IN 2023
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.
|Compare different Isle of Man entities||Tax resident LLC||2006 Act company||Gambling company||Trust||Foundation||Foreign company|
|Also known as||LLC||Act company||E-gaming company||Discretionary trust||Private foundation||International company|
|Best use of company?||All products and services||All products and services||E-gaming and gambling||Tax management||Asset management||Professional services|
|How soon can you invoice Clients/sign sales contracts?||2 weeks||2 weeks||3 months||3 weeks||3 weeks||3 weeks|
|How soon can you hire staff?||2 weeks||2 weeks||3 months||3 weeks||Cannot hire||3 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||1 week||1 week|
|How long to supply corporate bank account numbers?||6 weeks||6 weeks||6 weeks||6 weeks||6 weeks||6 weeks|
|How long to supply company registration/tax numbers?||2 weeks||2 weeks||2 weeks||3 weeks||3 weeks||3 weeks|
|Corporate tax rate on annual net profits?||0%||0%||0%||Cannot trade||0%||0%|
|Limited liability entity?||Yes||Yes||Yes||Yes||Yes||Yes|
|Government grants available?||Yes||Yes||Yes||No||No||Yes|
|Government approval required for foreign owners?||No||No||Yes||No||No||No|
|Resident director/partner/manager/legal representative required?||No||No||Yes||No||No||No|
|Minimum paid up share capital?||£1||£1||£56,000||£1||£1||£1|
|Can bid for Government contracts?||Yes||Yes||No||No||No||Yes|
|Corporate bank account location?||Barclays||Santander||Royal Bank of Scotland||Isle of Man Bank||Standard Bank||Consiter Bank|
|Can secure trade finance?||Yes||Yes||Yes||No||No||Yes|
|VAT payable on sales to local customers?||20%||20%||0%||Cannot trade||Cannot trade||20%|
|Average total business set up engagement costs?||£11,970||Request a proposal||Request a proposal||Request a proposal||Request a proposal||Request a proposal|
|Average total engagement period?||2 months||2 months||4 months||3 months||3 months||2 months|
Isle of Man company registration summary
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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;
- Isle of Man promotes start-up and existing businesses by providing them with grants, loans and equity to start, expand or relocate their business. The nation has a range of support schemes for a wide array of sectors, aiming to develop the business environment whilst ensuring the growth of all the sectors of its economy.
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;
- The Isle of Man has a small population of 84,820 people only. Additionally, the island has established industries in the sectors of finance, e-gaming, high-technology manufacturing and is well known for being a tax neutral jurisdiction. As a result, entrepreneurs seeking to i) establish new business in other areas or ii) launch and test new products in the market are likely to face challenges such as suffering from low profit-margins in the first few years;
- Effective 1 January 2019, Isle of Man entities including i) investment holding companies ii) IP companies iii) trading companies iv) professional service providers and v) funds and other financial services companies are required to employ local staff and lease a physical office.
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