By Caitlyn Buchanan, 22.09.17
The Isle of Man is an island situated in the middle of the North Irish Sea, in almost equal distance to England, Northern Ireland and Scotland. Its climate is temperate and mild with long sunny days in the summer months, making it a popular tourist destination. The quality of life on the island is very good with a high standard of living and low crime rate. Unemployment is almost negligible and a strong community spirit is lived there. The island has a relaxed and quiet way of life. Another notable aspect of the island is the high standard of education and health benefits. The Isle of Man boasts a diverse and thriving economy that is currently enjoying its 31st consecutive year of growth.
Since 1985, the Isle of Man’s official languages are both Manx and English. However, English is the most commonly spoken. While the island is not a part of the United Kingdom, it has held a status of Crown Dependency since 1828. It has its own parliament and governs all its internal affairs, such as its law and justice under the supervision of the British Home Office.
Why Entrepreneurs Choose the Isle of Man
Entrepreneurs are drawn to The Isle of Man mainly because the taxation on company profits is between 0-10% and only on profits gained within the Island. There are also no withholding taxes or taxes on trading or investment income. Foreign investment and trade are encouraged, The Isle holds a Bilateral Tax Agreement with the United Kingdom to protect companies from double taxation.
With a thriving economy, there are excellent opportunities for international businesses to engage. The Government has a positive approach to working with both the private sector and international clients. The Isle of Man has an excellent telecoms and power infrastructure which has benefited from hundreds of millions of pounds worth of public and private sector investment in recent years. It is this infrastructure which has helped provide the foundation for the Island’s success as a major center for e-business activities, offering an internationally orientated service to its global client base. The key sectors generating successful economic performance of the Isle are: financial services, e-Gaming and insurance. The new sectors that have developed in recent years include aircraft and ship registration, cryptocurrency, cleantech and biotech.
In 2017 the Department of Economic Development commissioned a high-level strategic review to establish strategies to effectively support economic growth. The International Stock Exchange, formerly known as the Channel Islands’ Stock Exchange was opened to provide a boost for the island’s finance industry. This move was made in the hope that the island’s finance industry would experience a rise in foreign investments and boost job creation. The outcome has been positive, there is a significant interest for access to exchange for capital growth of various trading companies in the island covering a wide range of industries.
The Isle of Man is an ideal place for entrepreneurs seeking to expand their operations and services. The island offers full access to the European market even though it is neither a Member State nor an associate member of the European Union. The island is a free port, such that the processing and storage of goods can be done without payment of custom duties, value-added tax or EU levy. This makes it an excellent jurisdiction for trading companies that wish to import and export goods in and out of the EU.
The main seaport is in the capital city, Douglas, connecting the Isle of Man to the UK by means of regular daily ferry services, all year-round, and to Ireland in the summer months. Other major cities are Peel, Ramsey, Castletown, Port Erin and Port St Mary.
Isle of Man Business Structures
There are 2 main types of company formation on the Isle of Man. There is an old-style company and a newer more flexible option:
- Companies Act 1931 Company
- Companies Act 2006 Company
The main differences are that a 2006 Act Company is less strict about the amount of information the company needs to file, and the format of records it needs to maintain or share with other parties. There is no need to publicly file details of the owners of the company, and there is no prescribed format for the accounts the company needs to prepare. A downside of choosing the 2006 Act structure is that the Registry will not produce a certificate of incumbency showing current shareholders and directors. On occasion, this can be a barrier to trading with third parties who are trying to carry out due diligence procedures.
For this reason, some business people prefer to use the 1931 Company Act because the requirement to publicly file more details makes the company more transparent, and perhaps appear more reputable. However, the majority of new incorporations choose to the 2006 Companies Act option.
The Isle of Man is an ideal location for international businesses, the system is similar to other international jurisdictions but with decreased formalities. As stated above, company ownership details are not maintained in official records. Banking secrecy is also practised, the Isle does require banks to disclose or prevent trusts and private foundations. However, there is monitorisation and control on banking activities as per anti-money laundering legislation. To address harmful tax practices The Isles signed into a bilateral exchange of tax information agreeement with Denmark, Faroe Islands, Greenland, Iceland, Ireland, Norway, Netherlands, Sweden, and the US. There are no restrictions based on nationality, residence or domicile when it comes to buying land, houses or other buildings in the Isle of Man. However, a person wishing to build a house on the Island is obliged to apply for planning permission. Additionally, Companies incorporated outside the Isle of Man are required to register with the Registrar of Companies if it holds land on the Island.
The Department of Economic Development encourages business efficiency and competitiveness through a range of schemes and initiatives. These incentives aim is to encourage new start-up businesses on the Island, help existing businesses to grow and to encourage investment in new technologies. Ease of business for entrepreneurs who are not-residents has been designed so they may fully participate in the island’s economic growth. In this regard, it is possible to incorporate companies remotely, typically there is no need to be physically present during incorporation. It should be noted that if a company wants to be physically present on the island for employment purposes, it will need to obtain a work permit.
It is highly recommended that you use a licensed formation agent to complete the registration process.If you would like more information on how to incorporate your company in the Isle of Man please contact us today on +353 (0) 16461627 or fill out our contact form here