The Isle of Man Tax Advantages for Offshore Companies
The Isle of Man is located in the Irish Sea at the geographical centre of the British Isles, is located almost equidistant from the islands of Great Britain and Ireland. Isle of man is a self-governing British crown dependency. The Isle of Man legal system is based on the English common-law model. The head of state is Queen Elizabeth II, who holds the title of Lord of Mann. The executive branch of government is the Council of Ministers. It is headed by the Chief Minister, currently Allan Bell MHK. The Council of Ministers comprises the greater part of the House of Keys.
Citizenship in the Isle of Man is governed by British law. The Isle of Man holds neither membership nor associate membership of the European Union. In conjunction with the Customs and Excise agreement with the UK, this facilitates free trade with the UK. The population of the isle is estimated at 95.000 people.
EU citizens could travel and reside, but they cannot work, in the island without restriction. And citizens without the hereditary qualification outlined above are similarly restricted from working in the EU.
The Isle of Man is a low-tax economy with no capital gains tax, wealth tax, stamp duty, or inheritance tax and a top rate of income tax of 20%. The rate of corporation tax is 0%, the only exceptions are that the profits of banks are taxed at 10%, as is rental (or other) income from land and buildings situated on the Isle of Man. Check this article here to learn more about Isle of Man Offshore Companies
Offshore banking, manufacturing, and tourism form key sectors of the economy. Agriculture and fishing also contribute to the Island’s Gross Domestic Product (GDP).
Tax Advantages of the Isle of Man:
- 0% corporate income tax dependant on certain circumstances
- Dividends made to non-residents are taxed at 0%
- No capital gains tax
- No stamp duty
- No inheritance tax
- Double tax relief is available for foreign tax paid
- No withholding tax
- No thin capitalization rules
- Losses can be carried forward indefinitely provided a continuity of business test is satisfied.
- Provisions exist for loss relief within groups of companies
Other Advantages of the Isle of Man:
- There are no exchange controls or other financial restraints imposed the companies
- Political and economic stability
- Long established legal system
- Sophisticated and extensive banking system
The Isle of Man most certainly has a lot to offer when considering incorporating an offshore company.
Example of Offshore companies in the Isle of Man could be:
- Holding investment, e.g. portfolios, commercial property and other companies shares
- Simplified trading within the European Union due to the 0% rate of tax on trading income and the ability to quote an European Union accepted VAT number;
- Holding intellectual property since the Isle of Man is a signatory to the Paris Convention on Patents and Trademarks.
Specifics and requirements of offshore company formation in the Isle of Man
- Incorporation time 3-6 days after name approval by the Companies Registry.
- An offshore company may be incorporated with a single shareholder, which can have a single share with zero par value. A single director is allowed and he/she may be non – Isle of Man resident.
- An offshore company is required to file an annual return. It is the responsibility of the director(s) to prepare the annual return and the responsibility of the registered agent to file the return to the authorities.
- Offshore companies accounts need not be prepared. However accounting records must be maintained at the address of the Isle of Man registered agent.
- An offshore company need not have its accounts audited if it meets two of the three following criteria:
– its annual turnover is £5.6 million or less.
– its balance sheet total is £2.8 million or less.
– its average number of employees is 50 or more.
- Every offshore company tax return must be prepared and filed at the Isle of Man Treasury. All Isle of Man companies are now treated as resident companies. Resident companies are taxed at a rate of 0% on their trading and investment income.