ISLE OF MAN COMPANY
Just £1700
The Isle of Man is not part of the United Kingdom. Tynwald, the Island's two-tier parliament, was founded by the early Vikings, and boasts the longest continuous history of any legislature in the world. Today, Tynwald legislates for all matters affecting the Isle of Man, with the exception of those, which are considered to “transcend the frontiers of the Island”. Thus, Tynwald controls the Island’s fiscal policies and the UK assumes responsibility only for foreign affairs and external defence.
The Isle of Man is not a member of the EU although it has concluded a “special relationship” by virtue of Protocol 3 of the Act of Accession, by which the UK became a member of the EU. This guarantees free trade between the Island and the countries of the Union while absolving the Island from involvement with the EU budget, and long-term programmes such as harmonisation of taxation.
The Isle of Man is an excellent, highly regarded jurisdiction for the establishment of a range of corporate and trust structures offering differing tax status, as outlined below.
ATTRACTIVE FEATURES
There are no exchange controls in the Isle of Man, so funds may he held in any currency and freely transferred. There are no death duties, wealth taxes, gift or succession taxes, capital gains or transfer taxes, and advance corporation tax levied in the Isle of Man.
Although the Isle of Man is not a member of the EU, it has the advantage of being part of the customs territory of the Union under Protocol 3. The Isle of Man Customs and Excise has no objection to offshore/foreign companies registering for VAT, subject to complying with certain criteria as outlined in our VAT Registration and EU Trading information sheet.
TYPES OF COMPANIES FOR INTERNATIONAL TRADE AND INVESTMENT
The three types of companies most widely used for international trade and investment are:
IOM Limited Company with a Resident Tax Status
A company incorporated under the Isle of Man Companies Act 1931 to 1993 will be deemed resident in the Isle of Man for tax purposes unless obtaining and maintaining one of the special exemptions.
Income tax at a rate of 10% for holding and 18% for investment companies is levied on worldwide profits irrespective of where management and control is situated and where business takes place. However, prescribed allowances and sums paid by way of dividend are deducted from profits before assessment to tax.
IOM Limited Company with a Resident Exempt Tax Status
The Income Tax (Exempt Companies Act) 1984 permits a company to apply for and obtain exemption from Isle of Man income tax, provided that the ultimate owner of the company is non-resident and all sources of income lie outside the Island. Interest from a local bank account is one exception to this rule. The company can be resident in and operate from the Island without incurring any income tax liability. An exempt duty of £430 + £60 filing fee for each tax year, or part thereof is payable annually on the 6th April.
The company must have a resident director and a resident professionally qualified secretary. It is required to keep proper books of account, but has no account or tax return filing requirements.
IOM International Limited Liability Company (ILLC)
The most recent company legislation developed in the Isle of Man is the Limited Liability Companies Act 1996. A limited liability company is a hybrid structure composing attributes of a company and a partnership. A limited liability company can elect for international status, subject to qualifying criteria.
The ILLC is not liable to income tax on its profits and each member is not liable to Manx income tax in respect of their share of the profits. An application for international status must be made annually together with a fee of £430 + £60 filing fee.
Two other types of companies exist:
IOM International Business Company
Under the International Business Act 1994 a company registered in the Isle of Man may apply for “international” tax status. The criteria for international tax status and the structure of an international company are similar to that described earlier for exempt tax status. However, a public company can have this status. An international company can elect its own tax rate up to a rate of 35%, subject to set minimum levels (currently £1200) and with the agreement of the Tax Office.
RESTRICTIONS ON TRADING
Limited Exempt and LLC companies are not permitted to:
To trade within the Isle of Man
Undertake banking or insurance activities
Undertake investment business other than the investment of the company’s own assets
Solicit funds from the public nor offer their shares or membership to the public
SUFFIXES DENOTING LIMITED LIABILITY
Limited Resident and Limited Exempt companies must utilise Limited or Ltd as a suffix whilst LLCs must utilise Limited Liability Company or LLC.
AUTHORISED AND ISSUED SHARE CAPITAL
Limited Resident and Limited Exempt companies have a minimum authorised share capital of £2,000 or its currency equivalent, this being the maximum for the minimum capital duty payable upon incorporation. The minimum issued capital is one share of par value.
CLASSES OF SHARES PERMITTED
Limited Resident and Limited Exempt companies may have registered shares, preference shares, redeemable shares and shares with or without voting rights.
SHAREHOLDERS
Limited Resident and Limited Exempt: The minimum number of shareholders is one.
LLC: The minimum number of members is two.
DIRECTORS
Limited Resident and Limited Exempt: The minimum number of directors is two. Limited Exempt companies are required to appoint at least one resident director. Bodies corporate may not be appointed as directors.
LLC: One manager either a natural person or a body corporate of any nationality.
COMPANY SECRETARY
Limited Resident and Limited Exempt companies require a company secretary. The Company Secretary must be a natural person, resident in the Isle of Man and must hold a professional qualification.
REGISTERED OFFICE
Companies must maintain a registered office in the Isle of Man.
FINANCIAL STATEMENT REQUIRMENTS
Whilst there is no requirement to file audited financial statements with the authorities, it is important to note that a company is required to keep financial records, which reflect the financial position of a company.
If accounting records are kept at a place outside the Isle of Man they must be sent to the company's registered office in the Isle of Man such as to disclose with reasonable accuracy the financial position of the business in question at intervals not exceeding 6 months.
Failure to maintain accounts or make them available for inspection at a company's registered office is an offence punishable by imprisonment or a fine.
The Assessor of Income Tax reserves the right to call in the financial records for inspection.
See ISLE OF MAX TAX EXEMPT COMPANY INFO
See ISLE OF MAN RESIDENT COMPANY INFO
