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Isle of Man Offshore Company Formation

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The Isle of Man lies in the Irish Sea, between Great Britain and Ireland and is a unique self-governing kingdom; a British Crown dependency which does not belong either to the United Kingdom or the European Union.

The legal system is based on English common law and Manx statute and as such there are recognizable business types namely: the Private Company Limited by shares, Company Limited by Guarantee, Public Company Limited by Shares, General and Limited Partnerships and Sole Proprietor and Trusts. In addition there are useful formations for offshore operations namely: the Exempt Private Company which provides exemption from income tax to a private company owned by non residents; the International Company, which is very similar to the Exempt Private Company in structure but company may be useful where it is necessary to show that a certain minimum level of tax has been paid in order to gain relief from taxation in another country. The rates of tax are negotiated with the Manx Tax Assessor but will not be less than £1,200 with the payment of rates of tax up to 35%.

The International Limited Partnership, the non resident Limited Liability Company and the Trust are also vehicles used by the overseas investor.



Advantages of the Isle OF Man Offshore company Formation



Company Formation expertise
Charges
Secrecy
Banking services
Legal system

Political stability

Prestige


offshore company fee schedule

The Isle of Man has strong banking, investment fund and captive insurance sectors, with a well-developed advisory and financial infrastructure and good transport links. Foreign Investors are attracted by the taxation structure; there are no capital gains taxes, turnover tax or capital transfer tax, no stamp duties and low rates of income tax.

The Isle of Man is not a full member of the European Union but has associate status. This allows Island-traders free trade with the rest of the community but no liability for financial contributions or eligibility for EU grants. Consequently the Isle of Man can be an ideal location to register a trading company requiring a genuine EU VAT number but also wanting full corporate tax exemption.

Manx Company Formation Formalities

The trading activities for all offshore entities i.e. Exempt companies, International Companies and International Limited Partnerships, are restricted to the administration of external business, or dealing with other exempt organisations. The formation requirements for the Exempted and International Companies the most common vehicles are minimal;

  • There are no specific minimum capitalization requirements. In most cases, a registration agent will only issue two shares;
  • A local registered office is a requirement;
  • Registered shares can be issued but with effect from 1 April 2004, no new bearer shares may be issued by Isle of Man companies and the rights relating to existing bearer shares may not be exercised until the shares are registered;
  • A minimum of 1 shareholder is required which may be an individual or a corporate body. Details of the shareholders must be filed on the public file but anonymity can be preserved by the use of nominee shareholders;
  • There must be at least two directors in a Manx company and directors must be real people. Exempt and International companies require one of the directors to be Manx resident and a professionally qualified local secretary;
  • Directors' details are kept on public record. Otherwise, there are no other nationality or residence restrictions;
  • A full register of members and charges must be kept at the registered office in the Isle of Man.

Isle of Man Trusts

Trust management, has been a traditional business for the Isle of Man particularly for wealthy UK individuals. The Manx law of trusts is based on the English law and all documentation is in English and there are no registration requirements.

A Manx resident who receives income from a trust, whether Manx or foreign, will be taxed on it; however, if income is accumulated in a Manx trust with Manx beneficiaries, the trustee(s) will be assessed on the income.

Taxation

There are no capital gains taxes, turnover tax or capital transfer tax, and stamp duties but VAT is applied at the same rate as in the United Kingdom. Manx residents pay income tax at 18% and make social security contributions.

Manx income tax for companies is currently 15% for trading companies and 18% for non-trading companies. Resident companies controlled and managed in the Isle of Man must pay tax on company worldwide income but Non-resident companies are exempt from taxation on foreign income and only liable for tax on income derived from the Isle of Man. Branches of foreign companies are treated for tax purposes as if they were Manx companies, once registered, depending on whether they are resident or non-resident. In June 1999 the Manx Government imposed a moratorium on the formation of new 'non-resident' companies.

Non-resident partners in a Manx partnership, limited partnership or Limited Liability Company are liable for tax only on Manx-derived income.

Off shore entities such as Exempt Private Companies are only liable for the payment of an annual application fee and the International Company will be liable to a rate up to 35% tax on foreign income.

Withholding tax at 18% can be deducted from payments made to non-residents in respect of dividends, interest, profit shares and directors' remuneration.

Banking law

The majority of banks in the Isle of Man are engaged in providing private banking services to UK expatriates and to foreign nationals. The services offered often extend beyond deposit taking to establishing and administering trusts and managing the underlying companies and assets held by those trusts, including investment management.

Employment law

Manx industrial relations are regulated by statute with requirements for the issue of written particulars of terms and conditions to all employees; the registration of trade union; the agreement for "cooling off periods" before industrial action, and limitations on picketing. Applications for unfair dismissal and other employment disputes can be referred to the Employment Tribunal.

Geography, People and Culture

The population was estimated at 77,655 in July 2004. The ethnic breakdown is majority Manx Norse-Celtic descent. The capital city Douglas accounts for over one third of the Island's resident population and over 32% of Island households. The Island's climate is temperate and lacking in extremes. In winter, snowfall and frost are infrequent.

English is the first language of modern Manx people but the 'old' language is Manx Gaelic. There are no longer any native Manx speakers but a growing number of enthusiasts have kept it alive and it is a learning option for all schoolchildren over the age of 7. Government departments use English and Manx titles on all official documents, correspondence and vehicles and Manx is also used on town and road signs and increasingly by commercial businesses.

Immigration and Residency

British Citizens and Citizens of the Irish Republic do not require passports or entry visas for travel between their respective countries and the Isle of Man. Other EU citizens require only their I.D. cards for travel to the Island. Citizens from non-EU countries will need a passport and a visa.

Legal and Political System

The Isle of Man is a parliamentary democracy. Queen Elizabeth II is the constitutional head of state - the Lord of Mann - and she is represented by a resident Lieutenant Governor appointed for a five year term (currently Mr. Adam Wood). The IOM is not represented in the UK parliament as it has its own parliament - the Tynwald, an institution founded by the Vikings over a thousand years ago. Its Parliament has two branches: the House of Keys and the Legislative Council. The majority of Members sit as independents.

The Manx legal system is entirely separate from that of the UK and Manx Lawyers are known as advocates and the two senior Judges who preside over civil cases in the High Court and criminal cases in the Court of General Gaol Delivery are known as Deemsters.

English precedents are often followed. Some UK legislation is adopted as such by the Isle of Man by agreement with the British Government. The ultimate court of appeal is the English Privy Council.

Economy

The official currency is the British pound there is also a Manx pound which is at par with the British pound.

Offshore banking, manufacturing, and tourism are key sectors of the economy. The government's policy of offering incentives to high-technology companies and financial institutions to locate on the island has paid off in expanding employment opportunities in high-income industries. As a result, agriculture and fishing, once the mainstays of the economy, have declined in their shares of GDP. Trade is mostly with the UK. The Isle of Man enjoys free access to EU markets.

Legislation relating to offshore and non-resident business

If you require more information on any particular statute please contact us.

Advocates Act 1995
Banking Act 1998
Banking Business Regulations 1991
Collective Investment Schemes (Compensation) Regulations 1988
Companies Act 1931
Companies, etc. (Amendment) Act 2003
Corporate Service Providers Act 2000
Employment Act 1991
Financial Supervision Act 1988
Financial Supervision (Restricted Schemes) Regulations 1990
Income Tax (Exempt Companies) Act 1984
Income Tax (Instalment Payments) Act 1974
Income Tax Act 1970
International Business Act 1994
Investment Business Act 1991
Investment Business Order 1991
Limited Liability company Act 1996
Merchant Shipping (Registration) Act 1984
On-Line Gambling Regulation Act 2001
Partnership Act 1909
Partnership Act 1890 (UK)
Perpetuities and Accumulations Act 1968
Purpose Trusts Act 1996
Recognition of Trusts Act 1988
Registration of Business Names Acts 1918 and 1954
Retirement Benefits Schemes Act 2000
Retirement Benefits Schemes (International Schemes) Regulations 2001
Trade Unions Act 1991
Trustee Act 1961
Trusts Act 1995
Variation of Trusts Act 1961

 
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