It’s probably stating the obvious, but there are currently thousands of Isle of Man companies in existence. They trade and transact across a huge spectrum of sectors – from services to manufacturing, encompassing traditional industry which has been operating successfully for generations, right through to the hi-tech businesses of the future.
For decades, the Isle of Man has provided a business-friendly landscape on a truly international scale.
Yet, there remains a popular misconception that the Island is predominantly a place where people set up “offshore” companies. The truth is, there is absolutely no difference between an Isle of Man company which has its eye purely on the domestic market and one that is more globally focussed.
They are, for all intents and purposes, one and the same. There is no distinction. They are designed for both home grown use and for those whose interests lie elsewhere.
Nevertheless, the attraction of establishing a company in the Isle of Man is undeniable. And it’s not difficult to see why. To give this some context, the Island sits proudly in the middle of the Irish Sea, midway between the UK to the east and Ireland to the west. It is a UK Crown Dependency and operates under its own common laws which are largely based upon English common law. For many, that’s extremely reassuring, but here’s where it starts to get really interesting. The Isle of Man is self-governing and has its own tax system, quite separate from that of the UK.
In fact, it has one of the most advantageous tax systems in the western world. For anyone looking to establish a Company, this is helpful to say the least!
The main tax benefits associated with Isle of Man Companies is that there is no capital gains tax, wealth tax, inheritance tax (IHT) or stamp duty. For the vast majority of businesses, the corporate tax rate sits at a big fat zero, whilst the highest rate of income tax is 20%.
Dividends paid to non-residents aren’t liable to any tax and double tax relief is in place for any foreign paid taxes. Also, there is no withholding tax and losses can be carried forward in perpetuity. These are the tax benefits that help to make the Isle of Man such an attractive jurisdiction for offshore companies.
Outside the EU.
The Isle of Man is not part of the EU and never has been. Until now, for those Isle of Man companies wishing to do business with the EU, there has been a customs and excise agreement with the UK, making it easier to trade.
But as of March 2017, the UK has officially signalled its intention to exit the EU, which may result in a short term period of uncertainty as to how this will pan out. Nevertheless, in the longer term, the intention would surely be to maintain a straightforward trading relationship with EU countries and it would seem to be in everyone’s best interests – inside or outside the EU bloc – for the status quo to be maintained. We don’t see the current arrangements changing markedly.
Meanwhile, as the UK embarks on its two year period of negotiation with Brussels, the Isle of Man remains an extremely stable economic environment. Locally, the economy has recorded continued year-on-year growth for at least the last three decades – a phenomenal achievement set against what’s been happening in the wider world.
The Island is arguably – no, actually is – the most politically stable place on the planet, given that it is home to the world’s longest continuous serving Parliament – making it as rock solid as the granite on which it stands. Furthermore, it is no coincidence that the Isle of Man banking system has a reputation for being both durable and well practiced in dealing with internationally oriented companies.
So, given its safe, well regulated and low tax business environment, together with its easy accessibility to London (just an hour’s flight away), for anyone deciding on the perfect jurisdiction in which to incorporate a company – where could be better than the Isle of Man?
Isle of Man 1931 Act Companies
There are two types of Isle of Man Companies. The first and most traditional type of Company is formed under the Isle of Man Companies Act 1931 to 2004. Around 130,000 have been established and it is still widely used today for both domestic and internationally focussed businesses.
It is available in various guises, including share capital Companies, guarantee Companies and hybrid Companies and is taxed at zero percent – the only exceptions being banking businesses, large Isle of Man retailers and those accumulating local rents.
Isle of Man 2006 Act Companies
Operating in parallel, we now also have available what some would say is a more flexible sibling – The Isle of Man 2006 Act Company. Again, they are not restricted to either local or international operations and like the 1931 Act Company, can include share capital, guarantee and hybrid and offer the same tax benefits. Over the last 10 years or so, more than 11,000 structures have been formed under the 2006 Act.
While the generally more relaxed characteristics of a 2006 Act Company may be an advantage, there are nevertheless provisos that come with them. For example, they require the registration of security and the Attorney General and the Financial Services Authority both have the right to inspect documents and records of a 2006 Act Company.
Which is best? The short answer is that both are proven and extremely reliable entities, but choosing either a 1931 Act Company or a 2006 Company will depend upon the circumstances of each business. A characteristic of one type of Company which might be an advantage in one scenario could be disadvantageous in a different situation.
It’s quick and easy
It is possible to incorporate a Company, with a single shareholder holding a single share. A Company can also have only a single director. Incorporation will necessitate certain descriptions, to include the terms PLC, Public Limited Company, Ltd., or Limited.
Whichever type of Isle of Man Company you decide upon, the setting up process is straightforward and takes no time at all – usually three to five days after the company name has been approved by the Companies Registry.
Let Sterling assist you!
The important point here is you aren’t alone in coming to a decision. At Sterling, we spend a great deal of time establishing Companies on behalf of clients and can offer in-depth advice as to which type of Isle of Man Company would be most appropriate for your particular operation.
What we can say, generically, is that for anyone looking to establish an offshore company in a safe, well regulated, tax efficient jurisdiction, the Isle of Man offers a tremendous range of benefits that, in our view, sets the Island apart from the rest.
For further information about the incorporation of an Isle of Man Company, contact us by phone +44 1624 611146 or by email: info@https://sterling.im