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The Isle of Man

HISTORY AND POLITICAL STRUCTURE

The Isle of Man, with an area of 221 square miles, is situated in the Irish Sea. Its landscape varies from inland mountains, through heather upland and lowland valleys to sea cliffs and a coastal plain. Douglas is the capital of the Isle of Man and the location of the Island’s government. It is the principal business town. The Island’s climate is temperate, influenced by the North Atlantic Drift. Summer temperatures rarely exceed 25°C. Winter temperatures rarely fall below freezing and snow is uncommon.

There are daily flights to London, Manchester, Birmingham, Liverpool, Dublin, Belfast, Edinburgh, Glasgow and Newcastle, regular flights to Jersey, Guernsey, Luton, Southampton, Leeds, Blackpool and Gloucester and good links with other places.

Population

The Isle of Man has a population of over 80,000 and has grown by over 11% in the last ten years. Almost half of the population lives in Douglas or its environs. The principal language is English.

Political System

The Isle of Man is an internally self-governing dependency of the British Crown. It is not, and has never been, part of the United Kingdom. The Island’s legislature (Tynwald) consists of two branches - a lower branch (the House of Keys) consisting of twenty four members elected by adult suffrage and an upper branch (the Legislative Council) consisting of ten members. Government Ministers, who are members of the House of Keys, head the eight departments of government. The Isle of Man is not a full member of the European Union. Its particular constitutional position in relation to the European Union was negotiated at the time of the United Kingdom’s entry into the European Community in 1972. The effect of this is that the Isle of Man falls within the EU common customs area and the EU common external tariff.

ECONOMY

The Isle of Man Government’s policy is to provide an environment for business with the minimum necessary controls. The objective is to preserve a mixed economy and the development of a variety of sectors (agriculture, film, finance, light industry, tourism) is encouraged.

Economic Statistics

The Island’s Gross National Product (for the year ended 5 April 2006) was £1,700,935,000, a 5.7% rise in real terms from the previous year. The proportions contributed by the various sectors of the economy in the year to 5 April 2006 were as follows:

Manufacturing and Engineering                                                                                                          8

Finance                                                                                                                                        39

Tourist Industry                                                                                                                             3

Construction                                                                                                                                  8

Agriculture and Fisheries                                                                                                                  1

Public Administration                                                                                                                      5

Prof. & Scientific Services                                                                                                               20

Other Services                                                                                                                               16

 

At May 2008 annual inflation stood at 5.6%. Economic growth (in gross domestic product) increase of approximately 8% is forecast for the period 2007/2008, 6% for 2008/2009 and 6% for 2009/2010. A budget surplus of £32.4 million was expected for 2008/2009.

Currency

The Isle of Man has a decimal currency system with the pound sterling as the principal unit. The currency is essentially, the same as that of the United Kingdom, although the Isle of Man Government issues its own notes and coins. The current policy in relation to the Euro is that the Euro will be adopted as the Island’s currency if and when the British government does so for the United Kingdom.

Industries

Traditional Manx industries include agriculture, fishing and tourism; these industries have declined somewhat in recent years and the finance sector has become increasingly important. Light manufacturing is encouraged and there is a growing film industry. 

WHY CHOOSE ISLE OF MAN WHEN STARTING A BUSINESS?

The Isle of Man economy has enjoyed an average growth of over 6% in real terms over the past 26 years. The 2007/08 national income figures produced by the Treasury’s Economic Affairs Division show there to be have been real growth that year in nearly every sector of the economy. The value of goods and services produced (or gross domestic product) in the Isle of Man economy over the year rose to over GBP2.0bn, an 11.7% increase over the previous year. With price inflation stripped out, real growth stood at 7.5%, marginally lower than in the previous year and similar to the average over the last ten years.

The Isle of Man avoided recession and the latest economic figures are encouraging, with National Income forecast to grow by 2.5% in 2010 and by 4% in 2011.

The Island’s per capita national income as a result was 37% higher in 2008/9 than in the fifteen countries that until 2004 constituted the European Union.

Over a period of some years, the government has been gradually abolishing corporate income tax altogether, and as from 2006 it applies only to financial institutions. The British Dependencies are, however, having to review their ‘0/10’ tax regimes in the face of pressure from the European Union.

There is no capital transfer tax, no surtax and no corporation tax, no wealth tax, no death duty, no capital gains tax and no gift tax. Value added tax is collected by the Isle of Man Customs & Excise at the same rates which apply in the United Kingdom.

In December 2009, international ratings agency Standard & Poor’s renewed its ‘AAA’ international credit rating on the Isle of Man, reflecting the island’s robust economy and strong fiscal position.

Advantages of the Jurisdiction of Isle of Man:

There are many advantages in forming an Isle of Man company, which include the following:

The advantages of registering in the Isle of Man:

  • Every country and jurisdiction has its distinct forms of business. The Isle of Man is no exception having been legally and politically distinct for over a thousand years, and in modern times becoming one of the leading centres in the world for offshore financial services. Companies and other forms of business organisation established under the       law of the Isle of Man have been widely used internationally. It is no accident that business organisations established in the Isle of Man have become so widely used. It is arguable that the Isle of Man has the most sophisticated law relating to forms of business organisation of any centre for ‘offshore’ work, and is among the leading jurisdictions of the world in this respect.
  • The Isle of Man is a ‘Common Law’ jurisdiction. Equity, as it developed in the English courts, has been applied identically in the Isle of Man since the seventeenth century. With a few exceptions, notably in Land law and Constitutional law, the Isle of Man closely follows English legal precedents and legislation.
  • Part of the success of the Isle of Man is its professional services industry. The Isle of Man legal profession is a consolidated profession practising law to the highest standards. The Judiciary of the Isle of Man enjoys the highest international reputation and its judgments carry great weight internationally. The accountancy profession is well established, with all the major international firms represented from the Chartered, Certified and other branches of the profession. The Institute of Chartered Secretaries and Administrators is also represented, as is the banking profession through a thriving centre of the Chartered Institute of Bankers.
  • The Department of Economic Development is responsible for the Companies Registry and all functions relating to the regulation of companies, corporate service providers, limited liability companies, limited partnerships and industrial and building societies. It also has powers to prescribe fees and duties and to initiate inspections.
  • Placing an order for the formation of a company

The establishment and operation of an Isle of Man Company is regulated under the Companies Act. In general, the principles contained in the Isle of Man legislation are based on English company law.

The formation of an Isle of Man International Business Company can take place by using an order form, which can be provided by the Registry Agent.

Off-the-shelf companies are available.

The Registry Agent will check the name availability of the company (whether there is a company under such name already). In the Isle of Man the law requires that all financial service providers know the identity of their client so the actual contact details must be indicated at the Registry Agent.   This information remains confidential.

Ordinary Companies 

The main steps required to set up a company are to complete the requisite forms, verify that the proposed name is not already in use and file a memorandum of association. The requirements of the memorandum of association are set out in the Companies Act.

Articles of association may be company-specific or based on standard sets available from accountancy firms. Thememorandum states the name of the company, the limitations on members’ liability, the amount of authorized share capital, and the firm’s objectives or powers. All limited companies must file accounts with the Registrar of Companies for public inspection.

Requirements for the Registration of an IBC

  • Director: Minimum of one Director. Corporations are permitted.
  • Secretary: A secretary is required. Corporations are permitted.
  • Shareholder: Minimum of one shareholder.
  • Shares & Capital:The minimum authorised share capital is EU€ 1, but Companies are normally capitalised with 100 issued shares of EU€ 1 each. Bearer shares are not permitted. Shares should be only denominated in Euros (€s).
  • Name of the Company: Company name may be expressed in any language in Latin alphabet if an English translation is submitted to the Registrar.
  • Company must have a registered office and a registered agent in Isle of Man.
  • The company must at the time of incorporation be specific about its intended objects.
  • Isle of Man Law demands that all limited companies have an official company seal.

Statutory Requirements

The statutory requirements for all companies formed under existing legislation include:

  • Maintaining registers of members, directors, secretaries or registered agent and charges;
  • Maintaining accounting records and minutes of meetings;
  • Maintaining a registered office or place of business on the Island;
  • Filing an annual return and paying the statutory fee; and
  • Filing notices of changes in various matters, including directors, secretary, registered agent and registered office.

The ‘New Manx Vehicle’ (NMVs) introduced in 2006 has less onerous filing requirements.

All companies limited by share or guarantee are required to make a return of the appointment of directors and company secretary (except NMVs), and any changes, within a month. The initial subscribing shareholders are shown on the memorandum and articles of association. Changes of members (other than for limited liability companies) are not filed except as disclosed in the annual return.

A company must hold an annual meeting of members (not applicable for NMVs).

The register of members, which must be kept in the Isle of Man, is open to inspection by the members of the company and the general public (on payment of a reasonable fee) but the register of charges is open to inspection, free of charge, by all creditors and members of the Company. All records held by the Registrar of Companies are open to inspection by members of the public on payment of the appropriate fee.

The annual return includes details of shareholders and directors. Confidentiality as to membership can be secured by the use of nominee shareholders. All companies are required to prepare annual accounts. There is no provision for the accounts of a private company to be filed; however, the annual return of a company must be accompanied by a declaration as to whether or not the company has complied with various legislative provisions relating to accounts. The accounts of a public company must be filed at the Companies Registry.

Required Documents to register the company:

  • Notarized copy of your Passport.
  • Notarized Copy of utility bill for address verification less than 3 months old
  • Application documents.

When all the details are confirmed and the payment for the relevant fees received, the Registry Agent will prepare the
Memorandum and the Article of Association of the new International Business Company. These will be filed with the
Registry of International Business Companies in Isle of Man. The Registered agent will file the corporate documents
of the company, will pay the applicable registration fees and arrange for the documents to be submitted to the Isle of
Man Registrar of companies for registration. All the relevant documents will be kept in the Registered Agents office.

Corporate documents of an IBC

  • Original certification of incorporation of IBC
  • Memorandum and article of Association
  • First minutes and Corporate Resolutions containing the appointment of directors, allocation of shares, share certificates, copies if the Registry of Directors and the Registry of shareholders need it.
  • Share transfer forms, trust declarations, appointments of representative (power of attorney) and the Corporate Seal.

Isle of Man Not in EU Fiscal Area

The Isle of Man is an English speaking dependency of the British crown but has never formed part of the United Kingdom. The Isle is politically stable and enjoys parliamentary government without party politics. Its 1,000 year-old parliament, Tynwald presides over the Island’s domestic affairs including, specifically, taxation. Britain is responsible for the
Island’s defence and foreign affairs. The island forms part of the EU single market and VAT area but is otherwise not part of the EU fiscal area. The Isle of Man has an English common law type legal system and tends to follow English legislation. There is an infrastructure of sophisticated legal and other professional services. The Isle has a Financial Supervision Commission with a great deal of experience in overseeing and regulating sensitive financial areas. The island’s currency is the pound and there are no exchange controls. There are frequent flights to a number of UK airports.

IOM Low tax Specialisations

The Isle of Man has strong banking, investment fund and captive insurance sectors, with a well-developed advisory and financial infrastructure. There are a number of business formats, Limited Partnerships and Limited Liability Companies (LLCs). There is an active trusts sector, and in 2001 the island began to offer on-line gambling licences.

 

GENERAL OVERVIEW

Location

Centre of the Irish Sea, within sight of England, Scotland, Ireland and Wales.

Time zone

Greenwich Mean Time

Population

App. 80,000

Capital

Douglas

Airport(s)

One Airport situated in the South of the Island

Language

Predominantly English but also Manx

Currency

The Isle of Man in currency union with the UK although it issues its own currency, which is legal tender only within the Isle of man. One Manx pound is therefore equivalent to one UK pound sterling.

Political system

Independent

International dialling code

441624

Legal system

Common Law jurisdiction

Centre’s expertise

International legal, accounting, banking and fiduciary services.

TAX

Personal income tax

Low rates of income tax - each resident is entitled to an attractive pre-tax allowance with a low rate of 10% and the standard/high rate of 20%. The amount of income tax payable is capped at £115.000 per individual.

Corporate income tax

Most companies pay income tax at a standard rate of 0% on all income, companies that receive income from banking business or from land and property situated in the Island pay tax at 10% on profits from those sources and the standard 0% rate on the remaining income.

Exchange restrictions

None for both residents and non-residents.

Tax treaties

For full details, please go to www.gov.im/treasury/incometax/sections/practitioners/internationala­greements.xml

SHARE CAPITAL

Permitted currencies

Any

Minimum authorised capital

No minimum.

Minimum share issue

No minimum.

TYPE OF ENTITY

Shelf companies

Yes

Timescale for new entities

24 hours

Incorporation fees

£195

Annual fees

£360

DIRECTORS

Minimum number

One

Residency requirements

No

Corporate directors

Yes

Meetings/frequency

As the directors or members require

SHAREHOLDERS

Disclosure

Annual return required, including directors name. Member only if elect to file.

Bearer shares

No

Minimum number

One

Public share registry

Yes

Meetings / frequency

As the directors and members require

ACCOUNTS

Annual return

Yes

Audit requirements

No

OTHER

Registered office

Must at all times, be on the Isle of Man, must have registered agent.

Domicile issues

Tranfer to domicile permissable.

Company naming restrictions

The FSC can refuse to register a company with a name which in its opinion is undesirable, is mis­leading, offensive or harmful to the public.

Fulfillment

We always do more than what is required of us