Why should you consider an Offshore company formation in the Isle of Man
The Isle of Man has long had a reputation as a hub for corporate finances particularly offshore which makes it a much sought after jurisdiction when considering setting up an offshore company.
However, this is an important decision to make and should not be made lightly therefore it is best to review the pros and cons with the jurisdiction before making a decision.
The Isle of Man has a rich and interesting history dating back to the Vikings. It in fact is not and has never been part of the United Kingdom despite being, part of the British Isles. In 1266, the Island became part of Scotland as part of the Treaty of Perth. From there it underwent a period of alternating rule by the kings of Scotland and England. The Island came under the feudal lordship of the English Crown in 1399, but the Island never became part of the United Kingdom retaining its status as an internally self-Governing Crown dependency.
The Islands parliament is known as Tynwald and dates back over 1,000 years. This makes the Islands own laws and overseas all internal administration, fiscal and social policies. Lawyers in the Isle of Man are known as advocates and combine the roles of solicitors and barristers in England. Manx advocates have an exclusive right of audience in the Islands courts, although English barristers can be licensed to appear in certain cases. Although English law does not extend to the Isle of Man, the Manx legal system is based on the principles of English common law, but in other respects Manx law has been developed to meet the Island’s special circumstances, particularly with regards to direct taxation, company law and financial supervision.
The head of State is Queen Elizabeth II who holds the title of Lord of Man. The Lord of Man is represented by a lieutenant Governor, but its external issues, such as foreign representation and defense are administered on the Islands behalf be the UK Government and the Island makes an annual payment for these services.
The Isle of Man does not have membership nor associate membership with the European Union. Although through the UK’s Act of Accession it permits trade for Manx goods without tariffs, in conjunction with the Customs and Excise agreement with the UK, this facilitates free trade with the UK. While Manx goods can be freely moved within the EU, capital and services cannot be. EU citizens can travel to the Isle of Man and can live there, but are not allowed to work there without the relevant paperwork.
The Isle of Man has long enjoyed a strong economy. The Islands main economy used to be agriculture and fishing, but this was surpassed a long time ago by offshore banking , manufacturing and tourism. The main international event associated with the Island is the Isle of Man Tourist Trophy race otherwise known as the TT, the TT is considered to be one of the greatest motorcycling sporting events in the world. The Isle of Man currency is pound sterling although the Government also prints the Manx Pound which is freely exchangeable on the Island along with GBP. Whilst many jurisdictions have suffered over the recent years due to financial turmoil the Isle of Man’s bank deposits in 2011 remained steady at £62 billion. The Isle of Man is a low tax economy with no capital gains tax, no wealth tax, no stamp duty and no inheritance tax. Whilst the Island enjoys a top rate of income tax at 20% it is important to note that all income earned throughout the world is assessable for Manx tax rather than only income earned in or brought into the Island. The rate of corporation tax is 0% for almost all types of income.
The Isle of Man Companies Registry has been in existence since 1865, The first Companies Act was enacted that same year. The FSC (Financial Supervision Commission) is responsible for the administration and regulation of all companies.
The Isle of Man has a strong reputation for its professional services industry with high standards in law and accounting. The Judiciary of the Isle of Man judgments carry weight internationally. The Financial Services Industry is long established and well regulated. The Isle of Man has adopted most internationally agreed measures and plays an active part in combating money-laundering and other criminal activities.
So in short the Isle of Man enjoys a long established stable reputation for its economy and Financial Services Industry. With 0% corporate tax and high service and compliance standards it is an attractive jurisdiction. However, with it highly regulated environment it is important that clients appreciate that a high level of paperwork is required .
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