Isle of Man Companies

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General Introductory and Offshore Tax Information

For many, the Isle of Man has proved itself a mature and sophisticated international offshore financial centre which has access to markets world-wide. Having considered the relevance of financial services to the Island’s economy, continuing to develop this sector by upgrading legislation for the use and regulation of Isle of Man offshore business entities has been of great importance. By so doing, the Isle of Man intends to remain an offshore jurisdiction of excellent repute, retain the confidence of stakeholders while being keeping astride with new standards. Isle of Man efforts to offer quality offshore business entities and services were evidenced in the results of an assessment programme conducted on the financial sector in 2008/2009 by the IMF which stated that the Isle of Man was in large part compliant with the majority of recommendations made by the Financial Action Task force.

Isle of Man companies and legal entities are considered as either resident or non-resident depending on whether they operate and are managed and controlled in Isle of Man. Though in many offshore jurisdictions non-resident offshore companies, similar to Seychelles company, are not liable to tax due to the fact that taxes may be applied on a territorial basis, in Isle of Man taxes generally tend to be applied across the board, thereby making almost all the same benefits applicable to all Isle of Man companies. Up till 2006, all Isle of Man offshore and onshore business entities were subject to taxes until significant fiscal changes were implemented.

For instance, both resident and offshore business companies were made exempt from wealth tax, capital gains tax and inheritance tax in 2006. Effective that same year (assessment year 2006/7), Isle of Man offshore companies were made not liable to income earned from trading and non trading activities, but the Distributable Profits Charge may be applicable to the beneficial owners of an offshore company if they are residents of Isle of Man. This Charge is not a corporate tax and was established to keep up Isle of Man’s income tax revenue given that corporate income tax is set at a 0% rate. For income earned from all banking activities and land and property located in Isle of Man however, a corporate rate of 10% is applicable.

Isle of Man Offshore Business Entities:

  • Isle of Man Limited Liability Company
  • Isle of Man Limited Partnerships
  • Isle of Man Protected Cell Companies
  • Isle of Man Companies

Isle of Man Limited Liability Company

Main Features:

  • Law —Limited Liability Companies Act 1996
  • Legal entity separate from its members
  • Liability of members is limited to their capital contribution
  • Management is vested in proportion to each member’s contribution
  • Name must include words ‘limited liability company’ or abbreviations ‘LLC’ or ‘L.L.C.’
  • Must maintain a local registered office and agent
  • Subject to filing an annual return within one month of the company’s registration anniversary
  • Formed by filing the Articles of Organisation, which states the company’s name, the address of its registered agent and names and addresses of the members

Isle of Man Limited Partnerships

Main Features:

  • Law — The Partnership Act 1909
  • Legal entity separate from members
  • Subject to have a locally based registered office
  • Subject to have a locally based registered agent
  • May be formed by any local resident, in which case has a minimum of 2 members
  • Maximum of 20 partners
  • Minimum of 1 general partner
  • Minimum of 1 limited partner
  • Liability of each member limited to the contribution made

Isle of Man Protected Cell Companies

Main Features:

  • Law- Protected Cell Companies Act 2004
  • May be formed by incorporation or conversion of a company
  • Must only be a company limited by shares
  • Must conduct insurance business according to 1986 Insurance Act
  • Is a single person
  • Cells created by PCCS are not legal persons separate from the company
  • Cells may be formed for protecting and segregating specific assets
  • Each cell is subject to have its own share capital
  • Liabilities of a cell is satisfied by the assets of the same
  • Subject to an annual renewal fee

Isle of Man Companies

Isle of Man Non-resident offshore companies may take these forms:

  • Company limited by shares
  • Company limited by guarantee
  • Unlimited company with shares
  • Unlimited company without shares
  • Company limited by shares and by guarantee

Main Features:

  • Law — Companies Act 2006
  • Companies may have at least 1 member
  • Companies limited by shares and guarantee may have at least 1 member
  • At least one member if an unlimited company may be an unlimited member
  • Must have a local registered office
  • Must have local registered agent
  • 12 week name reservation period
  • May be continued into or discontinued out of Isle of Man
  • 2 or more companies may merge or consolidate
  • Offshore Companies Pre 2006
  • International Company — paid up to 35% on foreign income
  • Exempt Company — were liable to annual renewal fees plus a fee of GBP475
  • Non-resident limited Liability Company — filed annual return and paid duty of GBP830
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