The Isle of Man is a self-governing British Crown dependency located in the Irish Sea, which occupies an area of 588 sq. km (277 sq. miles) and has a population of c. 85,000. The head of state is Queen Elizabeth II, who holds the title of Lord of Mann, but constitutionally the island has never been part of the UK. The UK government is responsible for the island’s defence and foreign affairs, while Tynwald, the Isle of Man parliament, is responsible for it domestic affairs including taxation. The Island issues its own notes and currency, the Manx pound, which is on a par with the UK pound and is interchangeable with UK currency.
Financial services, manufacturing and tourism are the key sectors of the economy. The Isle of Man is a low-tax economy with no capital gains tax, withholding tax, inheritance tax or wealth tax. The top rate of income tax is 20% subject to a tax cap of £115,000 for individual taxpayers or £230,000 for jointly assessed couples. Personal income for resident individuals is assessed and taxed on a total worldwide income basis; non-resident individuals are taxed on Isle of Man-source income only.
In 2006, the island introduced a 0% corporate tax rate. This applies to all companies other than banks, property companies and retail businesses with taxable income of more than £500,000, which are taxed at 10%. The Isle of Man is a part of the UK’s VAT area and imposes VAT on goods and services. The Isle of Man is not a part of the European Union however, under Protocol 3 of the UK’s Act of Accession, goods can be freely moved within the EU but not capital and services.
Isle of Man law is closely based on English common law and the decisions of the courts in England are regarded as being persuasive in the Manx courts. As a common law jurisdiction it is a recognised and pre-eminent jurisdiction for establishing trusts.
The Isle of Man is at the forefront of best practice in international regulation and has been praised by global bodies including the OECD, G20 and IMF for its commitment to financial and supervisory standards. The island has signed a number of international tax agreements that reflect its commitment to complying with international standards. In 2012 the OECD placed the Isle of Man amongst the top 12 jurisdictions meeting all of the standards required for the “effective information exchange”.
The Isle of Man has an excellent telecoms and power infrastructure, which has benefited from hundreds of millions of pounds worth of public and private sector investment in recent years. It is this infrastructure that has helped provide the foundation for the island’s success as a major centre for e-business activities. In addition, the Island offers internationally orientated service expertise and global client base.
The Isle of Man is a key commercial partner that delivers many benefits to the global economy and in particular to the UK. It is one of the most diversified of financial services centres worldwide. The initial presence of financial, professional and business services was pivotal to the development of other high value added sectors. Approximately 34% of GDP is generated by financial services, with much of the remainder generated by high value added and high tech industries such as ICT, aerospace and advanced engineering.
The island enjoys excellent transport links to major transport hubs in the UK and Ireland with many flights daily to London, Manchester and other regional airports.
Isle of Man Government – www.gov.im/
Isle of Man Financial Services Authority – www.iomfsa.im/about/aboutus.xml
Isle of Man Financial Services Sector – www.whereyoucan.com/finance
Isle of Man Aircraft Registry – www.gov.im/ded/Aircraft/