Company in the Isle of Man
The Isle of Man is a typically touristic land located in the Irish Sea. It is not fully dependent on the United Kingdom, except for foreign affairs and defence, for which the UK Government is responsible. The country is also not part of the European Union, but belongs to the customs territory of the European Community, which significantly facilitates numerous international contacts.
The Isle of Man is distinguished from other jurisdictions by the fact that you can legally conduct gambling activities there. This country was also for many years considered by Poland as having harmful tax competition. This changed in March 2011 when the countries entered into tax information exchange agreements with each other.
This seemingly innocent-looking country is an interesting place for investment and setting up a business in the Isle of Man.
Incorporation in the Isle of Man and the available legal forms of doing business
The Isle of Man’s partial dependence on the United Kingdom and its location have mainly influenced the fact that the common law legal system, which is already known to everyone, functions there. Therefore, among the legal forms of conducting business in this country we can distinguish a limited liability company (LLC), or a limited partnership (LLP).
In 2006, the Isle of Man underwent a legal revolution, mainly in the field of tax law, but also commercial law. This resulted in the creation of one of the offshore “tools” – New Manx Vehicle (NMV). This name is used to describe the package of changes that took place in the Isle of Man and which were related to the elimination of distinction between private and public companies, simplification of company re-registration and merger procedures. It has also become simpler to keep financial records of companies. Additionally, the name serves to denote a new type of form of running and opening a company.
The Companies Act provides several options for the formation of an NMV as:
- Company limited by guarantee
- Company limited by shares
- Company limited by guarantee and shares
- Unlimited company with shares
- Unlimited company without shares.
Establishing a company in the Isle of Man and the registration time
With the introduction of the Manx Corporate Vehicle there has been an upgrade to the Isle of Man company registration systems. It now takes approximately 48 hours to register a company on the Isle of Man as standard. There is also a faster registration option available for an additional fee.
Establishing a company on the Isle of Man does not pose many difficulties. The documentation itself is not complicated, and the incorporation process is relatively easy and efficient. Everything is done in English, which is also the official language.
When opening a company, it is important to keep in mind the naming requirements. The company cannot adopt a name that is identical or similar to an existing legal entity. The name of the company must not imply the provision of trust services for which an appropriate license is required.
The name of the company can be in any foreign language, but an English translation must be submitted to the Companies Registry to assess the appropriateness of the name, and limited liability companies must use “Limited”, “Incorporated”, “Corporation”, “Public Limited Company” or their abbreviations.
Opening a company in the Isle of Man remotely
It is possible to open a company in the Isle of Man remotely. It is possible by the fact that most registrations are made online. However, it is important to remember that the company must have a physical address in the Isle of Man, where the books and records of the company will be kept and correspondence will be sent. The use of virtual offices will help in this regard.
There is no requirement under Isle of Man law to have a resident member on the board of directors. The situation changes when you want to open a bank account for the company in one of the banks on the Isle of Man.
Taxation in the Isle of Man
The Isle of Man has a very important financial sector, which accounts for as much as a quarter of the total economy. This is why the Isle of Man is still considered a tax haven.
Establishing a company in the Isle of Man will come with many tax advantages. It is a jurisdiction with zero corporate income tax rate. Banking and insurance entities are excluded from this regulation, they are taxed at 10%.
There is no inheritance tax, capital gains tax or stamp duty in the Isle of Man and dividends paid to non-residents are taxed at 0%.
The Isle of Man, apart from being bound by the customs union of the European Community, is also a party to the customs and excise agreement with the United Kingdom, which results in both territories being treated as one for customs and VAT purposes.
In addition, the Island’s regulations do not require the filing of financial statements. However, accounting records must be kept at the company’s registered office and must allow for the preparation of financial statements if required.
Free Zones in the Isle of Man
Until now, issues relating to free zones have been covered by EU regulations. However, due to Brexit, there has been a problem in the Isle of Man in terms of the application of UK law, which was in part conditioned by EU law and has changed with the current exit from the European Union.
Regulations are still being drafted to determine the operation of free zones in the UK and the Isle of Man.
A ready-made company on the Isle of Man / buying a company on the Isle of Man /
It is also possible to buy a company on the Isle of Man that is already registered. As a rule, a ready-made company on the Isle of Man has been in existence for a relatively short period of time, has not previously conducted business and has been created for the purpose of its subsequent sale.
It is generally accepted that buying a company that already exists and that has cash flow can be a good way to start a business in the Isle of Man.