Registration of a company on the Isle of Man

The Isle of Man is a dependency of the British Crown. It is not part of the European Union and the European Economic Area. Still, it trades with EU countries under the rules of the Union regarding customs duties, excise taxes, and VAT. Therefore, setting up a company in Douglas or any other city in the Isle of Man allows access to the benefits of the internal European market. Due to the progressive legislation, the jurisdiction has a positive reputation. Registering a firm in the Isle of Man will allow the entrepreneur to engage in various activities, including owning real estate and managing assets. Due to the existence of information exchange and double taxation agreements, the jurisdiction is on the allowlist of the OECD.

Advantages of registering a company

• the possibility of duty-free trade with the UK and EU countries;
• a good reputation of the jurisdiction;
• no direct taxation of most companies in the Isle of Man;
• possibility to establish a company with one shareholder and any size of share capital;
• availability of qualified specialists;
• low tax rates;
• English-speaking environment.

Main forms of legal presence and doing business

• limited liability company;
• limited liability partnership;
• foreign companies;
• fund;
• trust.

Most foreign entrepreneurs choose a limited liability company to open a company on the Isle of Man. This legal form gives shareholders maximum flexibility in selecting a business area and limits financial risks. However, other types of companies may also be considered for certain types of business.

Registration procedure

• choose and reserve a company name through the Registry of Companies;
• register a company in the Isle of Man;
• open a corporate bank account;
• obtain the necessary permits and licenses.

Legislation and regulatory environment

Isle of Man companies can be created and regulated under two separate laws:

• The Companies Act of 1931 (often used for the formation of local businesses) requires the appointment of two directors for management, who can be non-residents but does not require the presence of a government-licensed agent. In addition, a company secretary is required, who can act as a director and be a non-resident. Companies must hold annual meetings and prepare annual financial statements.
• The Companies Act of 2006 allows for the creation of a company with one director, who can be a legal entity but requires the engagement of a licensed agent. There is no requirement for annual meetings or the preparation of annual financial statements.

You must have a local registered office to open a company on the Isle of Man.

The Companies Act allows the re-domiciliation of an existing legal entity from another jurisdiction allowing such relocation. In this case, the company continues to exist, retaining its assets and liabilities. After relocation, its activities will be governed by the laws of the Isle of Man.

The beneficial ownership law requires investors who own more than 25% of the company’s shares to provide the necessary data to the Registrar for storage in the Isle of Man beneficial ownership database.

Tax system

• corporate tax – 0% (for most companies), 10% (for banking and retail trade), 20% (for real estate transactions);
• PIT – 20%;
• VAT – 20%;
• dividend tax – 0%;
• tax on capital gains – 0%.

There is also no inheritance tax on the island, which makes registering a company a tax-efficient way to own real estate.

All companies must file tax returns for the reporting period, regardless of the rate at which they are taxed. The Isle of Man resident companies are taxed on their worldwide income. Non-resident companies doing business on the island pay taxes only on income earned on its territory.

Opening a business on the Isle of Man: how the lawyers at Prifinance can assist

Doing business on the Isle of Man allows a foreign entrepreneur to take advantage of many economic advantages of legal presence in the European Union. At the same time, the British island territory is characterized by a comfortable fiscal regime. Company registration on the Isle of Man can be used to optimize the tax burden and ownership of investment portfolios, real estate, and other assets. Prifinance lawyers will choose the optimal legal form of the legal entity under the client’s interests. Company specialists will deal with bureaucratic and administrative issues, allowing company registration in a short period.

After registering your business on the Isle of Man, you can entrust our specialists with your company’s accounting and annual maintenance.