Isle of Man

Doing Business in Isle of Man

Introduction

The Isle of Man is an English speaking country that lies in the Irish Sea between Britain and Ireland. It occupies an area of 572 square kilometres (220 sq. miles). Constitutionally, it has never been part of the United Kingdom, but is rather a self-governing territory within the Commonwealth with a population of about 85,000 persons.

Tynwald, the Isle of Man parliament, is responsible for the Island’s domestic affairs including taxation. Britain is responsible for the Island’s defence and foreign affairs. The Island has a special relationship with the European Community: whilst it is associated with the EC, the Island is excluded from the Community’s fiscal harmonisation policy. The Isle of Man is a part of the UK VAT area and does impose VAT on goods and services. As such, an Isle of Man company may be registered for VAT and may therefore prove a suitable vehicle for international trade with other member states of the EU.

Limited Liability Companies

The concept of the Limited Liability Company (“LLC”) is relatively new and is potentially one of the most interesting developments in international corporate and trust work in recent years. An LLC has corporate form and personality but is categorised as a partnership under the tax legislation of many countries. As such, the LLC is not separately taxable but rather its income is taken to flow through to its members who are taxed as though they had received the income directly. Thus, a non-taxable structure can be created by having non-resident individuals or companies as the members of the LLC. If the LLC has individual members, those members would most probably suffer taxation on profits received from the LLC in their country of residence, so the recommended structure is to have two offshore companies as the members of the LLC.

The Isle of Man LLC is a low profile zero tax company which enjoys the protection and privileges afforded by the Isle of Man legal system, which operates on the principles of common law.

An Isle of Man LLC has the following characteristics:-

Taxation

As described above, a correctly structured exempt Isle of Man LLC that has no Isle of Man source income (other than bank deposit interest) will not be subject to any form of Isle of Man tax on its income.

Shareholders

An LLC is required to have two or more members. Members are the equivalent of shareholders in a normal company. The names and addresses of the members appear on the public file.

Managers

If permitted by the articles of organisation, a manager, whose responsibilities and functions would be similar to those of a director of a company, may be appointed. Alternatively, the members themselves may elect to carry out the administration of the company in a similar manner to that in which the partners of a partnership conduct their affairs. Details of the manager are recorded on the annual return of the LLC, which is filed with the Registry and is open to public inspection.

Annual Reporting

An annual return must be filed with the Registry. It provides details of the registered office, registered agent, manager (if any) and members. There is no requirement to file accounts with the Registrar, although an LLC does need to produce accounts for the Isle of Man tax authorities.

Timescale

Name approval followed by incorporation can be achieved within five working days. We do not generally keep ready-made LLCs in stock.

Restrictions on Name and Activity

The name must end with the words “Limited Liability Company”, L.L.C.” or “LLC”. There is a list of words, published by the Financial Supervision Commission, which cannot be used as part of the name of an LLC.

Local Requirements

As a matter of local company law, the LLC must maintain a registered office address within the Isle of Man and must also appoint an Isle of Man resident, professionally qualified individual as registered agent. We would generally provide these services as part of the domiciliary service fee.

Disclaimer
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. IQTESADI does not accept any responsibility, legal or otherwise, for any errors or omission.