Taxation

For taxation purposes private companies incorporated in the Isle of Man fall into the following categories:

  • In order to meet international standards and to comply with the EU 'harmful tax practices' initiative, the Isle of Man abolished the exempt company regime in 2006. In its place, all companies, whether owned locally or by non zero rate of corporate income tax. This zero rate of tax now applies to most companies, the only exceptions being banking business and certain dealings in Isle of Man real estate. Whilst there are special anti-avoidance rules which apply to local businesses, for non-resident owners of the Isle of Man resident companies, there is accordingly no corporate income tax, no capital gains tax, and no taxation on the distribution of profits. A combined annual return fee and corporate charge of £320 is payable by each company.
  • International companies (as defined by the International Business Act 1994) which, in broad terms, may negotiate a local income tax charge of between a minimum of £1,200 (minimum) and an amount equivalent to a rate of 35% of assessable profits. The minimum increases at different stages in the fiscal year.
  • The Limited Liability Companies Act 1996 permits the formation of limited liability companies ("LLC's") similar in concept to those permitted by the Wyoming Limited Liability Company Act. Accordingly, an LLC has no shareholders or directors and is owned and managed by its members, whose liability is limited to the extent of their contributions to capital. The concept can, therefore, be likened to a form of incorporated limited liability partnership. Manx income tax is levied on the individual members of the LLC and not on the company itself. An LLC can apply for international designated status and upon payment of an annual fee to the Manx government (and compliance with certain defined criteria), the members can be granted complete exemption from Manx taxation.
  • Since Isle of Man (Manx) legislation permits the formation of guarantee companies, it is also possible to form a hybrid company. Such a structure has a group of shareholders (in the traditional sense) alongside a group of members - who may or may not also be shareholders. A hybrid company can, therefore, act as a quasi trust allowing the shareholders (professional administrators) to manage the structure, as trustees would do, but the guarantee members to have all rights to income and capital, similar to beneficiaries.
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