APGI Isle of Man Company

Isle of Man Offshore Incorporation

Isle of Man International Business Company (IBC) Overview

The Isle of Man is an English speaking country which lies in the Irish Sea between Britain and Ireland. It occupies an area of 588 sq. km (277 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 70,000 persons.

Tynwald, the Isle of Man parliament, is responsible for the Island's domestic affairs including taxation. Britain is responsible for the Island's defense and foreign affairs. The Island has a special relationship with the European Community: while it is associated with the EC the Island is excluded from the Community's fiscal harmonization policy. The Isle of Man is a part of the UK V.A.T. area and does impose V.A.T. on goods and services. As such, an Isle of Man Company may be registered for V.A.T. and may therefore prove a suitable vehicle for international trade with other member states of the European Union.

The 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.

Important Update on the Isle of Man Company

With the introduction of the Corporate Service Providers Act 2000, only those licensed as CSPs by the Financial Services Commission are now permitted to incorporate companies (as well as a number of other regulated activities). The Commission is also responsible for the regulation and supervision of CSPs.

Currently under proposal are a number of changes to company law for the Isle of Man Company, with the Companies (Amendment) Bill scheduled for 2002. The main changes being considered relate to the streamlining of procedures for the dissolution of companies, the phasing out of bearer shares and the clarification of the registration requirements for foreign companies which establish a place of business in the island.

ISLE OF MAN COMPANIES

The Isle of Man offers 2 distinct types of non tax paying company:

• Non-Resident Company
• Exempt Company

A Non-Resident Isle of Man Company is a company incorporated in the Isle of Man which is owned, managed and controlled by persons who reside outside of the Isle of Man Company. Upon the filing of a non-resident declaration, the company will not be subject to Isle of Man taxation. Instead will pay a fixed rate non-resident company duty of GBP600 per annum irrespective of magnitude of profits. The duty is payable in the first year upon the filing of the declaration and annually thereafter on the filing of the annual return on the anniversary of the company's incorporation.

It seems likely that the 'non-resident' company will soon be phased out. This format allowed all directors, the secretary and the shareholders to be resident outside of the island. It may well be possible for these companies to convert to "exempt company" status. This requires a resident secretary and one resident director. Other directors may reside anywhere. The exempt company pays a duty of GBP400 which is less than the non-resident company used to pay. If you do not have your own resident director and secretary, however, the added costs of nominees must be taken into account.

The Financial Services Commission in the Isle of Man is unhappy at the increasing number of companies being left without a registered office or any officers. The number of 'freefall' incidents has made the Commission concerned that the Island's international reputation is at risk. Those responsible for compliance are warned that matters must be concluded responsibly and in line with the Act when a company is no longer required.

An exempt Isle of Man Company must be owned by non-residents and must have at least one Manx resident director and a professionally qualified company secretary. Exempt status can be obtained provided that the company's business and trading is carried on outside of the Isle of Man. Banking activities may be controlled from within the Island and any income and profit derived from the account will not be subject to Isle of Man taxation. The exempt fee payable to the Isle of Man Government is GBP300 per annum, payable in the first year upon application and annually thereafter before 30th June.

An Isle of Man Exempt Company has the following characteristics:

TAXATION:

Isle of Man Exempt Companies are not subject to any form of tax on profit in the Isle of Man but do pay a flat rate annual fee to the Isle of Man Government which is GBP300.

SHAREHOLDERS:

A minimum of 1 shareholder is required which may be an individual or a corporate body. Details of the shareholders must be filed on the public file but anonymity can be preserved by the use of nominee shareholders.

DIRECTORS:

Each Isle of Man company requires a minimum of two directors and corporate directors are not permitted. Details of the directors must be filed on the public file but anonymity can be preserved through the use of third party professional directors. It is important to note that an exempt company must have at least one Isle of Man resident director and would usually have all its directors resident to clearly demonstrate that the control and management of the company takes place on the Isle of Man.

ANNUAL REPORTING:

An annual return must be filed each year showing details of shareholders and directors. There is no requirement to file accounts with the registrar, but please note that resident companies do need to produce accounts for the tax authorities.

TIMESCALE:

Companies can be incorporated within 10-14 days.

RESTRICTIONS ON NAME AND ACTIVITY:

The following words cannot be used without further approval; bank, assurance, casualty, guarantee, indemnity, insurance, re-insurance, surety, underwriting, bank, trust, trustee, holdings, international, group.

LOCAL REQUIREMENTS:

As a matter of local company law the company MUST maintain a registered office address within the jurisdiction of incorporation. Exempt Isle of Man Company companies must, as a matter of law, appoint an Isle of Man resident professionally qualified company secretary as well as a local director. For resident and non-resident Isle of Man companies it is a practical but not legal requirement to appoint an Isle of Man company secretary . We would generally provide these services as part of the domiciliary service fee.

Please contact us for a quote.