Discover the fascinating legal status of the Isle of Man in the Irish Sea. Although an overseas territory of the British Crown, it stands apart from the United Kingdom. While the UK handles military protection and foreign affairs, the Isle of Man enjoys self-governance, headed by the Lieutenant Governor.
The Isle of Man in the Irish Sea is a jurisdiction with quite a curious legal status. It is an overseas territory of the British Crown but it is not part of the United Kingdom. The UK is responsible for the military protection of the island and it takes care of its foreign affairs but the Isle of Man is a self-governed territory with the Lieutenant Governor as its head. Great Britain was a member of the European Union for a while but the Isle of Man was not (it’s not part of Great Britain) so it did not have to ‘Brexit’ the Union. At the same time, it has some special arrangements with the EU and it is part of the European Economic Area. The Isle of Man is not a member of the Commonwealth of Nations but the local authorities are making efforts to enhance cooperation with this organization.
As you can see, the jurisdiction has a rather unusual legal status indeed. So, what is the Isle of Man essentially? The defining characteristic of the territory is probably the following one: since approximately the middle of the 20th century, it has been a well-established offshore zone and a tax haven. Jumping the gun a little bit, we must say that this is possibly one of the greatest advantages that the Isle of Man offers to international entrepreneurs: it is among the best countries to register an offshore company because it is a reputable tax haven.
Understandably, the Isle of Man has not always been an offshore zone and a tax haven. The island has been inhabited since times immemorial. Some locals claim that the Parliament of the Isle of Man has been functional since around 900 BC, which makes it the oldest Parliament in the world. Scholars are skeptical about the age of the Parliament but they agree that no other country has an older legislative body.
Fishery and agriculture used to be the primary industries in the Isle of Man before but not any longer. Today, the two largest industries in the territory are electronic gambling/ electronic gaming and insurance. Together they bring one third of the overall income to the local budget. The two second-largest industries are banking and information technologies. These sectors of economy together generate about one fifth of the national GDP.
Main benefits of registering an offshore company in the Isle of Man
Why is referring to the Isle of Man as a tax haven justified? First of all, because the corporate tax is 0% there unless your Manx-registered company is engaged in banking, real estate, or retail. Besides, the rates of capital gains tax, withholding tax on dividends, and a number of other taxes are also 0% in the Isle of Man. The opportunity to economize on taxes is one of the most important factors that attract many wealthy individuals to the Isle of Man: a great number of millionaires and even a couple of billionaires live there.
There are more reasons to register an offshore company in the jurisdiction. The high level of confidentiality protection that you can find there is one of them. You certainly realize that total secrecy of company ownership is unavailable in the modern world. It is also true that the Isle of Man has faced problems with money laundering allegations. Some Manx-based companies have even been suspected of financing terrorists. The global efforts to enhance transparency of business operations affect all the jurisdictions and the Isle of Man is not an exception. (We must admit that there are a few countries that refuse to comply but these are sanctioned).
On the other hand, the local authorities realize that personal information privacy is one of the characteristics that make the Isle of Man attractive for foreign entrepreneurs. And the place does welcome foreign entrepreneurs because it’s just a small island with a population of only around 80 thousand people. By the way, approximately half of them have jobs, which is a comparatively large proportion. Any foreign company registered in the Isle of Man has to have a local registered agent (a representative). For the company owner, it may be a disadvantage as this obligation entails some additional expenses. However, the same obligation helps to keep the unemployment rate in the jurisdiction at an extremely low level of only 1%.
Therefore, the Manx authorities are doing their best to protect the confidentiality of the company owners. There is a Business Register in the jurisdiction but it is not available to the public. There have been legal precedents when the overly strict AML requirements have been challenged. After all, privacy of personal data is protected but the European legislation and transparency regulations can be imposed only up to a certain degree. Thus, the authorities of the Isle of Man use all the legal possibilities available to them to let the company owners preserve their confidentiality.
In addition to that, the Manx Government is highly supportive of business development in the territory. The local resources are limited, of course, and the authorities try to offer enticing conditions to international corporations. You might probably be surprised to learn that a number of aerospace companies in particular are based in the Isle of Man. Besides, the authorities promote startups and if you establish a Manx company, you may gain access to various Government support programs, grants, loans, and so on. You will find a pro-business environment in the jurisdiction.
To make the island even more inviting, the local authorities make it very easy to register a company there. The company can have only one shareholder and only one director. The shareholder/ director can be a natural person or a corporate entity. (Please mind, however, that if you would like to make a Manx-based corporate entity the founder of another company in the jurisdiction, certain restrictions will apply.) The shares that your company issues can have par value or they can have no par value.
It is true that you will have to meet some requirements when registering a company in the Isle of Man. We have already mentioned the obligation to have a local company representative. In addition to that, your Manx-based company will have to have a physical registered office in the jurisdiction. However, the advantages that you can find when establishing a company in the Isle of Man will certainly compensate for all the costs that you will have to incur.
