Recognized as a distinguished international business center, Isle of Man offers a unique business environment for start-ups, established companies, and organizations looking to relocate.
What are the benefits of setting up a company in Isle of Man?
A favourable taxation system:
- the Isle of Man operates a progressive income tax system, and the top rate for individuals is currently 20%.
- the country’s standard rate for corporate income tax is 0%.
- the Isle of Man is known for being a low-tax jurisdiction, and it does not impose capital gains tax, stamp duty, wealth tax, or inheritance tax.
- also, the standard rate of value-added tax (VAT) in Isle of Man is 20%.
- the country has also been actively expanding its tax treaty network to avoid double taxation.
Isle of Man is a self-governing British Crown Dependency with a stable political and legal system, which provides a reliable business environment.
Isle of Man has a flexible and business-friendly regulatory framework, which makes it easier to set up and operate a company.
Privacy and confidentiality
The country also respects privacy and confidentiality, approving of discreet business operations and protecting the identity of company owners and shareholders.
Access to EU markets
Although not an EU member, the Isle of Man enjoys a customs union with the EU, providing companies with potential access to European markets. It also has a beneficial customs agreement with the UK, which in turn facilitate trade.
Company Formation in the Isle of Man for non-Residents
It’s possible for non-residents to establish a company within the Isle of Man. Whether you reside within its borders or not, the requirements and process for company formation in the Isle of Man are quite straightforward.
However, regardless of your current location, there are several key factors to consider when setting up a new company in the Isle of Man.
Important Considerations for Establishing a Business in the Isle of Man
- Create a business plan and select the appropriate business structure
Before beginning the process of a company formation, it is important to develop a well-thought-out business plan. Although this may require time and effort, it serves as a foundation for the company.
Once the business plan is ready, next is determining the appropriate company structure.
The Isle of Man offers two distinct categories of corporate entities:
- Companies established under the 1931 Act
- Companies established under the 2006 Act
Both the 1931 and 2006 Companies Acts provide several options for company types, including:
- Companies Limited by Shares
- Companies Limited by Guarantee
- Unlimited Companies
- Select a unique company name
Every company, including the ones to be established in the Isle of Man requires a unique and different name. So, it is essential to be careful when selecting a name to avoid similarities with existing businesses or trading names. So before going too far into the company formation process, it is advisable to check with the Companies Registry. This step ensures that the chosen name is available, complies with all regulations, and can obtain approval from the Companies Registry.
- Choose a registered office address
When deciding on a registered office address for the company, it is essential to bear in mind certain requirements. The address must be a physical location situated within the Isle of Man.
Alternatively, the Manx company owner can choose to enlist the services of a licensed Corporate Service Provider based in the Isle of Man. These providers can provide a registered office facility and use their address on behalf of the company.
- Directorship requirements
Depending on which Companies Act the business has been set up, there must be a minimum of one individual, at least 18 years old, who will oversee the company. However, in the case of a 1931 company, the minimum requirement is two individuals. This individual/s is not required to be a resident of the Isle of Man.
Alternatively, under 2006 Act, it is possible to appoint a Corporate Director, under the condition that the appointment is made according to the regulations of an Isle of Man Licence holder.
- Registered agent and company secretary requirement
Depending on the Companies Act chosen for incorporation, it may be necessary to appoint either a Company Secretary or a licensed Resident Agent for the business, in the Isle of Man.
The specific role and responsibilities of these individuals will vary accordingly, but their main purpose is to ensure compliance with the relevant legal framework.
- Issuing of shares
If the chosen business structure is a “Company Limited by Shares”, there must be a minimum of one Shareholder.
Furthermore, the owner can determine the initial value of the company’s shares.
- Drafting the company’s memorandum and articles of association
These are important legal documents required when establishing a company in the Isle of Man. The ‘memorandum of association’ is a formal statement signed by all initial Shareholders, also referred to as Members, which signifies their consent to establish the company.
The second, the ‘articles of association,’ outlines the governance, management, and ownership structure of the company as mutually agreed upon by the Shareholders and Directors. It includes the rights, responsibilities, and authority of the Directors, as well as the mean by which the Members can exercise control over the Board of Directors.
- Registration for corporation tax
Compliance with tax obligations is an important aspect of operating a business in in the Isle of Man. So upon incorporation, it is necessary for the company to register for Corporation Tax with the appropriate authorities in the Isle of Man.
- Filing tax returns
The company is required to prepare and file an annual Company Tax Return by a specified deadline.
In general,, the deadline for submitting a company tax return in the Isle of Man is set at one year and one day after completing the company’s accounting period.
An accountant will generally help in compiling this information. And this obligation applies whether the company generates profit or not.
- Opening a bank account
When setting up a company in the Isle of Man, it is likely that you will require a bank account. While this process can be stressful, we (Damalion) can provide valuable assistance in this aspect .
Setting up a Company can be a time-consuming and sometimes complex process, but with Damalion by your side, it can be a straightforward process. Contact Damalion now to establish your company on the Isle of Man.