Presentation on theme: "DOING BUSINESS IN THE ISLE OF MAN"— Presentation transcript:
1DOING BUSINESS IN THE ISLE OF MAN Stuart Foster –Basil Bielich –
2The Isle of Man Independent from UK but with strong links 1000 year old Parliament makes its own lawsDiverse population of 80,000Traditional Industries – Farming & TourismNow – International Financial Centre of Excellence
3About the IOM: Easily Accessible Serviced By Air:Travel By Air16 DestinationsOver 100 flights a day1 hour from London City
4About the IOM: International Relations UKEuropeRest of WorldSelf governingIndependentFinancially independentSterling currencyCommon Customs & Excise Agreement - VATEU Relationship governed by Protocol 3Free movement of goodsFree movement of peopleNo contributions to or receipts from EUEU Savings DirectiveStrong feedback IMF, OECD, FATFInternational standard regulationGood international citizenStrong business linksIndependent international representation
5About the IOM: A Proud History Oldest continuous parliament in the world – over 1,000 yearsOpen consultative governmentStrong, stable economy – 25th straight year of economic growthInfrastructure investment - over £1bn in health, education, water, communications, power, etcGaelic welcome – diverse population of languages and cultures
6Why Locate In The Isle of Man “Simply put, we have all the elements that can support business.We believe in financial freedom, a strong but pragmatic regulatory regime and giving businesses freedom to flourish.We have a stable political system, excellent infrastructure, a strong economy and a flexible work permit system.People and businesses come to the Isle of Man because they are made welcome and because they can thrive.”IOM Government Finance DepartmentWorld Famous for TT Races
7World Class Economy: Business Friendly Total Bank Deposits of £50billion – Dec 200730,000 registered companiesWell regulated financial industryCommon law jurisdictionZero percent corporate taxTax cap for individuals
8Tax Regime – Smart Taxation Tax system is EU Code of Conduct compliantZero % rate for majority of corporationsLow rates for individuals – maximum 18%Budgeted and sustainable tax strategy in a robust economyStandard & Poor’s and Moody’s AAA sovereign credit rating
9Thorough Yet Pragmatic Regulation Commitment to quality business and the reputation of the Isle of ManRegulators work in partnership with industry to develop realistic best practicesPolicies developed from close work with OECD, IMF, FATF etc.
10International Profile of The Isle of Man Only Offshore financial centre with top ratings from OECD, FATF and Financial Stability ForumIMF reports 2003 and 2008Financial Times award for Best International TerritoryWinner - Best International / Offshore Finance Centre Awards 2006Winner - European Financial Centre of the Future Awards 2005 (The Banker)Standard & Poor ‘AAA’ RatedFBI Compliments Island – February 2001“…a well-regulated financial industry, money-laundering regulation and…demonstrates the need for global law enforcement co-operation”
11IOM: A Competitive Location CaymanDublinChannel IslandsIsle of ManSquare Miles2212150225Population40,0001.5 million160,00075,000Detached House Price£1.2 million£750,000£600,000£300,000Average Fund Accountant Salary£55,000£40,000£30,000Staff TurnoverN/A50%30%7%Average length of time for work/housing permit3 months1 month4 daysCorporate Tax RateZero12.5%20% (Changing)
12Summary A World Class Economy Self Governing Crown Dependency Stable & diversified economyStandard & Poor’s and Moody’s AAA Sovereign credit ratingPolitical stable for 1000 yearsDiversified SectorsA Place for BusinessEasy access to London & EUCommon VAT area with UK and EUTax neutral with 0% taxation for all corporations except banking activity 10% rateCorporate Re-Domicile provisionsLeading Non UK AIM listing with GBP9.3bnExcellent IT and powerFinancial Assistance Scheme for new businessAs a Place to LiveLow personal tax rate (max 18%) with generous allowancesExcellent education systemsFlexible work permit systemAffordable housingLow crime
13Business Structures Companies Trusts Standard Company New Manx Vehicle Limited Liability CompanyProtected Cell CompanyTrustsDiscretionaryLife InterestAccumulation & MaintenanceVarious Others
141931 Company The standard Isle of Man Company Each company has a memorandum and articles of association (incorporation)Types includePublic companies, which must file accountsPrivate companies, which cannot offer shares to the publicCompanies limited by sharesCompanies limited by guaranteeUnlimited companies.Commercial companies are usually limited liability companies having a share capital.
15New Manx VehicleNMV, under the Companies Bill/Act 2005, will be possibleminimal registry filingsunlimited capacity, but restricted objects permissibleno capital maintenance requirements (subject to solvency)no authorised capitalshares of no par value possibleredemptions and purchases of sharesdistribution of income and capital possible (subject to solvency)no financial assistance prohibitionsin generalno annual return requirementsrequirement for a registered agentcorporate directors permitted within certain limitsno prescriptive accounting requirements
16Limited Liability Company Based on the “Wyoming”legislationMain purpose was for tax reasonsHas limited liability and corporate personalitybut is taxed as if it were a partnership.Popular as a simple form of business vehiclethe members can also manage the companyno separation of ownership and management as with other forms of company.The main characteristics of the LLCLiability is limited to the amount of capital contribution made by the membersthere is no share capital as such.Members have the right to manage the LLC in relation to their capital contribution or they can appoint a managerThere are no DirectorsTaxationmembers pay income tax on their share of the profits, howeverif the LLC is owned by non-resident members and has no Manx-sourced income then it may be exempt from all Manx taxation.LLCs may exist for an unlimited periodAutomatically be wound up on the death, resignation or disqualification of a memberIf there are two or more members remaining then they can resolve to continue
17Protected Cell Company UCTIONCELLCELLCELLCORECELLCELL
18Protected Cell Companies (PCCs) Basically a standard company limited by sharesSeparated into legally distinct ‘cellsEach cell has its own proportion of the overall share capitalof the PCC,Each cell’s assets, liabilities and tax liabilities are kept separate from each other cell.Shareholders can own an entire cell but at the same time only own a small proportion of the PCC as a whole.The PCC is a separate legal entity.The separate cells created by the PCC do not become legal entities separate from the PCC itself.Cells are created by the PCC for the purpose of protecting ‘cellular’ assets using the provisions contained in the PCC Act.Cellular assets are the assets represented by the proceeds of cell share capital, and all other assets attributable to the cell.Initial useCaptive insuranceFundsCollective investment schemesPCC structures can be particularly useful in allowing ringUsefulRing fencing of individual client or intermediary assetsProvides a layer of risk management not afforded to these schemes previously, and this could prove to be attractive to high net worth clients.
19Accountancy and Auditing Recognised bodiesThe Institute of Chartered Accountants in England and Wales;The Institute of Chartered Accountants in Scotland;The Institute of Chartered Accountants in Ireland.The Chartered Association of Certified Accountants; andThe Chartered Institute of Public Finance and Accountancy.Financial Supervision Commission may authorise a person to act as an auditor of a private company.
20Audit ExemptionCriteria is similar to those used in the United Kingdom.A company can be an audit exempt company if it meets two of the following criteria:its annual turnover is £5.6million or less;its balance sheet total is £2.8million or less;its average number of employees is 50 or fewer.
22TAXATION - Principle Taxes DIRECT TAX =INCOME TAXResident individuals and companies are subject to Manx income tax on their worldwide income.INDIVIDUALSBASIC RATE AT 10%HIGHER PERSONAL RATE 18%CAPPED per individual £100,000-00CorporateSTANDARD RATE 0%BANKS 10%PROPERTY COMPANIES 10%
23TAXATION - Indirect Taxes Value added taxBasic rate 17.5%Low rate 5%Zero Rate Outside United KingdomExemptionsCustoms and Excise duties
24TAXATION - Other Isle of Man does not levy: Corporation tax or advance corporation taxCapital gains taxCapital transfer or gift taxesWealth taxesStamp dutiesDeath, estate or inheritance tax
25Alternative Investment Market (AIM) Isle of Man- over 50 companies listed on AIM15 companies in the AIM 100The Isle of Man has more high performing companies listed than any jurisdiction other than the UK (the next jurisdiction only has 6).
26Alternative Investment Market (AIM) General rate of corporate income tax 0%No capital gains or stamp transfer taxesNot a regulated entityShares can be traded through CREST without the need to use depositary receiptsNMV is a new simple and flexible corporate structureRemoval of capital maintenance requirementsLess prescriptive prospectus requirementsThe Isle of Man is a common law jurisdiction in which company and trust law is closely aligned to that of England and WalesSecurity concepts are the same as in England and WalesThe provision of company administration services is a regulated activity on the Isle of Man
27The quality international AIM vehicle Lawyers increasingly using IOMCapacity for new businessSpeed and flexibilityHighly cost effectiveStrong skill base/fund expertiseReputation for quality – key to Institutional Investors….a growing success story…27
29Our Offices – Burleigh Manor, Douglas, Isle of Man Browne Craine & CoNewest member of TIAG – April 2008Over 25 years of successWide variety of services & clientsBased in the Isle of ManOur Offices – Burleigh Manor, Douglas, Isle of Man
30PEREGRINE CORPORATE SERVICES PROVIDING HIGH QUALITY BESPOKE SERVICES TO COMPANIES AND TRUSTS SINCE 1986
31PEREGRINE CORPORATE SERVICES THE SERVICESCompanies – Incorporations– Fully managed– AIM listingsTrusts – Establishment– Provision of Trustees
32COMPANIES Why Isle of Man? Zero % Tax for majority VAT registration as though UKA strong reputationAccess to EU marketsIOM resident directors notrequiredRobust regulation
35Case Study - Consultancy Performer / Sportsman / ConsultantIndividual works on several short term contracts all over the world.IOM company bills their clients – incl VAT if required.IOM company pays no tax on income.IOM company distributes profits as and when required to shareholders.Depending on tax rules in home country, profits can accumulate tax free in IOM company.
36Trading Company Country B Country A IOM Company GOODS Invoice Invoice FundsFunds
37Case Study – Trading Company International Trading CompanyGoods sold from Country A to Country B.IOM company issues invoice Country B.Country A invoices IOM company at lower price.Profit is isolated in IOM Company at 0% tax on profitsCare required – Transfer Pricing / CFC’s
38Property Company IOM Company UK Property IOM Bank Purchase Rental IncomeFinanceIOMBank
39Case Study – Property Company UK Shareholder invests in an IOM company to purchase UK property as he plans to leave UK in future.IOM company borrows from a bank in IOM – several major banks & many contacts.IOM company pays no tax on rental income in IOM, but will pay tax in UK – Peregrine area of expertise.Property sold in future when shareholder has left UK.No capital taxes on disposal for IOM company.Depending on tax rules in new country of shareholder, capital taxes may be avoided.
41Shipping register Historical shipping register, since 1786 1984 – established as an International RegisterDeveloped and respected shipping sectorSteady growth of register and sector2003 – introduction of commercial yachtsDeveloping yacht sectorCentre of excellence – ships and yachts
43Why Isle of Man? Political and Economic stability Secure financial JurisdictionQuality of Register and shipping centreLow cost – no annual duesCorporate vehicles and tax structuresSupportive and pro-active governmentCustomer focused registry/survey teamsPragmatic approach to regulationBritish Flag which is not the UK43
44Aircraft Register Planned in 2005 - to mirror and complement Isle of Man register for commercial yachtsOpened for business 1 May 2007Private & corporate only, not commercial air transportOffers unique M-registration (e.g. M-MANX)No insurance premiumEuropean time zoneHelpful, flexible and pragmatic approachCost effective and high quality register44
45Where Next? Space industry – Public & Private IOM owns satellite orbiting slotsSpace University in IOMForward-thinking attitude of Government & Industry45
46COMPANIES – OUR SERVICES Incorporation of companiesFull management & control ORIncorporation & supportNot just IOM, other international companies5 qualified accountants as directors of your companyWell regulated location with strong reputationProvision of directors/services to AIM listed companies
47TRUSTS - INTRODUCTION Used since 10th Century Wealth protection Assets entrusted to associates = TRUSTEESTrustees act for the benefit of the BENEFICIARIESLegally recognised arrangement
49TRUSTS – USES Estate and inheritance planning – avoid probate Provision for family members/employeesProtection of assetsTax advantages if long term financial gains expectedCharitable reasons
50TRUSTS - DIFFERENT TYPES Discretionary - letter of wishesInterest In Possession – life tenantAccumulation & Maintenance – children & grandchildrenPurpose Trusts – Law since 1996, Independent enforcer requiredWill Trusts – additional inheritance planning
51TRUSTS – Case Study SETTLOR Grandparent TRUSTEE Trust Fund BENEFICIARY GrandchildrenAssetsAssetsOn DeathLifetime IncomeBENEFICIARYChildren
52TRUSTS – CASE STUDYSETTLOR - Grandparents settle investments into TrustTRUSTEES - Become legal owners and take responsibility for investments.Settlor provides guidance to Trustees via a Letter of WishesIncome from investments used to provide regular income to children during their life - BENEFICIARYUpon death of children, assets pass to Grandchildren - BENEFICIARY
53TRUSTS – WHY ISLE OF MAN? Trust service providers regulated High standards and expertiseHistory of Trust law – Statute & Common lawForeign laws re transfer of assets excludedNo statutory requirement to notify beneficiariesNo Tax providing no Manx income or beneficiaries
54TRUSTS – OUR SERVICES Establishment of Trusts Provision of Trustees Expertise & ExperienceAccess to legal adviceIsle of Man: - Supportive legislation- History of Trusts- Centre of expertise
55MORE INFORMATION www.brownecraine.com www.peregrine-iom.com