Isle of Man: Executive Summary

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In this Section:

- Isle of Man The Country and its Economy
- The Isle of Man
- The Economy of the Isle of Man
- Isle of Man Services Directory
- Map of The Isle of Man

Isle of Man Executive Summary

Isle of Man Not in EU Fiscal Area

The Isle of Man is an English speaking dependency of the British crown but has never formed part of the United Kingdom. The Isle is politically stable and enjoys parliamentary government without party politics. Its 1,000 year-old parliament, Tynwald presides over the Island's domestic affairs including, specifically, taxation. Britain is responsible for the Island's defence and foreign affairs. The island forms part of the EU single market and VAT area but is otherwise not part of the EU fiscal area. The Isle of Man has an English common law type legal system and tends to follow English legislation. There is an infrastructure of sophisticated legal and other professional services. The Isle has a Financial Supervision Commission with a great deal of experience in overseeing and regulating sensitive financial areas. The island's currency is the pound and there are no exchange controls. There are frequent flights to a number of UK airports.

Economy Buoyant; Taxes Reduced!

The Isle of Man economy has enjoyed an average of over 6% growth in real terms over the past 27 years. The 2009/10 national income figures produced by the Treasury’s Economic Affairs Division, show there to be have been real growth that year in nearly every sector of the economy. The value of goods and services produced (or gross domestic product) in the Isle of Man economy over the year rose to over GBP3.2bn, a 2.2% increase over the previous year.

The Isle of Man avoided recession and the latest economic figures are encouraging, with National Income forecast to grow by 2.5% in 2010 and by 4% in 2011.

The Island’s per capita national income was GBP39,276 according to the 2009/10 report.

Over a period of some years, the government has been gradually abolishing corporate income tax altogether, and as from 2006 it applies only to financial institutions.

There is no capital transfer tax, no surtax and no corporation tax, no wealth tax, no death duty, no capital gains tax and no gift tax. Value added tax is collected by the Isle of Man Customs & Excise at the same rates which apply in the United Kingdom.

In November 2011, international ratings agency Standard & Poor's reduced its 'AAA' international credit rating on the Isle of Man to AA+, citing external vulnerabilities and lack of monetary flexibility as credit weaknesses.

IOM Lowtax Specialisations

The Isle of Man has strong banking, investment fund and captive insurance sectors, with a well-developed advisory and financial infrastructure. There are a number of business formats, Limited Partnerships and Limited Liability Companies (LLCs). There is an active trusts sector, and in 2001 the island began to offer on-line gambling licences.

The Isle of Man v. the EU and the OECD?

The Isle of Man's unique situation with regard to the EU is both a strength and a weakness. The island will remain a favoured base for holding and trading companies working into the EU, and for e-commerce activity; but it has the EU and the OECD to contend with. Along with Jersey and Guernsey, however, the Isle of Man responded to its inclusion on the OECD's black-list by making it clear that it will not be pushed around to the detriment of its offshore sector, and in making its 'commitment' to the OECD in December 2001 the Island made it clear it would only agree to information-sharing if its major offshore competitors do so too. However, the Isle of Man has since won the praise of the OECD for being at the forefront of the tax transparency drive following the G20 summit in London in April 2009, and sits proudly in the OECD's 'white list' of cooperative jurisdictions.

After the EU agreed to a mixed information-sharing and withholding tax regime under its Savings Tax Directive in early 2003, the Isle of Man decided, along with Jersey and Guernsey, to apply a withholding tax to the returns on personal savings. However, the Isle of Man opted for the automatic exchange of information with regards to interest gained on the accounts held by depositors resident in countries within the European Union from July 1, 2011.

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