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Company formation Isle of Man – The location for a new start?
Company formation Isle of man can offer many key advantages making it one of the most ideal location to incorporate your company. Also known as the tax haven, the Isle of Man lies between Ireland and Scotland in the middle of the Irish Sea. Although the country is one of the British crown colonies but they no longer belong to Great Britain or the European Union. The Tynwald, the own parliament of the Isle of Man governs the country, but generally according to English law. The financial law is highly regarded, as there are a variety of corporate and tax models.
The Isle of Man economy has enjoyed an average of over 6% growth in real terms over the past 26 years. The 2010/11 national income figures produced by the Treasury’s Economic Affairs Division, show there to be have been real growth that year in e-gaming, an increase of nearly 19% in the ICT sector, a much improved insurance sector has led to the financial sector accounting for 35% of national income.
In the Isle of Man there is no general capital gains tax, turnover tax or capital transfer tax, and there are no stamp duties. Apart from VAT, the only significant tax is income tax which is levied at a maximum rate of 20% on individuals, and until 2006 on corporations (companies). In its budget for 2002/03 the government reduced lower rates of income tax to 10%.
Companies resident in the Isle of Man are taxed on their worldwide income and are required to file an annual income tax return reporting worldwide taxable profits calculated in line with local legislation and practice.
A non-resident company incorporated outside the Isle of Man but having a place of business or a permanent establishment (PE) on the Isle of Man will be taxed on the profit attributable to the Isle of Man establishment.
There are three rates of corporate income tax (CIT).
The 10% rate applies to income from:
1 – A banking business carried on in the Isle of Man on the basis of a deposit taking licence issued by the Isle of Man Financial Supervision Commission, and
2 – Retail activities (i.e. the sale of goods to consumers through retail premises) carried on in the Isle of Man, but only if that income exceeds 500,000 Isle of Man pounds (IMP) in the year.
The 20% rate applies to income from real estate situated in the Isle of Man.
The 0% rate applies to all other income.
What are the benefits of starting a business on the Isle of Man?
- Low taxation system
- No capital, property or inheritance tax
- 0% corporation tax for almost all revenue, but banking business can incur 10% corporation tax
- Income from real estate is taxed at 20%
- Internationally respected jurisdiction
- All leading banks and credit institutions are located within the island
- Diverse range of economic and tax models
The biggest mistakes when starting a business abroad
Many agencies and law firms do not advise comprehensively or wrongly. Learn what to look for.
Gravity of the situation
Often, these law firms think foreign companies are half-silk, tax evasion is favored and mailbox companies are the leaders rather than the exception. This is true, however, only in some start-up agencies that do not have the necessary expertise. Self-proclaimed law firms that do not employ tax accountants or lawyers usually set up companies that are unlikely to operate legally. We set up and look after companies that can withstand tax audits and that are legally operated.
Do you have to live in the country where you start a company?
You can set up a company worldwide, as long as the respective country allows you as a foreigner to acquire shares in local companies or to act as a managing director. If this is not the case trustees can be used. For example, Cyprus allows every EU citizen to own and run a business. Nevertheless, trustees can be used for the purpose of identity protection. However, it is important that the management takes place locally, in the country in which the company is to be taxable. In addition, a permanent establishment must be set up. Without these, a major tax offices around the world do not recognize the company and in the worst case would require additional payment of corporate and business taxes plus late payment surcharges. We rent you a real office and set up a permanent establishment that meets all requirements beyond doubt.
Problematic Law firms: Secrecy is not regarded.
Some law firms bind customers with toggle contracts and exert pressure when the customer wants to close his company. If you are a client of a law firm that has established a legally flawed company, they can be blackmailed. Because in the case of a fiscal problem, law firms without a license are not bound by a duty of secrecy.
Migrating to a different law firm
We receive many inquiries from customers who already own a foreign company and are looking for a new law firm. The process of changing law firm is made often difficult on purpose. Therefore, we have developed a principle of trust. If you are not satisfied with us and want to change, you can do that at any time. The necessary documents (resignation letter), you receive from us standardized after founding. You are therefore protected against unexpected costs and you are free at any time to visit another law firm. So far we have not lost any customer to another law firm.
Privacy / Firm Location
Your accounting documents are kept safe with us. In addition, all electronic data is stored encrypted and accessible only by us, which are bound to a professional secrecy. All accounting records are also stored locally only. Neither authorities nor hackers are able to access this data.
There are quite a few locations in the world that do not charge taxes on companies or individuals, or only estimate a very low flat rate tax. But this can rarely be used without corresponding change of residence. If you are a resident of any major country, the relevant double taxation agreement is decisive. Providers who promise otherwise lead them to tax evasion, which in the case of discovery usually punishes severely. We advise against setting up companies in countries that have already been blacklisted by the OECD. The foundation is usually very cheap, but the tax consequences in your origin country can be devastating. Since the introduction of the automatic exchange of information between almost all major countries, an anonymous private account no longer exists.
We comply with the following code:
- Legally secure foundations
- No unexpected(hidden) costs
- No false promises
- Finding the right solution by focusing on your requirements
With this strategy, we have been on the market since 2013 and have not disappointed any customer so far. And we prioritize it in keeping that way. We strive to ensure that every client is satisfied and does not take risks with the solutions we provide for them, but only exploits legal opportunities. Starting a company that involves doing real business is more costly than a letterbox company, but it is the only way to save on taxes without risking legal action.
What makes the Isle of Man attractive to foreigners?
Special features of income
In the case of income earned by the company outside the Isle of Man, it is not subject to income tax. However, the annual state taxes of £ 750, - have to be paid. However, once the income has been generated from transactions within the Isle of Man, the capital tax is 20%.
In the case of a resident company, both the annual accounts, the annual report and information about the directors, the shareholders and the secretary must be submitted to the Government of the Isle of Man. Subsequently, these documents are made available to the public.
Double taxation agreements
The double taxation agreement exists with the European Union, with the exception of Great Britain and North America.
Aktionäre, Direktoren und Schriftführer
Alleinaktionäre sind zwar erlaubt, in der Regel sind es jedoch meist 2 Aktionäre pro Unternehmen. Die vorgeschriebene Anzahl an Direktoren beträgt 2, wobei ein Direktor auf der Isle of Man wohnhaft sein muss. Ebenfalls ist ein Schriftführer für eine Unternehmensgründung vorgeschrieben.
Other benefits of the Isle of Man
- High banking secrecy
- Isle of Man does not belong to the EU, but to the customs territory of the European Community
The tax burden between a German company, a resident company and an offshore company in comparison.
|German GmbH||based company on the Isle of Man||Offshore Gesellschft|
|Corporation tax||15,825% including solidarity surcharge)||for domestic profits 10 - 20% tax burden||Flat rate tax on foreign profits of 750 GBP|
|Business tax||12,180 EUR (average rate of assessment in Germany 435% in 2010)||N/A||N/A|
Company formation Isle of Man - That's how it works
Are you interested in a reboot on the Isle of Man? Starting a business is straightforward because you do not have to travel to the Isle of Man as a founder.
Simply contact us via the contact form. We'll do everything else for you.