The Isle of Man is located in the Irish Sea, between Ireland and Great Britain. It is a self-governing British Crown Dependency that is not part of the United Kingdom or the European Union.
The Isle of Man is an established international business and finance center, and Investors and entrepreneurs choose to register a company in the Isle of Man because its corporate structures provide asset protection and tax reduction possibilities.
Advantages to Isle of Man Company Registration
Some of the primary advantages that bring investors and entrepreneurs to the Isle of Man are the following:
- Companies incorporated in the Isle of Man are subject to corporate income tax at a 0% rate.
- Isle of Man company registration is easy and fast.
- There is no tax to be paid on capital gains acquired from the sale of any holdings.
- The Isle of Man has maintained a successful business and investment space by making its laws simple and efficient.
- No Withholding Tax is due on dividends paid to shareholders.
- Isle of Man offers good living conditions, with low crime rates.
- It is politically and economically stable
Outlined next are the technical steps on how to incorporate an Isle of Man company.
Manx company name and registered office address
Before incorporating your company on the Isle of Man, you need to assign a name and then submit it to the Registrar of Companies for authorization.
Each company must have its own unique, distinctive name so be cautious when choosing a name.
The company must also have a registered office based in the Isle of Man.
Choose Suitable structure
The Isle of Man operates two different streams of corporate entities:
- The 1931 Act company: this is a formal corporate entity and is subject to many operational and filing requirements. It is the most common act for local businesses but is also favored by many multinational clients.
- The 2006 Act company: this is a more up-to-date entity precisely designed to allow more flexibility in its operation while still maintaining reasonable safeguards. It is mainly used for global clients as it requires a financial service license holder to act as Registered Agent which makes running costs much more expensive.
Under both the 1931 and 2006 Companies Acts there is a myriad of types of companies available:
- Company Limited by Shares,
- Company Limited by Guarantee, and
- Unlimited Company
Setup your Isle of Man Company
Before incorporating your company in the Isle of man, there are legal documents that must be prepared.
These legal documents consist of:
- the ’memorandum of association’, a statement signed by all initial Shareholders which agrees to the company being set up, and
- the ‘articles of association’ that set out how the company is to be operated, governed, and owned as agreed by the Shareholders and Directors.
Prepare the documentation and then submit it with the prescribed fee to the Registrar of Companies.
Appointments and Registers
An Isle of Man company must have a registered officer there, and this person must be licensed by the Isle of Man Financial Supervision Commission to act as a registered agent.
At least one company director must be appointed, and if you choose to set up a company that is limited by shares, there must be a minimum of one Shareholder. You can also set the initial value of the share.
Once the company has been incorporated and the directors has be formally appointed, the shares can then be issued.
Note that the registered officer will need to update the Isle of Man Government Beneficial ownership register detailing the beneficial owners. The company’s corporate registers must also be set up.
Post company Incorporation Requirements
- Opening a bank account: once the company is formed you can open a corporate bank account which will require AML (Anti Money Laundering) and KYC (Know Your Customer) laws.
- Register for Corporation Tax: once the company is incorporated, it must register for Corporation Tax in the Isle of Man. It must also Consider registering for VAT.
- Employer permit: the Company needs to apply for work permits for any non Isle of Man workers. It must also register as an Employer with the Isle of Man Tax office.
The company must also set up accounting systems, Register for data protection (optional), and set up a website to promote services
Ongoing obligations after company registration
Monthly obligations
- Bookkeeping and Bills paying: the company should keep its financial records up to date and perform bank reconciliations regularly. Most businesses also pay their suppliers monthly.
- VAT returns: if the company is VAT registered, the Company must prepare and file VAT returns with any VAT due monthly.
Annual Obligation
- All companies are obliged to pay an annual renewal fee.
- Isle of Man companies must also prepare financial statements
- Every registered business is required to file an annual declaration
- All companies in the Isle of Man are also required to file an annual return
- By the Income Tax Act 2006, companies have to prepare and submit a tax return.
If you are not a resident of the Isle of Man, you will need a professional to assist you in your company formation there.
For assistance in registering your company in the Isle of Man, let’s go ahead and contact your Damalion expert now.
