Juridictions : Isle of Man

General Information

Isle of Man does not have IBC. There are tree basic types of Isle of Man Company:

• The Exempt company
• The Resident Company which is to all intents and purposes resident in the Isle of Man for income tax and pays tax at a rate of 20% on its world-wide profits.
• The Non-Resident Company whereby management and control of the company is exercised with the Isle of Man.

Most offshore investors using the Isle of Man prefer the private limited company formed with share capital because there are no restrictions on share transfer, bearer shares can be issued, names of beneficial owners do not have to be disclosed in most cases, and accounts do not have to be filed at the general Registry or presented at the annual meeting. Capital structure in the Isle of Man is extremely flexible: a private or public company can be limited by shares; by guarantee; or by shares and guarantee (a hybrid entity in which members do not have to be share holders but are elected to membership). This hybrid is often used for timesharing in vacation homes and can also be useful for trusts and in tax planning. A company formed with share capital may also be formed with unlimited liability.

The Exempt Company

The essence of this type of Company is that exemption from liability for Income Tax in the Isle of Man is granted on the understanding that income generated by the company is derived from sources outside the Island and also for owners who reside outside the Island as well. Therefore, in licu of being assessed for Isle of Man income tax, an exempt Company pays a flat fee of £300 Sterling, irrespective of the level of profits generated. It should be noted that this fee is not pro rated depending on the time of year the application is made.

Restrictions

An Exempt company may not be a public company, and may not engage in trade or business in the Isle of Man, nor may it carry out any banking, deposit taking, insurance or other licensable activity in the Isle of Man or elsewhere. No resident of the Isle of Man is allowed any interest in an Exempt company.

Non-Resident Tax Issues

Non-resident Company has to pay £660 per annum. These payments are in lieu of tax.

Corporate Name

Approval of a company name must be obtained in advance from the Registrar of Companies, who consults with the Financial Supervision Commission.

Application for name approval to the Isle of Man Registry can be made and the name is reserve by the Registrar of Companies for a period of 30 days. At the end of the end of the 30 days, the same name can be re-aplied for if need be for a further period of 30 days.

Any of the following words must be part of the name of an Isle of Man IBC:

• Limited (the complete name; no abbreviation).
• Corporation
• Incorporated

Any of the following words or abbreviations cannot be included:

• Global or any geographic names.
• International.
• The abbreviation of Limited (Ltd.).
• World-wide.
• Any connection with the British Crown or the Royal Family.
• An Inaccurate use of such words as “Bank”, “Investment Trust” or “Tynwald”.