Isle of Man - Substance over style. (Or Mann of Substance?)

Following the review carried out by the EU Code of Conduct Group on Business Taxation (“COCG”) and the subsequent release of the proposed Income Tax (Substance Requirements) Order 2018, there has been an increase in the number of businesses looking to restructure and re-domicile companies to the Isle of Man.

Following the review carried out by the EU Code of Conduct Group on Business Taxation (“COCG”) and the subsequent release of the proposed Income Tax (Substance Requirements) Order 2018, there has been an increase in the number of businesses looking to restructure and re-domicile companies to the Isle of Man.

Substance requirements stress that companies must be able to demonstrate that they have a sufficient economic presence in the country where they are established. Evidence could include a permanent dedicated office in the jurisdiction, local employees, connections with local professional firms, proof of management and control in the jurisdiction and supporting documentary evidence such as minutes, contracts and agreements in place. In circumstances where it may be difficult to demonstrate the above, businesses may look to re-domicile to jurisdictions with the infrastructure & skills base to satisfy the requirements.

As an Island of 221 square miles, a population of 84,000 people and excellent transport links to the UK and beyond, the Isle of Man is the ideal location for companies to re-domicile from other jurisdictions. The Isle of Man has an excellent reputation as a financial centre and it also boasts predominately 0% corporation tax, no inheritance tax or stamp duty.

Why re-domicile?

Although it is straight forward to incorporate a new Isle of Man company, re-domiciliation offers businesses consistency - minimising disruption and allowing them to retain Assets, employments (where applicable), contracts & agreements in place without the additional time & cost of assignment/transfer.

Companies looking to re-domicile do require their existing jurisdiction to allow the transfer, and all have an equivalent legislation. From there the process is straight forward and cost effective.

From an Isle of Man perspective, an application must be made to the Company Registry including:

  • the company name, original jurisdiction and details of the Isle of Man Agent to be appointed;
  • a copy of the articles of association of the company;
  • a legal opinion confirming that the company has complied with legal requirements;
  • a declaration of solvency signed by the company directors; and
  • filing fee of £100.00.

We are members of TAG Alliances and IR Global who both have member firms worldwide that Peregrine can liaise with, including local advisors who can assist with the drafting/filing of the special resolution required signifying the company re-domiciliation as well as any notices that may need to be published in local newspapers.

With the drive for best practice as well as the proposed penalties associated with the failure to meet Substance requirements coming into force, now is the perfect time for businesses to review structures and ensure they are compliant.

If you would like to learn more about the re-domiciliation process please contact James McKenna at 01624 626586.

Peregrine Corporate Services Limited is licensed by the Isle of Man Financial Services Authority.

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