ISLE OF MAN FOR BUSINESS Steve Cummins Transworld Group, Isle of Man transworldgroup.im trasworldcapital.im
Feb 09, 2016
ISLE OF MAN FOR BUSINESS
Steve CumminsTransworld Group, Isle of Man
transworldgroup.im
trasworldcapital.im
THE ISLE OF MAN Independent from UK but with strong
links
1000 year old Parliament makes its own laws
Diverse population of 80,000
Traditional Industries – Farming & Tourism
Now – International Financial Centre of Excellence
ABOUT THE IOM: EASILY ACCESSIBLE
Travel By Air•16 Destinations•Over 100 flights a day•1 hour from London City
Serviced By Air:
ABOUT THE IOM: INTERNATIONAL RELATIONS
UK Europe Rest of World• Self governing• Independent• Financially independent• Sterling currency• Common Customs & Excise Agreement - VAT
• EU Relationship governed by Protocol 3• Free movement of goods•Free movement of people• No contributions to or receipts from EU•EU Savings Directive
• Strong feedback IMF, OECD, FATF• International standard regulation• Good international citizen• Strong business links• Independent international representation
ABOUT THE IOM: A PROUD HISTORY
Oldest continuous parliament in the world – over 1,000 years Open consultative government Strong, stable economy – 25th straight year of economic growth Infrastructure investment - over £1bn in health, education, water,
communications, power, etc Gaelic welcome – diverse population of languages and cultures
WHY LOCATE IN THE ISLE OF MAN
“Simply put, we have all the elements that can support business. We believe in financial freedom, a strong but pragmatic regulatory regime and giving businesses freedom to flourish.We have a stable political system, excellent infrastructure, a strong economy and a flexible work permit system.People and businesses come to the Isle of Man because they are made welcome and because they can thrive.”IOM Government Finance Department
World Famous for TT Races
WORLD CLASS ECONOMY: BUSINESS FRIENDLY Total Bank Deposits of £50billion – Dec 2007
30,000 registered companies
Well regulated financial industry
Common law jurisdiction
Zero percent corporate tax
Tax cap for individuals
TAX REGIME – SMART TAXATION
Tax system is EU Code of Conduct compliant
Zero % rate for majority of corporations
Low rates for individuals – maximum 18%
Budgeted and sustainable tax strategy in a robust economy
Standard & Poor’s and Moody’s AAA sovereign credit rating
THOROUGH YET PRAGMATIC REGULATION Commitment to quality business and the reputation of the Isle
of Man
Regulators work in partnership with industry to develop realistic best practices
Policies developed from close work with OECD, IMF, FATF etc.
INTERNATIONAL PROFILE OF THE ISLE OF MAN Only Offshore financial centre with top ratings from OECD, FATF and Financial
Stability Forum
IMF reports 2003 and 2008
Financial Times award for Best International Territory - 2001
Winner - Best International / Offshore Finance Centre Awards 2006
Winner - European Financial Centre of the Future Awards 2005 (The Banker)
Standard & Poor ‘AAA’ Rated
• FBI Compliments Island – February 2001“…a well-regulated financial industry, money-laundering regulation and…demonstrates the need for global law enforcement co-operation”
IOM: A COMPETITIVE LOCATIONCayman Dublin Channel
IslandsIsle of
ManSquare Miles 22 12 150 225Population 40,000 1.5 million 160,000 75,000Detached House Price
£1.2 million
£750,000 £600,000 £300,000
Average Fund Accountant Salary £55,000 £40,000 £40,000 £30,000Staff Turnover N/A 50% 30% 7%Average length of time for work/housing permit
3 months N/A 1 month 4 days
Corporate Tax Rate Zero 12.5% 20% (Changing
)
Zero
SUMMARYA World Class Economy
Self Governing Crown Dependency
Stable & diversified economy
Standard & Poor’s and Moody’s AAA Sovereign credit rating
Political stable for 1000 years
Diversified Sectors
A Place for Business• Easy access to London & EU• Common VAT area with UK and EU• Tax neutral with 0% taxation for all corporations except banking activity 10%
rate• Corporate Re-Domicile provisions• Leading Non UK AIM listing with GBP9.3bn• Excellent IT and power• Financial Assistance Scheme for new businessAs a Place to Live• Low personal tax rate (max 18%) with generous allowances• Excellent education systems• Flexible work permit system• Affordable housing• Low crime
BUSINESS STRUCTURES Companies
Standard Company New Manx Vehicle Limited Liability Company Protected Cell Company
Trusts Discretionary Life Interest Accumulation &
Maintenance Various Others
1931 COMPANY
The standard Isle of Man Company Each company has a memorandum and articles
of association (incorporation) Types include
Public companies, which must file accounts Private companies, which cannot offer shares to the
public Companies limited by shares Companies limited by guarantee Unlimited companies.
Commercial companies are usually limited liability companies having a share capital.
NEW MANX VEHICLE
NMV, under the Companies Bill/Act 2005, will be possible minimal registry filings unlimited capacity, but restricted objects permissible no capital maintenance requirements (subject to solvency) no authorised capital shares of no par value possible redemptions and purchases of shares distribution of income and capital possible (subject to solvency) no financial assistance prohibitions
in general no annual return requirements requirement for a registered agent corporate directors permitted within certain limits no prescriptive accounting requirements
LIMITED LIABILITY COMPANY
Based on the “Wyoming”legislation
Main purpose was for tax reasons Has limited liability and corporate personality but is taxed as if it were a partnership.
Popular as a simple form of business vehicle the members can also manage the company no separation of ownership and management as with other forms of company.
The main characteristics of the LLC Liability is limited to the amount of capital contribution made by the members there is no share capital as such. Members have the right to manage the LLC in relation to their capital contribution or they can appoint a manager There are no Directors Taxation
members pay income tax on their share of the profits, however if the LLC is owned by non-resident members and has no Manx-sourced income then it may be exempt from all Manx taxation.
LLCs may exist for an unlimited period Automatically be wound up on the death, resignation or disqualification of a member If there are two or more members remaining then they can resolve to continue
CORE
CELL
UCTION
CELL CELL
CELL
CELL
PROTECTED CELL COMPANY
PROTECTED CELL COMPANIES (PCCS)
Basically a standard company limited by shares Separated into legally distinct ‘cells Each cell has its own proportion of the overall share capitalof the PCC, Each cell’s assets, liabilities and tax liabilities are kept separate from each other cell. Shareholders can own an entire cell but at the same time only own a small proportion of the PCC as a whole.
The PCC is a separate legal entity.
The separate cells created by the PCC do not become legal entities separate from the PCC itself.
Cells are created by the PCC for the purpose of protecting ‘cellular’ assets using the provisions contained in the PCC Act.
Cellular assets are the assets represented by the proceeds of cell share capital, and all other assets attributable to the cell.
Initial use Captive insurance Funds Collective investment schemes PCC structures can be particularly useful in allowing ring
Useful Ring fencing of individual client or intermediary assets Provides a layer of risk management not afforded to these schemes previously, and this could prove to be attractive
to high net worth clients.
ACCOUNTANCY AND AUDITING
Recognised bodies The Institute of Chartered Accountants in England and
Wales; The Institute of Chartered Accountants in Scotland; The Institute of Chartered Accountants in Ireland. The Chartered Association of Certified Accountants; and The Chartered Institute of Public Finance and Accountancy.
Financial Supervision Commission may authorise a person to act as an auditor of a private company.
AUDIT EXEMPTION
Criteria is similar to those used in the United Kingdom. A company can be an audit exempt company if it meets two
of the following criteria: its annual turnover is £5.6million or less; its balance sheet total is £2.8million or less; its average number of employees is 50 or fewer.
TAXATION
TAXATION - PRINCIPLE TAXES
DIRECT TAX =INCOME TAX Resident individuals and companies are subject to Manx income tax on their
worldwide income.
INDIVIDUALS BASIC RATE AT 10% HIGHER PERSONAL RATE 18% CAPPED per individual £100,000-00
Corporate STANDARD RATE 0% BANKS 10% PROPERTY COMPANIES 10%
Value added tax Basic rate 17.5% Low rate 5% Zero Rate Outside United Kingdom Exemptions
Customs and Excise duties
TAXATION - Indirect Taxes
Isle of Man does not levy: Corporation tax or advance corporation tax Capital gains tax Capital transfer or gift taxes Wealth taxes Stamp duties Death, estate or inheritance tax
TAXATION - Other
ALTERNATIVE INVESTMENT MARKET (AIM)
Isle of Man- over 50 companies listed on AIM 15 companies in the AIM 100 The Isle of Man has more high performing companies listed
than any jurisdiction other than the UK (the next jurisdiction only has 6).
ALTERNATIVE INVESTMENT MARKET (AIM)
General rate of corporate income tax 0% No capital gains or stamp transfer taxes Not a regulated entity Shares can be traded through CREST without the need to use depositary
receipts NMV is a new simple and flexible corporate structure
Removal of capital maintenance requirements Less prescriptive prospectus requirements
The Isle of Man is a common law jurisdiction in which company and trust law is closely aligned to that of England and Wales
Security concepts are the same as in England and Wales The provision of company administration services is a regulated activity on the
Isle of Man
Lawyers increasingly using IOM Capacity for new business Speed and flexibility Highly cost effective Strong skill base/fund expertise Reputation for quality – key to Institutional Investors ….a growing success story…
THE QUALITY INTERNATIONAL AIM VEHICLE
THE BROWNE CRAINE GROUP
BROWNE CRAINE & CO
Newest member of TIAG – April 2008
Over 25 years of success
Wide variety of services & clients
Based in the Isle of ManOur Offices – Burleigh Manor, Douglas, Isle of Man
PEREGRINE CORPORATE SERVICES
PROVIDING HIGH QUALITY BESPOKE SERVICES TO COMPANIES AND TRUSTS SINCE 1986
PEREGRINE CORPORATE SERVICES
THE SERVICES
Companies – Incorporations
– Fully managed
– AIM listings
Trusts – Establishment
– Provision of Trustees
COMPANIES
Why Isle of Man? Zero % Tax for majority VAT registration as though UK A strong reputation Access to EU markets IOM resident directors not
required Robust regulation
IOM COMPANIES - USES TRADING
HOLDING
CONSULTANCY
PROPERTY
• INTELLECTUAL PROPERTY
• SHIPPING / YACHTS
• PRIVATE AIRCRAFT
• FINANCING
CONSULTANT / SPORTSPERSON / ENTERTAINER
InvoiceIOMCompany
CountryX
Non-residentIndividual
Funds
Funds
CASE STUDY - CONSULTANCYPerformer / Sportsman / Consultant
Individual works on several short term contracts all over the world.
IOM company bills their clients – incl VAT if required. IOM company pays no tax on income. IOM company distributes profits as and when required
to shareholders. Depending on tax rules in home country, profits can
accumulate tax free in IOM company.
TRADING COMPANY
GOODSCountryB
IOMCompany
InvoiceInvoice
CountryA
Funds Funds
CASE STUDY – TRADING COMPANY
International Trading Company
Goods sold from Country A to Country B. IOM company issues invoice Country B. Country A invoices IOM company at lower
price.
Profit is isolated in IOM Company at 0% tax on profits
Care required – Transfer Pricing / CFC’s
PROPERTY COMPANY
Rental Income
IOMCompany
UKProperty
IOMBank
Purchase
Finance
CASE STUDY – PROPERTY COMPANY
Property CompanyUK Shareholder invests in an IOM company to purchase UK
property as he plans to leave UK in future.
IOM company borrows from a bank in IOM – several major banks & many contacts.
IOM company pays no tax on rental income in IOM, but will pay tax in UK – Peregrine area of expertise.
Property sold in future when shareholder has left UK. No capital taxes on disposal for IOM company. Depending on tax rules in new country of shareholder, capital
taxes may be avoided.
SHIPPING AND AIRCRAFT REGISTERS
SHIPPING REGISTER
Historical shipping register, since 1786 1984 – established as an International Register Developed and respected shipping sector Steady growth of register and sector 2003 – introduction of commercial yachts Developing yacht sector Centre of excellence – ships and yachts
GROWTH OF SHIPPING REGISTER
0
50
100
150
200
250
300
350
400
450
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
No o
f Ves
sels
Year
Superyachts
Ships
WHY ISLE OF MAN? Political and Economic stability Secure financial Jurisdiction Quality of Register and shipping centre Low cost – no annual dues Corporate vehicles and tax structures Supportive and pro-active government Customer focused registry/survey teams Pragmatic approach to regulation British Flag which is not the UK
AIRCRAFT REGISTER Planned in 2005 - to mirror and complement Isle
of Man register for commercial yachts
Opened for business 1 May 2007
Private & corporate only, not commercial air transport
Offers unique M-registration (e.g. M-MANX)
No insurance premium
European time zone
Helpful, flexible and pragmatic approach
Cost effective and high quality register
WHERE NEXT?• Space industry – Public & Private
• IOM owns satellite orbiting slots
• Space University in IOM
• Forward-thinking attitude of Government & Industry
COMPANIES – OUR SERVICES
5 qualified accountants as directors of your company Well regulated location with strong reputation Provision of directors/services to AIM listed companies
• Incorporation of companies• Full management & control
OR• Incorporation & support• Not just IOM, other
international companies
TRUSTS - INTRODUCTION Used since 10th Century Wealth protection Assets entrusted to associates = TRUSTEES Trustees act for the benefit of the
BENEFICIARIES Legally recognised arrangement
TRUSTS - STRUCTURE
SETTLOR
TRUSTEES BENEFICIARIES
Assets Can decide
TRUSTS – USES
Estate and inheritance planning – avoid probate
Provision for family members/employees
Protection of assets
Tax advantages if long term financial gains expected
Charitable reasons
TRUSTS - DIFFERENT TYPES Discretionary - letter of wishes
Interest In Possession – life tenant
Accumulation & Maintenance – children & grandchildren
Purpose Trusts – Law since 1996, Independent enforcer required
Will Trusts – additional inheritance planning
TRUSTS – CASE STUDY
Lifetime Income
SETTLORGrandparent
AssetsOn Death
Assets
BENEFICIARYChildren
TRUSTEETrust Fund
BENEFICIARYGrandchildren
TRUSTS – CASE STUDY SETTLOR - Grandparents settle investments into Trust TRUSTEES - Become legal owners and take responsibility
for investments. Settlor provides guidance to Trustees via a Letter of
Wishes Income from investments used to provide regular
income to children during their life - BENEFICIARY Upon death of children, assets pass to Grandchildren -
BENEFICIARY
TRUSTS – WHY ISLE OF MAN?
Trust service providers regulated High standards and expertise History of Trust law – Statute & Common law Foreign laws re transfer of assets excluded No statutory requirement to notify beneficiaries No Tax providing no Manx income or beneficiaries