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Isle of Man Exempt Corporation
The Isle of Man has been a British Crown Dependency since 1866 with a democratically elected self-government.
Originally colonized and subject to Norwegian control it became part of the Kingdom of Mann and the Isles. Years later it became a colony of the English and Scottish crowns.
In 6500 BC, The Isle of Man separated from Britain and Ireland, but remained under British dominance ever since.
All corporations in the Isle of Man are regulated by three Acts (laws) that dictate how different types of corporations are formed and maintained. The three Acts are:
- LLC Act Company;
- 1931 Act Company ; and
- 2006 Act Company.
There are several benefits to an Isle of Man Exempt corporation including:
• Tax Exemptions: Isle of Man Exempt corporations are exempt from taxes from trading and investment activities. However, U.S. citizens and those residing in countries who tax worldwide income must declare all of their income to their tax authorities.
• Easy Registration: It is relatively easy to register in the Isle of Man. The documentation is straightforward, and the process for incorporation is relatively easy and efficient. It can take as little as two days to register an Isle of Man Exempt corporation.
• No Required Minimum Capital: There is no required minimum up-front capital to register an Isle of Man Exempt Corporation. This fact offers new start-up companies a great deal of freedom and affordability.
• UK Customs and Excise Taxes: The Isle of Man has a customs and excise agreement with the UK. This means that for customs, most excise duties, and VAT, the two territories are treated as one.
• Single Shareholder: Only one shareholder is required for incorporation in the Isle of Man.
• Privacy: Isle of Man Exempt corporations offer plenty of confidentiality and privacy. Nominee directors and shareholders can be appointed to keep information off of public records.
• Bearer Shares: Shares for an Isle of Man Exempt corporation can be issued as both registered and bearer for additional privacy for their shareholders.
• No Annual Records: Exempt companies in the Isle of Man do not need to keep annual records with the government.
• Less Bureaucracy: Statutes in the Isle of Man are less bureaucratic than British or Irish equivalents.
• Educated and Skilled Workforce: The English speaking workforce in the Isle of Man is both well-educated and skilled.
Isle of Man resident corporations usually pay a flat corporate tax rate of 20%. However, for offshore corporations where there is no beneficial ownership by an Isle of Man resident, the 20% tax rate does not apply. This rule is true even if the management and control is performed by a local nominee on behalf of an offshore owner.
Therefore, to achieve tax exempt status in the Isle of Man the corporation must demonstrate that beneficial ownership does not exist with an Isle of Man resident. In addition, no business can be engaged within the Isle of Man.
In lieu of local taxation, the exempt corporation must pay an annual exempt duty of Sterling £450 plus a filing fee of £50. Exempt corporations are excellent for passive business activities like holding property which are not used for trading or commercial activities.
An Isle of Man Exempt corporation can expect a yearly renewal payment of 2,380 GBP (This fee includes the cost of a registered agent, secretary and office, the provision of nominee directors and the annual filing fee).
An Isle of Man Exempt corporation provides privacy. Nominee shareholders and directors can be appointed to retain confidentiality of corporate names and other information.
Accounting and Audit Requirements
An Isle of Man Exempt corporation must file an annual return. This annual return needs to be filed by the registered agent, and approved by the directors of the corporation.
Isle of Man Exempt corporations do not need to prepare annual accounts. However, the Isle of Man registered agent needs to manage and retain the corporation’s regular accounting records.
An offshore corporation will not be audited if it has two of the three following conditions:
– its average number of employees is 50 or fewer
– its balance sheet total is 2.8 million GBP or less;
– its annual turnover is 5.6 million GBP or less
Annual General Meeting
An annual general meeting is required for an Isle of Man Exempt corporation.
Time Required for Incorporation
An Isle of Man Exempt corporation can expect the process to take about two business days. However, the actual time of registration depends on the efficiency of the corporate name registration process, as well as, how accurately the applicant completes its registration documentation.
Shelf corporations are not available.
There are several benefits to an Isle of Man Exempt corporation including: some tax exemptions, easy registration, one shareholder to incorporate, no minimum required capital, privacy including the issuance of bearer shares, less bureaucracy, no annual records filing, and an educated skilled workforce.