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Isle of Man

ISLE OF MAN

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New Developments
  • Following concerns that the Isle of Man's attribution of income of companies to Manx-residents (ARI) under its 'zero-ten' corporate taxation regime would be found 'harmful' under the European Union Code of Conduct for Business Taxation, the Isle of Man announced that the ARI regime would be withdrawn from 6 April 2012.
  • Legislation enabling the creation of foundations in the Isle of Man (a common-law jurisdiction, and therefore a 'trust' jurisdiction) has been passed. At the time of writing, Royal Assent was still awaited, but was expected imminently and it was expected to be possible to create foundations under Manx law before publication.
  • The Isle of Man has passed additional legislation allowing pension funds to be transferred to a scheme in the Isle of Man from other jurisdictions. Section 50C of the Income Tax Act 1970 enables a scheme to be created under which 70 per cent of tax-relieved funds (treated by the Assessor of Income Tax as the transfer value into the Manx scheme) must be used to fund an income for life but allowing the balance to be paid put as a capital sum. Following review by HMRC, this was confirmed as being acceptable under the QROPS legislation in the United Kingdom for section 50C schemes to qualify as QROPS schemes.
Practice Trends
  • Private trust business remains limited, except where there are particular circumstances or higher values involved.
  • Pensions (EFRBS, QROPS and QNUPS) have developed an enhanced role. Aggressive planning with employee benefits (not necessarily in the Isle of Man) has led to less certainty as to some aspects of this area than there was previously, but sound planning remains secure.

1. Introduction

A. History And Background

The Isle of Man (population approximately 80,000) is located in the Irish Sea. In the tenth century, it was settled by Vikings who established a Norse form of government and laid the island's foundations as an independent jurisdiction. The Isle of Man is not part of the UK or the European Union (EU) but is a British Crown Possession. The Queen, as 'Lord of Mann', is head of state. The island has its own elected government, independent judiciary and laws. The UK is responsible for defence and international relations.

The currency is the Manx pound (IMP). The British pound (GBP) and the IMP have parity.

B. Legal System

Tynwald is the Manx legislature. The island is a common law jurisdiction. The common law generally follows English law, including equity. Decisions of English courts are not binding on Manx courts, but are highly persuasive.

The principal civil court is the High Court (of which the judges are 'deemsters'). The main appellate court is the Staff of Government Division, but ultimate appeal lies to the Privy Council based in England. There is a separate criminal legal system.

Editorial Board
John Rimmer TEP
Appleby, Douglas, Isle of Man

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