STEP

Title Research

Isle of Man

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.

STEP Isle of Man branch page

New developments
  • The Isle of Man's proactive stance in negotiating tax information exchange agreements (TIEAs) placed it on the OECD's white list of cooperative financial centres, announced following the G20 summit in April 2009.
  • A new exemption was created under new regulations limiting regulation of ’private’ charities formed without, and being prohibited from seeking, public funding. To benefit from the reduced regulation, charities must satisfy certain requirements, chiefly requiring a degree of scrutiny by the Attorney General, the preparation of audited accounts and regulated local officers, so the institution is established in the Isle of Man and amenable to supervision if necessary.
  • A full double taxation agreement (DTA) was signed with Estonia in May 2009.
  • A modified version of the system of attributing (and therefore taxing) income arising to companies to Manx resident members (ARI) is being phased in to replace the distributable profits charge.
  • The Treasury announced that, with effect from 1 July 2011, the Isle of Man's approach to the EU Savings Directive will move from allowing a choice between application of withholding tax to be applied to interest payable to an EU-resident individual and disclosure of the interest to automatic exchange of information alone.
  • The financial services legislation was consolidated into a new Financial Services Act 2008, Insurance Act 2008, Collective Investment Schemes Act 2008 and Company Officers Disqualification Act 2009. In addition, a new Anti-Money Laundering Code came into effect early in 2009.
  • In view of the banking crisis around the world, the Isle of Man modified its bank depositors' compensation scheme, increasing compensation to up to GBP50,000 for an individual and up to GBP20,000 for a charity, trust or company.
Practice trends
  • The trusts industry continues to see a move from volume business to one based on higher-value trusts.
  • Tax-driven planning is seeing a reduction in implementation of marketed ’schemes’, which have become more problematic in practice.
  • The external profile of the Isle of Man continues to grow, both among businesses and on the international stage.

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. The British pound (GBP) and the Manx pound 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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