Marcus Cake

The Isle of Man is a world class financial centre. I recommend the Isle of Man Finance web site for more information. It is a very competitive offshore offering, but may be less flexible and more expensive than other “offshore” jurisdictions. Amongst other requirements, an Isle of Man company has to have at least one resident director and a resident company secretary. This is about to change. The Isle of Man is about to introduce the “New Manx Vehicle” (”NMV”) company structure. The NMV has many of the attributes of the International Business Companies of the BVI and other offshore jurisdictions.

“… the Isle of Man is a Crown Protectorate. It is not part of the United Kingdom or the European Union but nevertheless, under Protocol 3 above, is part of the Customs Union. Therefore, there is complete freedom of trade between the Isle of Man, the United Kingdom and other parts of the European Union. In addition, unlike any of the Channel Islands, it is considered part of the UK for VAT collection purposes. Under the mutual Customs Union Agreement, the Isle of Man imposes, save in certain circumstances, an identical 17.5% VAT rate to that of the UK. In other words, the Isle of Man can be an ideal location to register a trading company requiring a genuine EU VAT ‘number but also wanting full corporate tax exemption.” - SCF Group Isle of Man profile

In April 2006, a 0% corporate tax rate came into effect for Isle of Man companies. The Isle of Man is a highly regarded finance centre, competitive jurisdiction for E-Business and is regularly chosen as a base for international companies to list companies on the :aim: stock exchange. It is also part of the EU for VAT purposes as a result of its “special relationship” with the UK. This can avoid issues with the EU’s E-Business directive. Unfortunately, the NMV may not be available until September 2006 and may be delayed into 2007.

I was fortunate to visit the Isle of Man in September 2005. The Isle of Man E-Business unit arranged meetings in advance with numerous senior government executives in multiple departments. As an unknown entrepreneur, I was pleasantly surprised by the seniority of the people I was able to meet. There seemed to be a pervasive and common interest amongst all people that I met (private and government) to advance the interests of the Isle of Man. They made themself available as a result. All government executives were exceptionally helpful and were able to answer my questions specifically, decisively and with certainty. The introduction of the NMV will remove the reservations I had about the Isle of Man.

If you want to learn more about E-Business in the Isle of Man, I recommend visiting the Isle of Man E-Business unit web site and reading the “e-Business Strategy – five years on” report published on 21st March 2006. Cains law firm also provides an “International business guide to the Isle of Man“.
I have extracted some comments below to provide further information about the NMV.

Sovereign report, October 2005

“Last year in the BVI, the leading incorporator of offshore companies, 60,000 new companies were put on the register. By contrast, the Isle of Man registry incorporated 2,593 new companies. This disparity can partly be explained by the fact that BVI companies are much cheaper to incorporate and easier to administer. This NMV seems designed to compete with the BVI product, but has the added advantage of a European location, some coincidental business hours with the Far East and a blue chip reputation.”

“The Isle of Man Government published, on 2 August [2005], draft legislation for the creation of a new Manx corporate vehicle, the “NMV”. The new legislation has been prepared, after close examination of the vehicles available in other onshore and offshore jurisdictions and is designed to be simple and inexpensive to administer and to meet international obligations.”

“In particular, the new structure will remove the requirement to have Isle of Man-based directors and company secretaries and, in some cases, for annual returns. The consultation document states: “The conclusions to date are that corporate directors should be permitted within certain limitations, annual returns should only be required for companies undertaking business locally, and that the provision of corporate administration services to an overseas company should not result in a place of business being established in the Island.”

“The proposed NMV will not require an annual general meeting, authorised share capital, or a capital maintenance requirement. It will provide for a simple redomiciliation procedure and shares of no par value. Unlimited capacity but restricted objects, and protected cell companies will be permissible. There will be no financial assistance prohibitions.”

Detailed information on current Isle of Man companies is available here.

BUDGET 2006 TREASURY MINISTER’S SPEECH 21 February 2006

“One of the results of the efforts of both Government and the private sector has been the recent accolade from the highly respected publication, ‘the Banker’, which has voted the Isle of Man its “European Finance Centre of the Future”, with the Island coming second only to Singapore in the World Finance Centre category.”

“We have diversified our economy into areas such as films, space, marine administration, e-gaming and other e-commerce related activities. More companies are using the Island’s reputation as a stable and well-regulated economy to apply for Alternative
Investment Market listings on the London Stock Exchange.”

“E-Business is also a key growth sector for the Island. Within E-Business, E-Gaming has enjoyed rapid growth in the past year. The Isle of Man is now positioned as one of the top jurisdictions for E-Gaming activities based on our reputation of being a well regulated, low tax environment, having a world class telecommunications infrastructure and being increasingly responsive to the industry’s needs. This has resulted in the relocation to the Isle of Man of companies from a range of different jurisdictions around the globe.”

“The Treasury and all other concerned parties, including the Financial Supervision Commission, are actively working towards the introduction of a new type of company in the Isle of Man, often referred to as ‘The New Manx Vehicle’. The drafting of this Bill is almost complete and I am confident that it will receive Royal Assent during this session.”

Treasury team go clubbing in London, Telegraph, 7th February 2006

Extract:

“The Isle of Man Treasury and Isle of Man Finance, the Treasury’s international business promotion arm, are providing a staffed Isle of Man Finance office, together with meeting rooms earmarked for use by Manx companies.”

“The office complex also includes a grand Victorian club room for both discreet and informal discussions. It is the first time the Isle of Man has set up a permanent office outside the island.”

“Number 1 Cornhill, with its distinctive dome, is opposite Bank Station and in easy reach of London City, Gatwick and Luton airports.”

With the NMV, the Isle of Man is a compelling offshore proposition (particularly for European E-Business). The opportunity to use “meeting rooms earmarked for use by Manx companies” in the Isle of Man’s London office is an innovative marketing tactic.