The Isle of Man has strong banking, investment fund and captive insurance sectors, with a well-developed advisory and financial infrastructure and good transport links. Foreign Investors are attracted by the taxation structure; there are no capital gains taxes, turnover tax or capital transfer tax, no stamp duties and low rates of income tax.
The booming economy of the Isle of Man is largely due to the success of the financial services industry – the largest sector on the Island. The main activities of the sector include deposit-taking, asset protection and management, packaged investments such as unit trusts, life assurance and also corporate management.
Markets for these services are world-wide and the Isle of Man has built an exceptional reputation as a centre of excellence for expatriate banking.
The majority of banks in the Isle of Man are engaged in providing private banking services to expatriates of the United Kingdom and to foreign nationals.
The services offered by banks often extend beyond deposit taking to establishing and administering trusts and managing the underlying companies and assets held by those trusts, including investment management. A significant array of wealth management solutions have evolved to meet a growing demand.
Corporate and institutional clients, such as captive insurance companies, life assurance companies and fund managers all require sophisticated banking services – particularly in the money markets. This has led to an expansion in the continuing growth in the provision of such services.
Trends in the insurance and reinsurance markets in the Isle of Man closely follow those in the UK. Among these, a pronounced hardening of markets for commercial lines after years of declining rates has been especially noticeable. Certain lines (including, for example, cyber liability, and directors’ and officers’ liability coverage) have been particularly affected by rate increases. Among the impacts this has had in the Isle of Man, where the captive sector has always formed an important part of the local insurance industry, has been a renewed interest in the possibilities offered by captives to reduce the overall cost of cover. Also noticeable have been root-and-branch reviews of existing insurance programmes, with a view to benefitting, if possible, from new capacity that has been drawn to the markets by hardening rates and to reducing overall costs of cover through increased deductibles. Separately, initiatives to explore the Isle of Man as a domicile of choice for insurers from the EEA (in particular, Dublin and Luxembourg) wishing to carry on long-term business in the UK on a cross-border basis after a possible hard Brexit have also been a feature of the past 12 months.
Collective Investment Schemes
The general approach to CIS regulation is to ensure the protection of more at-risk investors and the reputation of institutions operating on the IOM, while limiting the regulatory burden. To this end, the acknowledgement of regulation and supervision by well-regarded overseas authorities offers a form of “leverage” of the authorities’ efforts. For example, companies and funds listed on overseas exchanges will have stringent requirements on their prospectuses and reporting imposed by those exchanges, so there is assumed to be little need for extensive additional requirements.
The Isle of Man has historically been an attractive location for hedge funds due to its stable economy, 0% rate of corporation tax and flexible corporate structuring. The island offers a wide range of hedge fund structures. The scheme utilised will largely depend on the categories of investors being targeted and the level of regulation desired.
Funds which are essentially private or “friends and family” arrangements can benefit from limited regulation without needing to have the range of regulated functionaries typically associated with regulated investment products targeted at retail investors. The Isle of Man Wealth and Funds Association is placing a particular emphasis on attracting hedge funds and hedge fund of funds to the island. In addition, the Isle of Man is a particularly favourable location for the UK Alternative Investment Market (AIM) listing of closed-end funds, particularly real estate-focused schemes.
Isle of Man Offshore Companies and their Tax Liability
An NMV can be incorporate, registered or continued under the Act as:
The key features of a Isle of Man Offshore Company Formation