• Isle of Man Tax System

  • TAX RESIDENCY

    Tax Residency

    A company incorporated in the Isle of Man is considered to be tax resident in the Isle of Man by virtue of its incorporation.

    A company incorporated outside the Isle of Man is considered to be tax resident in the Isle of Man if its management and control is exercised in the Isle of Man.

    Taxable Basis

    Isle of Man tax resident companies are taxed on their worldwide income.

    Non-Isle of Man tax resident companies are taxed only on income generated in the Isle of Man.

  • TAX ADMIN

    Taxable Period

    The taxable period for a company in the Isle of Man is its accounting year.

    Tax Returns

    Every company needs to submit an annual tax return within 12 months and one day of the year-end.

    Tax Assessments

    The Tax Authorities have 4 years to issue an assessment if they consider that the tax return is incorrect.

  • CORPORATION TAX

    Corporation Tax

    The income tax rate in the Isle of Man is 0% for all companies except for licensed banks with deposit-taking activities, which are taxed at 10%, and income from immovable property located in the Isle of Man (irrespective if the owner company is taxed at a lower rate), which is taxed at 10%.

  • DIVIDENDS

    Dividends from Foreign Investments

    Dividend income of an Isle of Man company is taxable, however under the 0% income tax rate no tax arises.

    Dividends from Local Investments

    Dividend income of an Isle of Man company from another Isle of Man company is not taxable in the Isle of Man.

    Withholding Tax on Dividends

    Dividend payments by an Isle of Man company to a foreign shareholder (company or individual) does not suffer any withholding tax.

    Dividend payments by an Isle of Man company to another Isle of Man company does not suffer any withholding tax.

  • INTEREST

    Interest Income

    Interest income (other than for banks) of an Isle of Man company is taxable, however under the 0% income tax rate no tax arises.

    Interest Expense Deductibility

    Interest expense is tax-deductible only if incurred wholly and exclusively for the generation of income.

    Withholding Tax on Interest

    Isle of Man does not impose any withholding tax on payments to foreign recipients.

    There is no withholding tax on the payment of interest by one Isle of Man company to another Isle of Man company.

  • ROYALTIES

    Royalty Income

    Royalty income of an Isle of Man company is taxable, however under the 0% income tax rate no tax arises.

    Royalty Expense Deductibility

    Royalty expense incurred wholly and exclusively for the production of income is allowed as tax-deductible.

    Withholding Tax on Royalties

    Isle of Man does not impose any withholding tax on royalty payments to foreign recipients.

  • TAX LOSSES

    Ordinary Tax Losses

    Ordinary tax losses can be carried forward indefinitely and be set-off against taxable income of future years.

    Ordinary tax losses can be also carried back one year and be set-of against taxable income of the previous year.

    Group Relief

    The Isle of Man tax system allows for Isle of Man resident companies to form a group for tax purposes whereby tax losses may be transferred between members of the tax group.

    A tax group is created when:

    • One company holds directly or indirectly more than 75% of the share capital of the other company.
    • One company owns directly or indirectly more than 75% of the share capital of two other companies.
  • CAPITAL GAINS

    Disposal of Shares by Foreign Shareholder

    The disposal of shares of an Isle of Man company by its foreign shareholder is exempt from taxation in Isle of Man.

    Capital Gains

    There is no capital gains tax in the Isle of Man. Capital gains are not included in the taxable income of the company.

    Capital Losses

    Capital losses are not tax-deductible since there is no capital gains tax.

  • PARTNERSHIPS

    Partnership Profits

    General and Limited partnerships are treated as transparent entities for tax purposes which means that their profits are taxed directly in the hands of each partner.

  • BRANCHES

    Branch Profits

    The profit of an Isle of Man Branch generated in the Isle of Man is taxable in the same manner as Isle of Man companies.

    There is no tax in the Isle of Man on the remittance of the profit of an Isle of Man Branch to its foreign head office.

  • STAMP DUTY

    Stamp Duty

    There is no stamp duty in the Isle of Man.

  • CAPITAL DUTY

    Capital Duty

    There is no capital duty in the Isle of Man.

  • VAT

    VAT Taxable Transactions

    VAT is levied on the supply of goods and services.

    VAT Standard Rate

    The standard rate of VAT is 20%.

    VAT Reduced Rate(s)

    The reduced rates of VAT are 5% (fuel and power for domestic use and installation certain energy-saving materials), 0% (exports of goods, international services, food, water, books and newspapers and passenger transport).

    VAT Exempt Transactions

    Transactions in land, financial and insurance services, betting and gaming, health and education are exempt from VAT in the Isle of Man.

    VAT Registration Threshold

    The registration threshold for VAT purposes in the Isle of Man £83,000.

    VAT Filing & Payment

    Filing of VAT returns and the payment of VAT liability is made every 3 months.