Why use the Isle of Man for multi-asset class and cross-border wealth structuring

With society facing challenges and uncertainty not seen on such a global scale for generations, many business owners, wealth creators and entrepreneurs are reflecting on their wealth structuring arrangements and, in particular, their choice of wealth structuring jurisdiction.

The Isle of Man has been a leading international finance centre for decades.  Situated in the Irish Sea between England and Ireland, the Isle of Man is a self-governing British Crown Dependency and is part of the British Commonwealth.

Known for its rugged coastline, medieval castles and rural landscape, the Isle of Man is home to the oldest continuous parliament in the world, the High Court of Tynwald, of Norse origin and over 1,000 years old.

With a long history of political and economic stability, the Island is free to enact its own laws, direct taxation rates and drives a bespoke fiscal and economic agenda, separate to those of the United Kingdom or European Union.  The Isle of Man is currently treated as part of the United Kingdom for customs, excise and VAT purposes under an agreement between the two jurisdictions.

The Isle of Man is a common law jurisdiction with a progressive legal framework that is very much based upon English law.  This familiarity has helped the Island develop its reputation as a jurisdiction of choice for private client wealth structuring matters over many years.

Regulation and recognition

Financial services providers from the Isle of Man are regulated and overseen by the Isle of Man Financial Services Authority (IOMFSA), an independent statutory Board that has been created by the Isle of Man Government.  The provision of trustee, corporate and fund services – so often key components of any wealth structuring plan – are regulated activities here on the Island. In addition, the IOMFSA has oversight responsibility from an anti-money laundering and countering the financing of terrorism perspective across certain Designated Non-Financial Businesses and Professions (DNFB) that incorporates certain advisory services.  These include legal professionals, accountants and tax advisors, amongst others, and this regulation all adds to the credibility of the Isle of Man and its financial and professional services sectors.

Recently awarded as ‘Best International Finance Centre’ at the 2020 ‘International Investment’ Awards for the third time in the last four year and shortlisted for ‘IFC of the Year’ at the 2021 Citywealth Awards, the Island is home to over 300 regulated financial services firms.  With such an award winning, well established and diverse network of professional services and advisors, the Island is ideally placed to assist with multi-asset class and cross-border wealth structuring.

Economic stability, diversification and flexibility

The Isle of Man Government has made significant progress in diversifying the Island’s economy over recent years and alternative sectors include e-business, e-gaming, aviation and marine, aerospace, and niche manufacturing.  This has all contributed to an Aa3 stable rating from Moody’s (October 2020), that is equivalent to the United Kingdom.

Taxation rates are favourable when compared against other jurisdictions. Manx resident individuals are subject to income tax on their worldwide income at a maximum of 20% and personal allowances do apply.  An individual can elect for the tax cap at £200,000 but this must be for a five year term.  Non-residents with Manx source income are liable to tax at 20%.  The majority of Isle of Man companies are subject to corporation tax at the rate of zero percent.  There is no stamp duty, capital gains or inheritance taxes applied in the Isle of Man and all of these factors can make the Island attractive for relocation and residency purposes, business establishment or the home jurisdiction for a wealth structuring arrangement.

With a range of flexible structuring arrangements and corporate vehicles, covering both open and closed ended investment arrangements, there is a choice available where there are private equity investors or a stock market listing is being considered.  Isle of Man incorporated entities have a proven track record of listings on London’s Alternative Investment Market (AIM) and other recognised international exchanges.

At a practical wealth structuring level, the Island has favourable and well-established legislation governing the establishment and administration of trusts (including private trust companies), corporates, foundations, partnerships and fund arrangements.

Transparency, cooperation and protection

As a progressive and responsible jurisdiction, the Isle of Man has signed a number of Tax Information Exchange Agreements with other countries.  It is also a Foreign Account Tax Compliance Act and Common Reporting Standard reporting jurisdiction.  Most recently the Isle of Man has collaborated with the Channel Islands, in response to the EU Code of Conduct Group for Business Taxation findings, to enact economic substance legislation from 1st January 2019 for companies that operate in certain sectors and areas that are viewed as being potentially geographically mobile.

The Isle of Man’s proactive approach to tax transparency, coupled with robust Anti Money Laundering and other financial crime legislation, has seen the Island receive satisfactory reports from the Organisation for Economic Cooperation and Development, the International Monetary Fund and Financial Action Task Force (FATF). The Isle of Man was assessed by MONEYVAL in 2016, the Council of Europe’s permanent anti-money laundering and countering the finance of terrorism body.  The Island continues to report to the MONEYVAL Plenary on an annual basis as to the progress made in achieving full compliance with FATF’s 40 recommendations that constitute the global compliance standard.

With the collection and processing of personal data being so important, and the world continuing to move in an ever more digital direction, the Isle of Man Data Protection Act 2018 has adopted the European Union General Data Protection Regulation (GDPR).

The current pandemic and economic uncertainty arising from this have brought into focus the importance for high net worth individuals and their families to have robust wealth structuring arrangements that are administered and coordinated from a highly respected international financial centre.

Abacus Trust Group is headquartered on the Isle of Man with further international offices located in Monaco, London and Malta.

If you are interested in learning more about the many benefits of using the Isle of Man for wealth structuring purposes, please contact our Director – Isle of Man office, Paul Howland, at paul.howland@abacustrustgroup.com or call on +44 1624 689610.

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