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Open a Foundation in Isle of Man

Open a Foundation in Isle of Man

Isle of Man is a preferred location for the formation of investment vehicles and wealth management structures. Investors can open a foundation in the Isle of Man by following the guidelines set forth in the Foundations Act.

The main uses of a foundation target family and estate planning but these structures can also be used for charitable purposes. Our Isle of Man company formation agents can help you open a foundation and handle all of the registration requirements.

The uses of a foundation in the Isle of Man

The foundation can be seen as an alternative to opening a trust in the Isle of Man and it is a suitable choice for individuals who wish to benefit from largely the same asset protection services without entering into a trustee relationship. As such, foundations in the Isle of Man may be used for the same purposes as trusts. These include:

  • wealth planning for families and succession;
  • business succession planning;
  • personal assets protection;
  • tax reduction;
  • philanthropy.

Like the fund, the foundation has a flexible duration. However, instead of having to create a determined relationship between the beneficiary and the trust manager, in the case of the foundation, the founder may choose his level of involvement. If you want to open a foundation, we can also present the steps for opening a bank account

 Quick Facts  
Who can open a foundation in Isle of Man

Individuals and legal entities, both local and foreign.

Foundation types

– charitable,

– non-charitable

Purposes of opening a foundation

– wealth planning,

– asset protection,

– tax planning,

– philanthropy,

– succession planning, etc.

Authority overseeing foundations

Isle of Man Registrar of Foundations

Process of setting up a foundation

– appoint a registered agent,

– draft the foundation instrument and rules,

– submit application to the Registrar,

– establish a foundation council

Appealing decision of registration

If the Registrar declines to register a foundation, the decision can be appealed to the High Court in the Isle of Man.

Foundation Instrument – characteristics

– serves as the constitutional document,

– must be written in English,

– is publicly available,

– must define the foundation objective,

– council members must be specified, etc.

Foundation Rules – characteristics

– are not publicly available,

– can be in a language other than English,

– specify how beneficiaries can be changed,

– outline council functions, etc.

Initial allocation of assets

No requirement for an initial dedication of assets.

Foundation name

Must end with the word “foundation” and respect the Registrar’s guidelines.

Taxation

0%, except for the 10% tax for income from Manx land and property.

Our accountants can provide more  details.

Required registered agent (YES/NO)

YES

Can sign contracts (YES/NO)

YES

Advantages of opening a foundation in Isle of Man

– tax-free regime,

– confidentiality,

– easy registration process,

– structure flexibility,

– no initial distribution of assets required,

– lower costs compared to opening a company, etc.

Assistance

Our team can serve as the registered agent and also help in drafting the foundation documents.

We also offer support in company formation, if you are interested.

The foundation is a separate legal entity; however, it does not have shareholders but beneficiaries. This legal structure can be used to hold assets, for the purpose for which it was created (which can be charitable or non-charitable). Our agents who specialize in offshore company formation in the Isle of Man can give you further details on the characteristics of the foundation. 

The establishment of a foundation in the Isle of Man

An Isle of Man foundation is incorporated through an application submitted to the Registrar or Foundations. The application is submitted by a registered agent (an individual who is authorized to occupy this function) and it will include the name and business address of the foundation, the registered agent’s and the council member’s personal identification details and information about the objectives of the foundation.

If the application meets the requirements and is accepted by the Registrar, then you can officially open a foundation in the Isle of Man. However, if the Registrar declines to register the foundation, you can appeal against this decision to the High Court.

Each foundation will be assigned a unique registration number upon approval of its establishment. This number serves as an identifier for the foundation and is used for administrative and regulatory purposes.

The Foundation Rules

The Foundation Rules in the Isle of Man are governing documents that outline how the foundation operates, its objectives or purposes, its structure, the roles and responsibilities of its members, and other important provisions regarding its administration and management. These rules are mandatory and are established at the moment when you open a foundation in Isle of Man.

The foundation rules can be written in a language other than English. However, if this is the case, a translation of the rules must be provided to the registered agent. If the foundation is intended for the benefit of a specific person or group, the rules will provide for how these beneficiaries can be changed or updated over time.

The rules must establish a council to administer the assets of the Isle of Man foundation and to carry out its objectives. Administrative matters related to the council, such as the appointment, retirement, and decision-making processes of council members, must be outlined in the rules. Any decisions requiring the approval of another person must be also identified in the rules.

Our Isle of Man company formation agents can assist you with drafting the necessary rules for the foundation.

Benefits of establishing a foundation in the Isle of Man

There are plenty of benefits to opening a foundation in the Isle of Man, which also includes the taxation system. Our specialists in the Isle of Man company registration can explain some of these advantages.

Unlike some jurisdictions, a foundation in the Isle of Man allows for the exclusion of forced heirship rules, providing greater flexibility in estate planning and wealth distribution. Beneficiaries can be named at the establishment of the foundation or at a later date. There is also no requirement to transfer assets into the foundation at the time of establishment.

The founder can choose to be a council member or beneficiary of the Isle of Man foundation. As a beneficiary, he/she may be entitled to receive benefits or distributions from the foundation’s assets. Additionally, the founder can also act as an enforcer of the foundation.

As for taxation, foundations are treated similarly to the other Isle of Man companies. The current standard rate of corporate tax in the Isle of Man is 0% for all income except income derived from banking business or land and property in the Isle of Man, which is taxed at 10%. The taxation is an important advantage when deciding to open a foundation in Isle of Man.

For assistance in tax matters, we can recommend our accountants in Isle of Man.

Statistics about companies and foundations in Isle of Man

If you wish to know more about the status of companies and foundations in Isle of Man, here are some interesting statistics. The statistics are from The Official Isle of Man Government and cover the time between January 1st, 2023, and January 1st, 2024:

  • 20 new foundations were established during this period;
  • 28 new foreign companies were opened;
  • 834 companies were established and registered under the Isle of Man Companies Act 2006.

For more information on setting up a company in the Isle of Man or for more details about foundations and trusts, please do not hesitate to contact us.

If you are interested in investing in the Isle of Man, our local team of tax specialists can give you complete information about the tax advantages available to companies, according to the business field in which they activate. You can reach out to our CPA in the Isle of Man for bookkeeping services, assistance in preparing financial statements, audits, forensic accounting, and more.