Taxes in the Isle of Man are divided into those applicable to corporations and those applicable to individuals. Resident individuals enjoy some of the lowest taxes in Europe, and companies incorporated in the IoM are also subject to an attractive taxation system.
It may be considered that Isle of Man is a tax haven, given the low tax rates and the fact that companies are subject to a 0% corporate income tax rate for certain types of income.
In this article, our team highlights the basics of IoM tax, as we provide details on the current tax rates and the obligations for both companies and individuals. For those interested in more in-depth information, our CPA in Isle of Man will offer guidance and information as needed.
If you are a first-time investor here, opening a resident or a non-resident company will be easier with our help. We suggest reaching out to our Isle of Man company formation specialists, to find out more about the general company formation process along with updated information on the Isle of Man tax rates.
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Corporate taxation in the Isle of Man
The Isle of Man income tax on corporate income has three rates:
- 20% on income derived from real estate located outside the Isle;
- 10% in income from banking activities carried out in the Isle on the basis of proper licensing by the Isle of Man Financial Services Authority and on retail activities when these exceed a profit of 500,000 IMP per year;
- 0% on all other types of income.
As the list above suggests, the taxes in the Isle of Man for companies can be lower compared to those in other EU and non-EU countries, depending on the activities the company engages in.
This is one of the main reasons why for some investors the Isle of Man tax haven is the most suitable location to set up their European headquarters.
Apart from the taxes on corporate income listed above, there are no other local taxes in Isle of Man. This means that no dividend withholding tax is applicable.
As far as the Isle of Man VAT is concerned, it has several rates, as listed below by our Isle of Man company registration agents:
- 20% standard rate applicable to most types of goods and services;
- 5% rate applicable to certain types of goods and services, such as the installation of some energy-saving materials;
- a 0% rate applies to the dispatch/export of goods, certain foodstuffs, most books and newspapers, and others.
There is no Isle of Man VAT applicable to most financial or insurance services nor to certain land transactions. Our team can give you more information about the applicable rates.
Companies enjoy a low IoM tax and few taxes. There is no payroll tax and no capital duty tax, however, social security contributions are due by the employer (under a similar system to that applicable in the UK).
Individual taxation in the Isle of Man
Individuals also enjoy a simple taxation regime and an Isle of Man income tax on their personal income that has similarly low rates, just as in the case of the corporate income tax.
The Isle of Man tax rates applicable to individuals are also lower in comparison to those applicable in other countries. The following rates apply:
- 10% on income of up to GBP 6,500;
- 20% on income over GBP 6,500.
An individual’s income which is subject to these taxes in Isle of Man is comprised of not only the employment income but also the investment income and the general income. IoM residents are taxed on their worldwide income while non-residents only on their Isle of Man-sourced income. Upon request, our team can also give you details on residency, both for short and medium to long-term purposes.
Contact us if you want to know more about taxes in Isle of Man. Our team of company formation agents, as well as our accountants, will answer your questions and give you personalized solutions.