Back To Top

Your Lowtax Account


Isle of Man: Double Tax Treaties

Introduction

Until a few years ago, the Island had only one Double Taxation Agreement, which was entered into with the United Kingdom in 1955. This treaty is very similar to the equivalent agreements between the UK and Jersey and Guernsey.

The treaty does not conform to the OECD standard model treaty. Its main features are as follows:

  • the profits derived from an industrial or commercial enterprise in one country will not be taxed in the other country except to the extent that they are attributable to a permanent establishment;
  • profits of shipping or air transport attributable to a resident of either country are not taxed in the other country, regardless of point 1;
  • an individual resident in only one of the two countries is exempt from tax in the other country on personal, including professional services performed in the other country on behalf of a resident of his own country (but they must be taxed in his own country); and
  • if despite the above, tax is payable in both countries, the tax paid in one country is allowed as a credit against tax due in the other.

The agreement specifically excludes dividends and debenture interest from its provisions.

Exempt companies, International Companies and International Limited Partnerships were not entitled to the benefits of the treaty.

A Tax Information Exchange Agreement (TIEA) and an arrangement amending the 1955 Double Taxation Arrangement between the UK and the Isle of Man, signed in Douglas on September 29, 2008, entered into force on April 2, 2009. The provisions of the TIEA also took effect in the UK and the Isle of Man on April 2, 2009.

The agreement amends the provisions of the 1955 double taxation treaty by adding provisions on the taxation of income from pensions and a mutual agreement procedure.

Under the revised agreement, many pensions paid from the United Kingdom to people living in the Isle of Man are taxed in the Isle of Man only.

In addition taxpayers have new rights under the agreement to ask one government to intervene in order to resolve problems arising from the application of the agreement.

The negotiation, signing and ratification of tax co-operation agreements is part of the Isle of Man’s commitment to international standards and the global effort to establish a system based on co-operation between countries, transparency and effective exchange of information in tax matters.

The Isle of Man was one of the first international financial centres to make a commitment to the OECD principles of transparency and exchange of information and has since then taken the lead among smaller international financial centres in implementing these principles.

The Isle of Man has signed double tax avoidance agreements with the following countries (all of which are in force as of September 2013, except where otherwise indicated):

  • Australia (Agreement for allocation of taxing rights with respect to certain income of individuals)
  • Bahrain (Double Tax Agreement)
  • Belgium (Double Tax Agreement, awaiting ratification)
  • Denmark (Agreement for the avoidance of double taxation on individuals)
  • Estonia (Double Tax Agreement)
  • Faroe Islands (Agreement for the avoidance of double taxation on individuals)
  • Finland (Agreement for the avoidance of double taxation on individuals)
  • Greenland (Agreement for the avoidance of double taxation on individuals)
  • Guernsey (Double Tax Agreement)
  • Iceland (Agreement for the avoidance of double taxation on individuals)
  • Ireland (Agreement for affording relief from double taxation in respect of certain income of individuals)
  • Jersey (Double Tax Agreement)
  • Luxembourg (Double Tax Agreement, awaiting ratification)
  • Malta (Double Tax Agreement)
  • New Zealand (Agreement for the allocation of taxing rights with respect to certain income of individuals)
  • Norway (Agreement for the avoidance of double taxation on individuals)
  • Poland (Agreement for the avoidance of double taxation with respect to certain income of individuals)
  • Qatar (Double Tax Agreement, awaiting ratification)
  • Seychelles (Double Tax Agreement, awaiting ratification)
  • Singapore (Double Tax Agreement, effective January 1, 2014)
  • Slovenia (Agreement for the avoidance of double taxation with respect to individuals, awaiting ratification)
  • Sweden (Agreement for the avoidance of double taxation on individuals)
  • UK (Double Tax Agreement)

According to the Isle of Man Income Tax Division, the Island is in active tax treaty negotiations with a number of countries, including Italy, the Netherlands, and Spain.

The Isle of Man has also signed a number of tax agreements with respect to income from shipping and aviation. As of December 2010, these include:

  • Denmark (shipping and aviation)
  • Faroe Islands (shipping and aviation)
  • Finland (shipping and aviation)
  • France (shipping and aviation)
  • Germany (shipping)
  • Greenland (shipping and aircraft)
  • Iceland (shipping and aviation)
  • The Netherlands (shipping and aviation)
  • Norway (shipping and aviation)
  • Poland (shipping and aviation)
  • Sweden (shipping and aviation)
  • United States (shipping)

The Isle of Man and the Netherlands broke new ground in October, 2005, as representatives from both governments signed a bilateral economic cooperation treaty, the first of its kind between a small international financial centre and an OECD member.

The agreements are part of a Manx/Dutch economic deal aimed at supporting business opportunities between the two countries.

The agreement was endorsed by the OECD.

Included within the framework of the agreement are:

  • A shipping and aircraft taxation agreement ensuring that a relevant business based in the Isle of Man is not taxed in the Netherlands so long as it is conducting international trade;
  • A 'transfer pricing' agreement, meaning that the Isle of Man and the Netherlands work together to ensure certainty of treatment when companies having operations in the two territories move goods and services between them;
  • An agreement that Manx subsidiaries of Dutch companies do not experience any tax issues following introduction by the Isle of Man of a '0/10' company tax system;
  • A commitment to work towards a full double taxation agreement between the Isle of Man and the Netherlands which will further support Manx-Dutch business relationships; and
  • A tax information exchange agreement.

In April 2008, the Isle of Man announced that it had concluded two tax cooperation agreements with Australia. The signing ceremony took place at Australia House in London, and the agreements were signed by the Isle of Man’s Treasury Minister, Allan Bell, and the Australian High Commissioner to the United Kingdom, John Dauth.

The two agreements comprised:

  • A tax information exchange agreement based on the OECD model; and
  • An agreement for the allocation of taxing rights over certain income of individuals and to establish a mutual agreement procedure in respect of transfer pricing adjustments.

The agreement entered into force on January 5, 2010, after the Australian side announced the ratification of the agreement. The Isle of Man ratified the agreement back in March 17, 2009.

Latest Isle Of Man Treaty Updates

Treaty Update: Isle of Man - Various
26 September, 2016
The Isle of Man's TIEAs with Romania and the British Virgin Islands will become effective on October 8 and 9, respectively.
Treaty Update: Cayman Islands - Isle of Man
23 September, 2016
The TIEA between the Cayman Islands and the Isle of Man became effective on August 26, 2016.
Treaty Update: British Virgin Islands - Isle of Man
25 April, 2016
The BVI Government announced on April 14, 2016, that it has signed a TIEA with the Isle of Man.
Treaty Update: Isle of Man - Spain
11 December, 2015
The Isle of Man and Spain signed a TIEA on December 3, 2015.
Treaty Update: Isle of Man - Romania
10 November, 2015
The Isle of Man signed a TIEA with Romania on November 4, 2015.
Treaty Update: Isle of Man - Cayman Islands
08 October, 2015
The Isle of Man and the Cayman Islands on September 22, 2015, completed the signing of a TIEA, after its signature earlier in the Cayman Islands on September 10, 2015.
Treaty Update: Isle of Man - Swaziland
27 January, 2015
The TIEA with Swaziland was ratified by the Isle of Man according to a Statutory Document issued by the Council of Ministers on December 12, 2014.
Treaty Update: Isle of Man - Lesotho
15 January, 2015
The TIEA between the Isle of Man and Lesotho entered into force on January 3, 2015.
Treaty Update: Isle of Man - Switzerland
28 October, 2014
The TIEA signed between Isle of Man and Switzerland entered into force on October 14, 2014.
Treaty Update: Isle of Man - Swaziland
03 September, 2014
Isle of Man signed a TIEA with Swaziland on May 16, 2014, the Manx Government confirmed on September 1, 2014.
Treaty Update: Isle of Man - Luxembourg
19 August, 2014
The DTA between Luxembourg and the Isle of Man entered into force on August 5, 2014.
Treaty Update: United States - Isle of Man
30 July, 2014
An amendment to the 2002 tax information exchange agreement between the Isle of Man and the United States entered into force on July 1, 2014.
Treaty Update: Isle of Man - United Kingdom
30 July, 2014
An amendment to the DTA between the Isle of Man and the United Kingdom entered into force on July 1, 2014.
Treaty Update: Seychelles - Isle of Man
27 December, 2013
The DTA signed between the Seychelles and the Isle of Man entered into force on December 16, 2013.
Treaty Update: Isle of Man - Various
18 September, 2013
The Isle of Man Government on September 16, 2013, confirmed the signing of TIEAs with Lesotho and Italy.
Treaty Update: Isle of Man - Singapore
11 September, 2013
The DTA signed between the Isle of Man and Singapore will become effective on January 1, 2014.
Treaty Update: Isle of Man - Switzerland
30 August, 2013
The Isle of Man and Switzerland signed a TIEA on August 28, 2013.
Treaty Update: Jersey - Isle of Man
22 July, 2013
The DTA signed between Jersey and the Isle of Man entered into force on July 10, 2013.
Treaty Update: Isle of Man - Botswana
25 June, 2013
The Isle of Man and Botswana signed a TIEA on June 14, 2013.
Treaty Update: Isle of Man - Guernsey
12 June, 2013
The comprehensive DTA signed between the Isle of Man and Guernsey on January 24, 2013, is to enter into force on July 5, 2013.
Treaty Update: Argentina - Isle of Man
15 May, 2013
The Government of the Isle of Man has confirmed that the TIEA signed with Argentina entered into force on May 4, 2013, following the completion of Argentina's domestic ratification procedures.
Treaty Update: Isle of Man - Singapore
07 May, 2013
The Isle of Man-Singapore DTA entered into force on May 2, 2013.
Treaty Update: Isle of Man - Luxembourg
22 April, 2013
The Government of the Isle of Man on April 18, 2013, confirmed the signing of a Comprehensive DTA with Luxembourg on April 8, 2013.
Treaty Update: Isle of Man - Seychelles
17 April, 2013
The Isle of Man Government on April 11, 2013, confirmed the signing of a DTA with the Seychelles on March 25, 2013, by the Isle of Man, and by the Seychelles on March 28, 2013, by post.
Treaty Update: Isle of Man - Various
17 April, 2013
The Isle of Man's DTAs with Bahrain, Qatar and Slovenia became effective for Manx income on April 6, 2013.
More on TreatyPro.com

 

 

Back to Isle of Man Index »