Isle of Man: Country and Foreign Investment
This page was last updated on 23 January 2020.
Isle of Man Not in EU Financial Area
The Isle of Man is an English-speaking dependency of the British crown, though it has never been part of the United Kingdom. It is politically stable and enjoys parliamentary government without party politics. Tynwald, the 1,000 year-old parliament, presides over the island's domestic affairs including taxation. Britain is responsible for the island's defence and foreign affairs. The island forms part of the EU single market and VAT area but is otherwise not considered part of the EU.
The Isle of Man has an English common law type of legal system that tends to follow English legislation. There is an infrastructure of sophisticated legal and other professional services. The island has a financial supervision commission with a great deal of experience in overseeing and regulating sensitive financial areas. The island's currency is the pound sterling and there are no exchange controls. There are frequent flights to a number of British and Irish airports.
Economy Buoyant and Taxes Reduced
The Isle of Man’s economy has enjoyed an average of nearly 6% growth in real terms over the past three decades. The Manx economy is stable. Unemployment is very low and inflation, though averaging 1.9% in 2019, a little above the 1.3% EU average, is stable. Tourism and agriculture, forestry and fishing, the traditional mainstays of the island's economy, have declined in importance recently. The island's government has encouraged economic growth by creating a beneficial tax regime and by offering incentives to manufacturing and financial services.
The Manx economy enjoyed an average of over 6% GDP growth in real terms from 1990 to 2014. There was a slight dip in 2015-16 (-0.9%), but since then growth has returned, with 7.4% growth in 2016-17 and 7.7% in 2017-18.
There is no capital transfer tax, corporation tax, wealth tax, death duty, capital gains tax or gift tax. Value added tax is collected by the Isle of Man Customs & Excise at the same rates which apply in the United Kingdom.
Manx Low-tax Specialisations
The Isle of Man has strong banking, investment fund and captive insurance sectors, with a well-developed advisory and financial infrastructure. There are a number of business formats, limited partnerships and limited liability companies. There is an active trust sector, and in 2001 the island began to offer on-line gambling licences. E-gaming accounted for more than 21% of GDP in 2017-18.
Isle of Man v. EU and OECD
The Isle of Man's distinctive relationship with the EU is both a strength and a weakness. The island is currently a favoured base for holding and trading companies working in the EU, and for e-commerce activity – though some EU policies are regarded as interfering. The OECD is regarded in a similar way. After a period of being blacklisted as an uncooperative jurisdiction with respect to tax transparency, however, in April 2009, the OECD put the Isle of Man on its white list of cooperative jurisdictions.