There is a common misconception that offshore financial centres, such as the Isle of Man, are “tax havens”, and that they can be used to avoid taxes which are legally payable.  This is not the case, however there are many legal company structures using offshore financial centres which can be used very effectively to mitigate taxes in an international business.

An unfortunate consequence of tax laws in many countries, including the UK, is that in addition to paying tax in countries in which you do business, you end up being taxed a second time in the country where your ultimate holding company is established.  The Isle of Man tax system does not penalise businesses for holding subsidiary companies through an Isle of Man parent, and therefore provides an excellent choice of location for the holding company of an international group.  The growing number of tax treaties signed by the Isle of Man is further enhancing its status as a holding company jurisdiction.

It is always easiest to structure your international business efficiently right at the very beginning, but even if you already have a successful, well-established business it isn’t too late to take action.  A process know as a corporate inversion [hyperlink to “corporate inversion” within case studies] allows, for example, a UK parented group to be moved under a new Isle of Man parent, this allowing a more tax efficient flow of funds to the shareholders of the company.  For a practical example of this process please see our case study here.

There are many benefits of using an Isle of Man company for your business restructuring, such as our flexible limited company, the New Manx Vehicle and the ability to recover VAT on your professional restructuring costs, something which is not possible from locations such as the Channel Islands or Caribbean jurisdictions.

For more information please contact: stewart.fleming@abacusiom.com