isle of man substance requirements

[ShillGates]

Substance requirements

Are the substance requirements affecting your Isle of Man tax resident company? The approved legislation affects a variety of geographically mobile business sectors.

www.pwc.com

General requirements for a relevant company are that;

• it is managed and directed in the Isle of Man;
• it has an adequate number of qualified employees on the Isle of Man (this will include outsourced employees);
• it has adequate expenditure on the Isle of Man, proportionate to its level of activity on the Island;
• it has an adequate physical presence on the Isle of Man; and that
• it conducts core income generating activity on the Isle of Man.

in light of the above, anyone still operating a company there? was looking a tthe good banks they have in IOM but was surprised about the relevnt requirements, which seemingly means that unless you live there, the gov will boot you out ?

 

[Sols]

So far, it's been sufficient to have one or two local directors. The "employee" doesn't have to be dedicated, and it doesn't have to be an employment arrangement (contracting work or directorship is fine).

You can satisfy the requirement to conduct core income generating activity by having the aforementioned local directors sign agreements on behalf of the company. The law says:

For the purposes of subsection (1)(e), a relevant sector company conducts core income-generating activity in the Island even if it outsources such activity, provided that it is able to demonstrate adequate supervision of the outsourced activity and the activity is conducted in the Island.

The substance requirements are easy to fill for smaller companies for a single person or very few founders.

IOM doesn't want to enforce this too harshly, but it also can't afford to be completely hands off. It's a balance. Follow guidance from reputable trustees/fiduciaries, and they'll make sure your company is compliant with Manx law.

 

[ShillGates]

How does that work in terms on the local bank accounts. Would I have signatory rights on this bank account not to upset these “balances”

 

[Sols]

It varies. Normally, no, you would not have signatory rights on the bank account. But not all directors are firm on this, and might let you have access if they deem it suitable.

 

[ShillGates]

Substance requirements

Are the substance requirements affecting your Isle of Man tax resident company? The approved legislation affects a variety of geographically mobile business sectors.

www.pwc.com

TO come back on this, I was reading this again and it only applies to ;

The requirements affect Isle of Man tax resident companies deriving any income from activity in the following sectors:

• Banking;
• Insurance;
• Shipping;
• Fund management;
• Financing and leasing;
• Headquartering;
• Operation of a holding company;
• Holding of intangible property; and
• Distribution and service centre business.

Does this mean a normal company that performs services to multiple unconnected clients not in the industries above are actually not included?

any good corp providers in isle of man you recommend

 

[Barney2201]

We nearly moved to the IOM before deciding on Guernsey....

If you are not prepared to move there and put 'boots on the ground' you will need a local resident director.

Local's are only allowed so many directorships (I believe 3) so they are not cheap.

When we looked into having a IOM company but remianing in the UK, the operational costs were circa £20K per year plus set-up which also wasn't cheap.

I think something like IOM works if you have a business with only limited transactions per year.

 

[darthvader1100]

We nearly moved to the IOM before deciding on Guernsey....

If you are not prepared to move there and put 'boots on the ground' you will need a local resident director.

Local's are only allowed so many directorships (I believe 3) so they are not cheap.

When we looked into having a IOM company but remianing in the UK, the operational costs were circa £20K per year plus set-up which also wasn't cheap.

I think something like IOM works if you have a business with only limited transactions per year.

could you please let me know which service you used and approx cost for the Guernsey setup.

 

[pomegranate]

Does this mean a normal company that performs services to multiple unconnected clients not in the industries above are actually not included?

Yes - Substance requirements won't apply if you don't fall in these categories