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Offshore Trusts Report: Isle of Man

Uses, Clients and Tax Treatment

Trust management, particularly for wealthy UK individuals, has been a traditional business for the Isle of Man. Successive tightenings of UK anti-avoidance legislation have reduced the possibilities for UK citizens, but trust work continues to be significant and as in a number of other jurisdictions, many Collective Investment Funds are based on Trusts. The recent introduction of the purpose trust will probably lead to an increase in corporate trust work.

Income tax is the only form of direct taxation in the Isle of Man. There are no capital gains taxes, gift taxes or inheritance taxes.

A trust managed and controlled within the Isle of Man, with non-resident beneficiaries, and all income arising from sources outside the Isle of Man, will not give rise to income tax against either the trustees or the beneficiaries. There is no stamp duty. By concession, bank interest and some dividends arising in the Isle of Man are exempt from tax, but other local income will be subject to non-resident tax.

If a primary or supplementary trust deed has a clause which specifically excludes any Isle of Man resident from becoming a beneficiary, but that trust receives income from taxable sources in the Island (e.g. rental income from a property in the Isle of Man or profits from a business carried on in the Isle of Man) there is a liability to Isle of Man income tax. There is an obligation on the trustees to submit a completed trust questionnaire and a copy of the relevant trust accounts, showing worldwide income received and expenses incurred. These should be received by the Assessor by October 6 in the year following the year of assessment in which the income was received. The Assessor will notify the trustees of what is required of them on an ongoing basis. The tax rate applicable to trusts for the 2009/10 year of assessment was 18%.

In February, 2005, however, a leading UK tax expert warned that many trusts domiciled in the Isle of Man could fall foul of new measures designed to tighten up the tax rules surrounding pre-owned assets for UK taxpayers. Nick Williamson, managing director of fiduciary services company Walbrook Group, revealed that as many as one-fifth of trusts in the Isle of Man with UK beneficiaries could be affected by the new rules, which came into effect in April, 2005.

In effort to clamp down on tax planning schemes that seek to mitigate the effects of inheritance tax, the UK government introduced a new system to subject benefits enjoyed from previously-owned assets now held in trust to income tax. The new rules not only affect property but also investments and other assets.

Mr Williamson explained at the time that: "The change may well affect British expats if they are beneficiaries from trusts set up by UK taxpayers. The new rules apply to any assets transferred into trust since March 1986, which would affect a lot of trusts."

He warned that some trusts could need "drastic restructuring" before the introduction of the amended rules, to combat the effect of new taxation.

   

The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

New Zealand

New Zealand: Legal Framework and Formation Rules and Fees
New Zealand: Review of the Law of Trusts
New Zealand: Taxation of Trusts

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees

 


Isle of Man News

Record Turnout For Manx E-Gaming Summit Wednesday 14/9/2016 The Isle of Man recently held its 13th annual E-Gaming Summit, which looked at regulatory challenges and opportunities and emerging trends in Fintech, data, cyber security, and blockchain technology.

IoM Companies Register Celebrates Digital Milestone Monday 9/5/2016 The Isle of Man Companies Registry has announced that it has incorporated its first company through its new online service.

International Support For Beneficial Ownership Info Exchange Wednesday 27/4/2016 More than 20 jurisdictions have signed up to a pilot project to exchange data held on beneficial ownership registers and registers of trusts, according to UK Chancellor George Osborne.

OFCs Join G5 Beneficial Ownership Initiative Monday 25/4/2016 Bermuda, Gibraltar, and the Isle of Man Governments have agreed to support an initiative on the automatic exchange of beneficial ownership information, which is being spearheaded by the five largest economies in the European Union.

IoM Rejects Public Beneficial Ownership Register Friday 26/2/2016 The Isle of Man has decided that it will not introduce a public register with information on the beneficial ownership of companies.

Gibraltar To Introduce Foundations Wednesday 28/10/2015 The Government of Gibraltar has launched a consultation on the introduction of new legislation to permit the creation of private foundations.

Director Appointed To IoM's New Central Registry Wednesday 12/8/2015 The Isle of Man has appointed a Director to lead the island's new Central Registry, after the amalgamation of several other registries with the Companies Registry earlier this year.

DeMontford Bell Expands Malta Operations Wednesday 15/7/2015 DeMontford Bell, the UK-headquartered financial introducer, has announced that it is to expand its permanent operations in Malta to support the high volume of business migrating there.

IoM Forms First Company Exclusively With Bitcoin Capital Wednesday 22/10/2014 The Isle of Man has enabled the formation of the first company with Bitcoin capital, Garigus Limited, as part of the territory's efforts to foster the creation of a niche market centered on digital currencies.

IoM Conference Builds On Island's Digital Currency Ambition Tuesday 23/9/2014 The Isle of Man recently hosted a conference on digital currencies, after the island's announcement earlier this year that it will introduce a regulatory regime to govern trading in crypto-currencies.