Tax Friendly Jurisdictions and the Isle of Man

Finding the best offshore tax haven for your money - where you can invest it via wealth building investment opportunities - will be partly a matter of personal choice and partly based on the options available to you depending on various criteria such as your country of residence, country of domicile, chosen investment vehicle or preferred investment company etc.

To fully examine every single tax friendly jurisdiction in one article would be impractical!  A qualified and experienced financial adviser with offshore focus will be able to discuss with you the merits of any specific location available to you.

However, to give you an example of how a tax haven works and how it can prove interesting to you in terms of your wealth building planning let’s look at the Isle of Man.  Hopefully this will give you a good basic understanding of tax havens and enable you to compare features and benefits of any other offshore jurisdiction recommended to you with the Isle of Man.

Firstly, the island has a stable and independent legal, economic and political climate which means that an investor is granted a degree of security and peace of mind when investing there.

All life assurance companies based in the Isle of Man are closely regulated, this means that incidents of mis-selling are unlikely and bad practice will not be tolerated.  Therefore an investor is more likely to expect companies operating out of the Isle of Man to be legitimate...though physical location alone is of course not a guarantee of the legitimacy of a company! 

The island is a designated territory of the UK under the Financial Services & Markets Act 2000, this means investors are protected through laws accepted by the UK authorities as at least as effective as their own.  Again, this can offer a potential investor a further degree of security and peace of mind.

If you compare the Isle of Man to Luxembourg for example - Luxembourg being one of the more popular countries for offshore investors - you will see that it is actually more favourable than Luxembourg in some ways as it has a statutory compensation scheme for offshore life assurance companies.

A statutory compensation scheme means that all investors - worldwide - who invest in policies issued by Isle of Man authorised life assurance companies benefit directly from a unique level of protection afforded them.

The level of protection is as follows - if an authorised life assurance company is unable to meet its liabilities, this worldwide investor protection scheme will compensate investors affected by up to 90% of the value of their policies and there is no upper amount to the monetary limit.

Currently, financial institutions on the island are prohibited from disclosing client or transaction details to any one, meaning that investor privacy is secured.

The only exception to this is if an individual is believed to have been involved in serious crime (e.g., terrorism) and the financial institution is obliged by law to disclose their details.

Non-residence on the Isle of Man is the key to obtaining offshore tax treatment on the island...i.e., so long as you reside offshore from the island - anywhere else in the world - you can theoretically benefit from the tax advantages offered there.

In terms of the tax advantages available, in the Isle of Man there is no general capital gains tax or capital transfer tax and apart from VAT at 17.5%, the only significant tax is income tax which is 18% max. and does not apply to offshore funds.

If you are advised to invest via an alternative offshore jurisdiction, see how it compares to the Isle of Man and always make sure you are comfortable with the jurisdiction that you are recommended.

Further Offshore Tax Havens Articles

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