Isle of Man: Mortgage and Tax Paradise
Located in the northern Irish Sea, between the Great Britain and Ireland, Isle of Man is one of the smallest islands in the world with an area of only 572 kilometer square. While it is not part of the British territory, Isle of Man is a British Crown Dependency and enjoys great benefits in terms of trading with the UK, and inherits many legislation, customs and traditions from the UK. Although small in size, Isle of Man’s population is increasing quite rapidly in recently year due to its successful offshore financial service sector, and it is particularly attractive to individuals and corporations coming to enjoy the generous mortgage rates tax benefits offered by Manx’s government.
Low corporate tax rates
Many entrepreneurs and investors find their way to establish their companies’ base in Isle of Man for the same reason: to enjoy the low tax regime here. In the Isle of Man, there is no tax on capital gain, wealth tax, stamp duty, death duty or inheritance tax. Moreover, except for businesses in banking and land rental which are required to pay a corporate tax rate of 10%, much lower than any other European country and territory, the standard corporate tax rate is 0%. This rate is applied both to resident companies and non-resident companies. In addition, Manx government offers other corporate incentives such as grants and soft loan and enters into various tax treaty and agreement to provide businesses with the most favorable taxation. Businesses operating within the Freeport zones are offered with free facilities, and their export and import goods are exempt from duties and other taxes.
Low personal income tax rates
As for individuals, the tax rate ranges from 0% to 20% with a much lower effective tax rate if taking deductions into considerations. The general tax deductions include interest paid on mortgages or loans, charitable donations, private medical insurance payments, nursing expenses and educational expenses if enrolling full-time. A tax cap is also applied. For taxpayers filing tax individually, the maximum amount of tax payable is £115,000, and for couples filing tax jointly, the applicable cap is £230,000. If an individual experience a loss in their personal trade or profession, he or she can also appeal for a tax relief for the year when the loss incurs.
Tax relief for mortgages
Another advantage of living in the Isle of Man is that owning a house or some real estate’s property is not beyond one’s reach. First of all, since Manx government encourages immigrants to come and reside in the Island, there is no discrimination between residents and non-residents when it comes to buying a new house. Besides, potential real estate purchasers will have a wide variety of choices to meet their specific demands. Although real estate prices tend to be high in Douglas, the capital and largest city, buyers can easily find some cheaper properties in other surrounding location. In recent year, with an influx of new residents, real estate value has increased to some extent, but compared to some areas in England, it remains much more affordable.When applying for a mortgage in Isle of Man, the buyer can also enjoy some tax relief. Qualifying mortgage interest is added to taxpayers’ allowances, translating to a tax relief at 10%.
Simple business registration process
Registering a new company in Isle of Man is also very simple. There is no restriction on the types of business, nationalities of the directors or required initial investment capital. Investors need to choose a business name, and has it approved by the authority at the Companies Registry. Memorandum and Articles of Association also have to be drafted. The company must have a registered agent who is controlled by the Isle of Man Financial Services Authority. If the investor is familiar with the process, he/she can complete registration online. Generally, it takes about two weeks to incorporate a company, and investors can choose to pay a fee to expedite the process. Following its establishment, there are legal obligations that the company needs to follow including filing annual returns, director reports and other accounting records.
Ease of doing business
Despite being a small island with a population of nearly 90,000 people, Isle of Man still offers investors with abundant resources, modern infrastructure, and comprehensive supporting services. Most banks in the UK have their representative offices or branches on the island, serving the local residents, UK expatriates and other foreign investors. The Manx or Isle of Man pound is directly pegged to the British pound, facilitating the exchange rate of businesses. The island operates a National Health Service, providing free general healthcare services for the citizens. With an advanced education system, and an emphasis on equipping students with the most sought-after skills, Isle of Man also manages to provide businesses with high-quality labor force, meeting the demand of a fast-developing economy.
In sum, with its attractive tax system, it comes as no surprise that Isle of Man has drawn so many businesses and immigrants to invest and reside in this place. This also drives the economic growth and brings more opportunities in the future.