Why the Isle of Man?
Many advisers recommend expatriates to consider shifting or establishing their portfolio in offshore jurisdiction. One of the most popular is the Isle of Man (IoM) – a small celtic island located between England and Ireland. Why is that so?
The Isle of Man is a ’so-called’ low tax economy with no capital gains tax, wealth tax, stamp duty or inheritance tax. This means that for non-resident (i.e. if you don’t live there) you don’t pay tax. This alone explain why so many people like the IoM. As simple as that. But there is more to this tiny island than a simple tax-attractive piece of land.
In order to become one of the leading offshore center, they had to set in place protections laws that ensures your money will still be there when you will need it. There is no point building up wealth if something has gone wrong along the way with the company looking after your money. Therefore, the IoM protections mirror or exceed the investor those you will fin in jurisdictions such as the UK, the US and Australia.
Two that are particularly significant.
1975 – Plan Holder Protection Act
The first is the 1975 Plan Holder Protection Act which was updated last in 2000. It is there to protect investors against losing their money if their company did fail. The way this works is that each quarter, financial institutions have to pay a premium based on the size of funds they are managing into a central provident fund managed by the IOM authorities. This fund then guaranties 90% of the value of your account by law.
1996 – Financial Service Act
The second is the 1996 Financial Service Act of IOM. It regulates and supervises financial companies to be sure that investor interests are safeguarded. As an example, that they have to submit audited accounts every six months instead of annually like they would in the UK or US for example. This is for the IOM to be sure that client monies are properly accounted for. Another part of that law is that all assets under management by those companies must be held by a third-party custodian to be sure that a company can’t use client money to bail itself out should they experience financial difficulties.
On top of all that, the Bee Gees were born there! How not to like such a place !!