Isle of Man
Value-added tax (VAT)
VAT is a transaction-based tax applied on the domestic supply of most goods and services and is currently charged at a standard rate of 20%. VAT is designed to be a tax borne by the final consumer, and there is a mechanism for businesses to recover VAT incurred in a supply chain, subject to meeting certain conditions.
For VAT purposes, the Isle of Man forms a single territory with the United Kingdom (UK), and the VAT rules are broadly identical. This means that VAT is charged on supplies between Isle of Man and UK businesses as if they were domestic supplies. The Isle of Man has its own tax authority for VAT and other indirect taxes, which works in conjunction with the UK tax authorities.
Some supplies are charged at 0%, including food, books and publications, and public transport, and there is also a 5% rate applied to domestic property repairs, amongst other things. Finally, some supplies are exempt from VAT, including insurance and financial services, betting and gaming, education, and healthcare.
Customs and excise duties
In addition to VAT, the Isle of Man forms a common jurisdiction for customs and excise duties with the United Kingdom, and, again, the rules are broadly identical. Customs duties are levied on most goods imported from outside the European Union into the Isle of Man, and there are various rates of duty that apply. Excise duties apply to such things as alcohol, tobacco, and fuels, and there are various rates of duty that apply. There is also a levy on commercial passenger flights known as Air Passenger Duty.
There are no property-related taxes for companies other than (i) income tax payable at a rate of 20% on their profits from the rental or development of land or property situated in the Isle of Man and (ii) business rates as detailed under Local income taxes in the Taxes on corporate income section.
There are no capital transfer taxes in the Isle of Man.
There is no stamp duty payable in the Isle of Man.
There are no other transaction taxes in the Isle of Man other than betting duty on gaming transactions, which is levied at differing rates of up to 15%, depending on the nature of the gaming transaction and whether it is online or land-based.
Employers in the Isle of Man are responsible for deducting tax from an employee’s remuneration under the Income Tax Instalment Payments (ITIP) scheme. An employer is any person, which includes any individual, company, partnership, or public body, that engages or hires the services of someone and, in return, pays a wage or fixed payment.
The scheme covers everyone who receives remuneration and includes employees, office holders (e.g. directors), and pensioners. Any remuneration is subject to ITIP, and tax should be deducted in accordance with the individual’s tax code.
For the purposes of ITIP, ‘remuneration’ means any payment of salary, wages, fees, commission, pensions, or annuities and some termination payments.
National Insurance contributions
In addition to deducting ‘National Insurance’ contributions from their employees’ earnings, employers in the Isle of Man are required to make a ‘secondary’ National Insurance contribution in respect of each of their employees, depending on the individual’s circumstances.
The standard rate of secondary contribution is 12.8% on earnings over IMP 120 per week, but reduced rates apply in certain circumstances where the employee is a member of a pension scheme.