The Isle of Man as a trust jurisdiction
The Isle of Man, although positioned in the middle of the British Isles, is not actually part of the United Kingdom. It has its own parliament and makes its own laws covering internal matters. However, the island has close links with the UK by virtue of being a Crown Dependency and Queen Elizabeth II is its head of state. The UK Government manages foreign relations and defence matters on behalf of the island.
The island’s trust law mirrors its political position. The island has its own trust legislation but much of this is based on English trust law and decisions of the English High Court and Court of Appeal are of persuasive authority in the Isle of Man courts. The English Privy Council acts as the highest court of appeal for the Isle of Man.
This unique position enables the Isle of Man to offer trusts that are positioned outside the UK for tax purposes but offer clients the comfort of well-developed trust legislation and established case law based on precedent. Recent changes to trust legislation, such as the Trusts (Amendment) Act 2015, have also brought Isle of Man trusts into a comparable position with other international jurisdictions. There is now no limit to the duration of a Manx trust (previously it was 150 years) and the statutory requirement for there to be two trustees, unless the sole trustee was a trust corporation, has been abolished.
There is no capital gains tax or inheritance tax in the Isle of Man. Where all the beneficiaries of an Isle of Man trust are resident outside the Isle of Man and the income does not arise from Manx sources (except for bank interest) there will be no Manx tax to pay on the income of the trust.
Originally posted on bworth.net