Non-EU companies supplying goods to the European Union (EU) can face a complex and costly system of import VAT and duties often involving multiple member states. Using the Isle of Man can drastically reduce this complexity and provide both a cost effective and highly compliant route to the EU market place.
The Isle of Man has a simplified solution, it is treated as being part of the EU for VAT and Customs purposes and has infrastructure in place to smoothly process the administration required without the need for goods to physically travel to the Island. A VAT registered Isle of Man Company can apply for Customs Freight Simplified Procedure (CFSP). The Isle of Man’s Electronic Processing Unit (EPU) creates a link to the UK Customs system and provides electronic processing of Customs declarations allowing fast processing and for goods that are delivered to the UK to be cleared for EU purposes.
The Isle of Man Company will need to pay the VAT and import duty due and the VAT will then be reclaimed under the Isle of Man registration. It is also worth noting that Isle of Man Companies are taxed at zero percent for this activity.
By utilising the Isle of Man in this way, sellers can avoid the need for a permanent establishment in the UK and the costs for setting up a major European operation. Language barriers are overcome and the intricacies of indirect tax and import duties are avoided.
Sanctuary Trust Limited (‘Sanctuary’) is an Isle of Man Company licensed by the Isle of Man’s Financial Supervision Commission to provide both corporate and trust services in accordance with the Financial Services Act 2008.
Located in Douglas, the business centre of the Isle of Man, Sanctuary has access to the Island’s first class legal and commercial infrastructure including Manx Advocates, English Solicitors and Barristers practicing in the Isle of Man, most large UK banks offering multicurrency bank accounts and the ‘Big Four’ accountancy practices.
The Isle of Man has a special relationship with the European Union set out in Protocol 3 to the United Kingdom’s Act of Accession 1972, which formed part of the Treaty of Accession. Under this special relationship the island is neither a member state nor an associate member of the EU. It is also worth emphasising that the Isle of Man is an internally self-governing dependent territory of the crown and is not part of the UK.
Under Protocol 3, the Isle of Man is part of the customs territory of the Union. It follows that there is free movement of industrial and agricultural goods in the trade between the Island and the Union. Apart from the requirements of the Protocol, in particular that the Isle of Man Authorities shall apply the same treatment to all natural and legal persons of the union, the other union rules do not apply.
The Island’s relationship with the Union allows it to trade with counties in the Europe Economic Area in a fashion generally similar to trade in the Union itself.
The standard rate of corporate tax in the Isle of Man is 0% and a 10% rate of tax applies to income received from banking business and land and property in the Isle of Man.
The Isle of Man in general adopts the UK’s VAT Regulations however registrations are administered locally by the Isle of Man’s VAT Office. While the Isle of Man is not a full member of the EU, it does however subscribe to the EU rules for VAT purposes and is therefore able to be utilised as a gateway into Europe for trading purposes.
Our team of professionals are available to assist with any queries on importing products into Europe via the Isle of Man
We provide no warranty that the information contained herein is accurate, up-to-date or complete and in no circumstance does the Information constitute legal, tax or any other form of advice. You are responsible for independently verifying the information provided in this information sheet (the ‘Information’), if you intend to rely upon or use it in any way. In appropriate circumstances, this may necessitate that you obtain independent tax or legal advice. This information includes Information provided to us by third parties and that Information may not have been vetted by us. You use the Information at your own risk.
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