The Island is a dependency of the British Crown and recognises the monarch as Head of State, it is not however part of the United Kingdom and has its own parliament.

For companies, the Isle of Man operates a zero rate tax regime. There are provisions for preventing the avoidance of tax by residents through holding assets within companies they own. Certain finance sector companies operating on the Island pay tax at a rate of 10%. There is a double taxation treaty with the United Kingdom. The European Savings Tax Directive applies in the Isle of Man and individuals resident in a country covered by the Directive and receiving savings interest from an Isle of Man source have the option of paying a withholding tax, failing which the income is reported to the tax authorities in their home country.

The finance sector in the Isle of Man is governed by the Financial Supervision Commission, an independent statutory body established in 1983 and responsible for the licensing and supervision of banks, building societies, investment business, collective investment schemes and companies which provide company and trust administration services. It is also responsible for the Companies Registry.

Companies can be formed in the Isle of Man in one of two ways. The Companies’ Act 1993-2004 and the Companies’ Act 2006.  The information below refers to the old law.