Oscar Brown, examines the attractiveness of the Isle of Man as hub for Shipping and Aviation.
The Isle of Man has always been a place known for stability, yet in the modern age it has become defined by its ability to change and adapt in an ever moving environment.
The Island was the first to embrace the ethos of an international business platform and from this has taken giant steps in shedding its historic image and outdated image held by the minority.
As one of the world’s leading offshore financial centres the Isle of Man Government is committed to promoting and enhancing the Island's reputation as a well-respected international business centre and as an established platform for business success and prosperity. The Isle of Man has a Triple 'Aa1' rating from Moody's, and has been recognised by the International Monetary Fund as a well-regulated offshore finance centre of excellence.
The prevailing attitude of the Isle of Man’s Government is one of the proactive development of new sectors whilst at the same time solidifying its reputation for exemplary professional services. This is reflected in a unique public private partnership, which gives the Island its ‘where you can’ attitude.
The government’s relationship with the private sector has allowed the island to move into previously untapped reputable international markets in a range of key industries. Over the last 15 years it has nurtured a highly skilled and professional workforce that has adapted and evolved for a range of established and developing industries.
Glowing recommendations from multiple onshore governmental and centralised bodies has cemented its reputation for diversification, stability and the highest standard of professionalism. Something which is no better reflected in its yachting and aviation sector.
The Island has over other international jurisdictions positioned itself as the primary location for all areas of yachting and aviation services. A modern client will use the Island as their first point of call for every aspect of structuring advice, for both EU and non EU assets.
How has the Island managed to achieve this when others simply rely on the one key selling point of their particular jurisdiction? It has been achieved though innovators who recognise that to meet the needs of an educated global client they must offer the opportunities of other IFCs, whilst retaining central control on the Isle of Man.
Almost no other jurisdiction has been able to adapt and place itself in multiple jurisdictions, whilst at the same time retaining its core position, thus making the Island the first port of call for clients, lawyers and professional advisors on almost all worldwide structures.
In 2007, the Isle of Man created its Aircraft Register, aimed at private and corporate business jets and helicopters.
In addition to the obvious benefits of the Isle of Man's stable political and economic environment the benefits of the Isle of Man as a jurisdiction for aircraft, high quality private and corporate jets registry include:
Operating Costs – the low priced costs involved in operations from the Island.
A Register where registration grants the right to use the single ‘M’, politically neutral, prefix.
Exceptionally efficient and high personal service standards from an internationally respected registry which is available ‘all hours’.
The beneficial tax regime (both in terms of VAT planning and corporate tax), which exists in the Island
A secure Aircraft charges register.
Isle of Man is in the same time zones as the UK and Europe.
Of the above reasons, the beneficial tax regime afforded by the Isle of Man is arguably the most significant. The Isle of Man has retained a zero-10 per cent tax regime for companies with the standard rate of corporate tax being zero per cent, and no capital gains tax. Unlike the Channel Islands, the Isle of Man has VAT.
An Isle of Man VAT registered business may enjoy the following benefits:
With a Certificate of Approval for Duty Deferment the deferral of import VAT for 15 days after the month end.
Import to the Isle of Man.
VAT zero rating.
Reclaim VAT on Isle of Man and UK expenses.
No Insurance Premium Tax (IPT) vs six per cent in the UK.
No exchange controls.
There are a large number of aircraft management and administration businesses on the Isle of Man to cater for the growing demand for Manx registered aircraft. These businesses can assist with the likes of ensuring local management and control remains in place, VAT administration, crew arrangements and payrolling, insurance and brokerage arrangements, intra-group chartering (subject to compliance with specific user agreements and only between related group companies) and all manner of registration and structure maintenance.
Thanks to an ethos of a world-class level of customer service provided by the registry staff, an experienced professional services sector and a flexible and sophisticated regulatory regime (including aircraft importation via the Isle of Man and the VAT structures for owning and operating business aircraft), the Island’s Aircraft Register has become the most successful offshore business aviation register in the world. By the end of September 2014, the Island had registered 726 with 444 aircraft on the register aircraft since its inception in 2007.
The success of the Isle of Man reflects two things: the strength and customer service of the registry itself and also how good the Isle of Man’s service companies are. To accomplish this in such a short period is considered by many as a remarkable achievement.
Its size and reputation now eclipses many other registries combined, a feat achieved in only seven short years. Many attempts have been made to mimic this success across the globe with other IFCs moving into an area primarily made successful by the Island. Unfortunately, they have not seen the level of continued growth experienced by the Island’s Registry, maintaining its premium global reputation.
In the year to September 2014, 96 aircraft were registered in the Island and there were 16 Authorised Airworthiness Surveyors employed in Switzerland, UK, USA and the Island.
The success of the Aircraft Registry was in some ways launched of the back of the thriving Island based super yacht business. The platform of a flexible and customer orientated registry combined with high levels of government support and highly skilled professional advisors has long served the established yachting industry.
However, the services provided by members are not exclusive to Isle of Man solutions. Many firms have offices in other jurisdictions and are able to provide clients with the appropriate solution tailored to their individual requirements.
The members of the Isle of Man Super Yacht Forum are now well known and respected worldwide, providing the highest level of service to one of the most demanding industries in the world – they cover owners, managers, crew, builders, legal and financial advisors and countless individuals who work in the ever evolving industry.
The Isle of Man is a Red Ensign jurisdiction at the forefront of yacht registration and administration. It is an international centre of maritime excellence where yacht professionals cover a diverse range of disciplines and are well known for providing the highest level of service.
Despite a geographical disadvantage in its location to the majority of super yacht community, the Island remains internationally renowned as one of the most customer focused, flexible and efficient jurisdictions for yacht structures in the world.
The world class customer service levels the Registry offers are frequently cited as the major reason for choosing the Isle of Man flag. Along with advanced commercial regulation, completive fee structure and reputation.
Growth rates in the yachts owned and registered by Isle of Man-based professional service providers have in many cases outstripped growth in almost all other IFCs. This growth is not limited to being based on the Island and many Isle of Man operators offer a diverse range of structures and ownership products to meet the needs of a discerning and educated clientele
To many the Island represents low risk, stability, a European time zone and quality service. Because of this, many international advisors prefer to route yacht business thought the Isle of Man first rather that the local jurisdiction in which they require the service.
Most of the yachting world’s leading vessel management companies have their base on island and have established a cluster of expertise among fiduciaries, lawyers, accountants and tax advisors that is unsurpassed in other IFCs. This cluster of skill sets is not Island specific, and again highlights why the Island is the first choice when a yachting question arises.
Clients and advisors know that yachting options put in place from the island will take advantage of the opportunities of a worldwide marketplace whilst still proving the stability and service reputation that comes from the island.
Picking up the phone to an Isle of Man entity gets results and in an environment where ‘speed is service’ it is a predominantly evident that many IFCs do not offer this kind of service.
Not known to rest on its laurels, the Isle of Man contingent of professional advisors outnumbers any other competing jurisdiction in attending almost all of the major yachting and aviation conferences around the world, ensuring global coverage.
The Isle of Man is an international finance centre with a robust yet adaptable, light framework, which allows for new, innovative regulated activity to flourish whilst protecting established industries.
The Island’s intelligent regulator listens to business and works together with government to ensure that sensible decisions are reached and international best practice is followed. The Isle of Man engages with our trading partners across the world to offer high levels of corporate governance and transparency and this is no more evident within the yachting and aviation sectors.
The Island is known for taking the initiative in the international business community and for being amongst the first to embrace the multi-jurisdictional footprint.
By positioning the Island in the mainstream financial services market but maintaining its favourable tax neutral system, it has become the first port of call for businesses looking for solutions in the aviation and marine sector.
Oscar Brown, Principal, Baker Tilly