Isle of Man and VAT

A problem faced by many companies in low tax jurisdictions is that if they purchase from one EU company and sell to another, it is essential for them to be registered for VAT.

The Isle of Man is able to offer both low and zero tax companies the opportunity to register for VAT, enabling such companies to benefit from the simplification procedure. This procedure enables companies trading with European member states to issue invoices without adding a charge for VAT, as the company they supply will be required to account for VAT in its own country on behalf of the Isle of Man VAT registered company.

It is possible for a company not resident in the Isle of Man to register for VAT in the Isle of Man. In order to do this, it is necessary to appoint a local agent in the Isle of Man. Dixcart Management (IOM) Limited can provide this service, together with a full accounting service and, where required, additional advice on VAT issues.

Provision of a VAT agent in the Isle of Man

The Isle of Man can offer a unique advantage in the provision of a local VAT agent. The Isle of Man has a customs union with the UK and is considered for all VAT purposes as if it were a member of the EU (through the UK) while remaining for direct taxation purposes an independent jurisdiction.

Where appropriate, an IBC can appoint a "local VAT agent" in the Isle of Man. The agent will be responsible for the registration process and will provide the ongoing contact point between the VAT authorities and the IBC. The agent will be required to maintain copies of the IBC’s accounting records as well as the original purchase invoices and copy sales invoices at their offices. They will liaise with customs officials at the necessary VAT inspection visits and report back to the directors of the IBC as required.

It should be noted that in order to qualify for VAT registration within the UK, it is necessary that the company seeking registration undertakes an economic activity within the UK or has an establishment in the UK.

Dixcart Management (IOM) Limited can provide local agent services for VAT registration and can also can offer advice regarding the use of an agency company for international trade if, in particular circumstances, this is more appropriate.