Isle of Man Registered Office and Registered Agent Services – What You Need to Know

The Isle of Man is an OECD whitelisted offshore jurisdiction with an excellent track record of providing effective, efficient, and above all, compliant corporate structures. One such vehicle, that provides both flexibility and tax efficiency when used for structuring, is an Isle of Man Company.

The requirements and formation of an Isle of Man Company are governed by either the Companies Act 1931 (CA 1931) or the Companies Act 2006 (CA 2006) – the merits of which are not considered here. Within both Acts there are stipulations pertaining to Registered Offices and in the Companies Act 2006, Registered Agents.

In this brief article, we will discuss the following subjects, to help illustrate the rules and obligations in relation to these requirements and how Dixcart can help:

Why Incorporate on the Isle of Man?

The Isle of Man is rated Aa3 stable and is an independent Crown Dependency. Among other things, Manx registered companies benefit from the business-friendly Government and locally set tax regime.

In addition to offering efficiency for the management of wealth, the Island also provides a great deal of privacy to inbound investors, whilst still meeting global compliance standards; earning it a place on the OECD whitelist, which means that it is not considered a tax haven.

Headline rates of taxation include:

  • 0% Corporate Tax
  • 0% Capital Gains Tax
  • 0% Inheritance Tax
  • 0% Withholding Tax on Dividends

Isle of Man companies are also able to register for VAT, and businesses in the Isle of Man fall under the UK’s VAT regime.

What is an Isle of Man Registered Office?

In the Isle of Man, as with other Common Law jurisdictions – such as the UK, a Registered Office is the official address where all statutory correspondence and formal notices are delivered. This address can be separate from the company’s place of business and is very often the address of an appropriately licensed third-party agent; usually a legal firm, accountants or Corporate Service Provider (CSP) such as Dixcart.

Requirements of a Registered Office on the Isle of Man

Whether incorporated under the CA 1931 or CA 2006, the Isle of Man company must have a physical Registered Office address on the Island, and an official record of the address must be provided in the company’s incorporating documents filed with the Isle of Man Companies Registry.

In addition to providing a physical Isle of Man address where notices can be served and received, the Registered Office must also be the location where certain company records are properly maintained. These include the following:

  • Memorandum & Articles of Association
  • Accounting Records
  • Register of Directors
  • Register of Members
  • Copies of Minute Books
  • Register of Charges

Dependent on whether it is a CA 1931 or CA 2006 Company, there are certain administrative duties that are the responsibility of the Directors or Registered Agent. For example, where there is a change of Registered Office on a CA 1931 Company, the Directors must file a form 4 with the Registry, within a month of change to avoid a penalty; whereas under a CA 2006 Company, this notice must be submitted by the Registered Agent.

What is an Isle of Man Registered Agent?

The CA 2006 introduced the role of the Registered Agent into Manx legislation. Companies formed under that Act are commonly referred to as New Manx Vehicles (NMVs).

A Registered Agent is appointed to ensure proper recording and upkeep of company information to comply with regulatory obligations; including activities such as filing and maintaining statutory documentation. The Registered Agent is a key fiduciary, but is not an officer of the Company.

The person appointed must be permitted to act as Registered Agent, possessing the appropriate license granted by the Isle of Man Financial Services Authority (IOM FSA), under the Isle of Man Financial Services Act 2008. 

Unlike a CA 1931 company, which requires the appointment of two Directors and a Company Secretary, CA 2006 companies only require a single Director and do not require a Company Secretary. However, a Registered Agent must be appointed at all times.  

Both a Registered Office and a Registered Agent are requirements for a CA 2006 company; more often than not, the two functions are carried out by the same licensed third-party provider, such as Dixcart.

The Registered Agent needs to be aware and understand the company’s activities at all times; therefore systems and procedures will be put in place to manage the flow of information on the company that services are being provided to.

When expressed in basic terms, it can be easy to think that the Registered Office and Registered Agent functions are simple and straightforward. However, there are many pitfalls that can result in penalties, or even worse, the company being struck off the register.

Pitfalls to be aware of: Incorporating and Administering an Isle of Man Company

As with many things in life, there is not an insignificant degree of nuance involved in establishing and administering a corporate structure; it can be easy to find yourself open to a myriad of potential risks if you do not know what you are doing.

When establishing an Isle of Man Company

Note the requirement for the Memorandum of Association, filed on incorporation, to include the details of the Isle of Man Registered Office, and for a CA 2006 company, the Registered Agent. From the outset, these are absolute conditions for the establishment of the company; meaning you need a service provider with a Class 4 license issued by the IOM FSA to setup. In the case of a Registered Agent, this person will actually submit the documentation to the Registrar.

There are many online service providers that claim to offer Isle of Man incorporation, however many of these do not have a real Isle of Man address etc. and as such, do not meet the statutory requirements of an Isle of Man company Registered Office. It is best practice to ensure you deal directly with an Isle of Man service provider, which will give assurance of both compliance and value for money.

Before incorporating, you need to make sure that the structure is set up and operates in a way that is best suited to your personal and financial objectives. It is recommended that you seek professional advice so that you are aware of the legal obligations associated with the chosen structure.

Seeking appropriate advice is also of particular importance, if the proposed company activity is impacted by the Substance Requirements legislation brought into effect in 2019.  Companies engaging in a relevant sector activity are required to demonstrate that they have adequate substance on the island. Failure to comply can result in significant penalties and, if persistent, can lead to the company being stuck-off the Register.

Dixcart are well placed to provide guidance on all corporate services and structuring matters, and can work alongside your chosen personal advisers.

On-going statutory requirements for an Isle of Man Company

Statutory and procedural knowledge is essential for traversing the requirements and obligations related to a well-run and compliant Company. For example, if reporting obligations are missed, such as the filing of returns with the Isle of Man Companies Registry, there can be penalties.

There is a perpetual need for a Registered Office, and Registered Agent if required, to be in place ‘at all times’. The legislation makes it clear that it is an offence to have a company without meeting these commitments.

If a Registered Agent chooses to remove services, it must give 8 weeks’ formal notice of its resignation. Within one week of serving notice, the Registered Agent must file a copy with the Registrar. After the 8-week period, if no replacement is found, the Isle of Man Companies Registry may begin proceedings for non-compliance with the Act.

When statutory obligations are not met, such breaches may signal to the Isle of Man Companies Registry that the company may no longer be in operation. In such instances, or where a serious breach occurs, action may be taken to strike the company from the Register, which could result in the company being dissolved when still holding assets.

Working with Dixcart

At Dixcart, we have been providing Corporate Services and guidance for over 45 years; assisting clients with the effective structuring and efficient administration of companies tailored to their individual objectives.

Our in-house experts and senior employees are professionally qualified, with a wealth of experience; this means we are well placed to support and take responsibility for different roles, including acting as executive director, non-executive director and providing specialist consultancy services where appropriate. If required, our qualified professionals can also assist entities with any substance issues. 

We have developed an extensive range of offerings, which includes the provision of Registered Office and Registered Agent services to Isle of Man companies. From pre-incorporation planning and advice to the day-to-day management of the company and troubleshooting issues, we can support your goals at every stage.

Get in touch

If you require further information regarding the incorporation, management or provision of Registered Office and/or Registered Agent services for an Isle of Man company, please feel free to get in touch with Steve Doyle at Dixcart: advice.iom@dixcart.com. Alternatively, you can connect with Steve on LinkedIn.

This Article has been converted to a PDF, which you may find easier to read/print and/or to forward to a client or colleague.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

Malta

Malta – Attractive Residence Programmes and Tax Benefits for Expatriates

Background

Malta offers 9 residence programmes to meet different individual circumstances. Some are appropriate for non-EU individuals while others provide an incentive for EU residents to move to Malta.

The residence programmes and the tax benefits they can provide for individuals, where relevant, are detailed below.

  1. Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment

‘Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment’ is Available to EU/EEA and Non-EU Passport Holders and provides foreign individuals and their families, who contribute to the economic development of Malta, a route to becoming citizens of Malta.

Applicants can opt for residence in Malta, leading to citizenship choosing between two options:

  1. application after three years of residence in Malta, for a lower contribution fee; OR
  2. application for citizenship after one year of residence in Malta.

To be able to apply for Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment, an applicant needs to make a direct investment to the Maltese economy, make a donation, and hold a residential property.

Exceptional Services Requirements

  • Direct Investment

Applicants, who can prove residency status in Malta for 36 months prior to the naturalization, are required to make a direct investment of €600,000 whilst applicants who prove a residency status in Malta for at least 12 months are required to make an exceptional direct investment of €750,000.

If the applicant is accompanied by qualifying dependants, a further investment of €50,000 per dependant is to be made. 

An applicant cannot apply for a certificate of citizenship by naturalisation for exceptional services, before he/she has proved that he/she has become a resident of Malta for the minimum period required.

  • Philanthropic Donation

Prior to the issue of a certificate of Maltese citizenship, the applicant must donate a minimum €10,000 to a registered philanthropic, cultural, sport, scientific, animal welfare or artistic non-governmental organisation or society, or as otherwise approved by the Agency.

  • Property Investment

Once an applicant is approved and prior to the issue of a certificate of Maltese citizenship, the application must either purchase or rent residential property in Malta. If the applicant opts to purchase a property, an investment of at least €700,000 must be made. An applicant may alternatively take a lease on a residential immovable property in Malta, for a minimum annual rent of €16,000. The applicant must retain the property for at least 5 years from the date of the issue of the certificate of Maltese citizenship.

  • Tax Advantages Available to Individuals

Individuals will be taxed on Malta source income and certain gains arising in Malta. They will not be taxed on non-Malta source income not remitted to Malta, or Capital remitted to Malta. In addition, they will not be taxed on capital gains even if this income is remitted to Malta.

  • MALTA PERMANENT RESIDENCE

The Malta Permanent Residence programme is available to non-EU individuals and enables them to reside indefinitely in Malta.

Successful applicants receive Permanent Maltese residence immediately and a 5 year residence card. The card is renewed every 5 years if the requirements of the programme are still being met. There are two options with regards to this programme:

Option 1: Rent a property and pay the full contribution:

  • Pay the €40,000 non-refundable administrative fee; AND
  • Rent a property with a minimum of €12,000 per year (€10,000 if the property is situated in Gozo or the south of Malta); AND,
  • Pay the full Government contribution of €58,000; AND
  • Make a donation of €2,000 to a local philanthropic, cultural, scientific, artistic, sport or animal welfare NGO registered with the Commissioner of Voluntary Organisations.

Option 2: Purchase a property and pay a reduced contribution:

  • Pay the €40,000 non-refundable administrative fee; AND
  • Purchase a property with a minimum value of €350,000 (€300,000 if the property is situated in Gozo or the south of Malta); AND,
  • Pay the reduced Government contribution of €28,000; AND
  • Make a donation of €2,000 to a local philanthropic, cultural, scientific, artistic, sport or animal welfare NGO registered with the Commissioner of Voluntary Organisations.

It is possible to include up to 4 generations in one application if it can be proven that the additional applicants are principally dependant on the main applicant.

An additional Government Contribution of €7,500 is required for each additional adult dependant (excluding the spouse) included in the application.

Applicants must show capital assets of not less than €500,000, out of which a minimum of €150,000 must be financial assets.

  • GLOBAL RESIDENCE PROGRAMME

The Global Residence Programme entitles non-EU nationals to obtain a special Malta Tax Status and Maltese residence permit through a minimum investment in property in Malta.

Successful applicants can relocate to Malta if they choose to do so. They also have the right to travel to any country within the Schengen Zone of countries without the need for an additional visa(s). There is no minimum day stay requirement, however successful applicants may not reside in any other jurisdiction for more than 183 days per year.

To qualify for the scheme an individual must purchase property costing a minimum of €275,000 or pay a minimum of €9,600 per annum in rent. If the property is in Gozo or the south of Malta the minimum property value is €250,000 or €220,000 respectively, or a minimum rent payment of €8,750 per annum is required. In addition, an applicant must not spend more than 183 days in any other jurisdiction in any single calendar year.

  • Tax Advantages Available to Individuals – Global Residence Programme

A flat rate of 15% tax is charged on foreign income remitted to Malta, with a minimum amount of €15,000 tax payable per annum (income arising in Malta is taxed at a flat rate of 35%). This applies to income from the applicant, his/her spouse and any dependants jointly.

Foreign source income not remitted to Malta is not taxed in Malta.

Individuals may also be able to claim double taxation relief under the regime.

  • THE MALTA RESIDENCE PROGRAMME

The Malta Residence Programme entitles EU nationals to obtain a special Malta Tax Status and Maltese residence permit through a minimum investment in property in Malta.

To qualify for the scheme an individual must purchase property costing a minimum of €275,000 or pay a minimum of €9,600 per annum in rent. If the property is in Gozo or the south of Malta the minimum property value is €250,000 or €220,000 respectively, or a minimum rent payment of €8,750 per annum is required. In addition, an applicant must not spend more than 183 days in any other jurisdiction in any single calendar year.

There is no minimum day stay requirement, however successful applicants may not reside in any other jurisdiction for more than 183 days per year.

  • Tax Advantages Available to Individuals –The Malta Residence Programme

A flat rate of 15% tax is charged on foreign income remitted to Malta, with a minimum amount of €15,000 tax payable per annum (income arising in Malta is taxed at a flat rate of 35%). This applies to income from the applicant, his/her spouse and any dependants jointly.

Foreign source income not remitted to Malta is not taxed in Malta.

Individuals may also be able to claim double taxation relief under the regime.

  • HIGHLY QUALIFIED PERSONS PROGRAMME

The Highly Qualified Persons Scheme is directed towards professional individuals earning over €86,938 per annum (basis year 2021), employed in Malta on a contractual basis.

This scheme is open to EU nationals for five years (may be extended 2 times – 15 years in total) and to non-EU nationals for four years (may be extended 2 times – 12 years in total. A list of qualifying positions is available on request.

  • Tax Advantages Available to Individuals – Highly Qualified Persons Programme

Income tax is set at a flat rate of 15% for qualifying individuals (instead of paying income tax on an ascending scale with a current maximum top rate of 35%).

No tax is payable on income earned over €5,000,000 relating to an employment contract for any one individual.

  • RETIREMENT PROGRAMME

The Malta Retirement Programme is available to EU and non-EU nationals whose main source of income is their pension.

An individual must own or rent a property in Malta as his/her principal place of residence in the world. The minimum value of the property must be €275,000 in Malta or €220,000 in Gozo or south Malta; alternatively, property must be leased for a minimum of €9,600 annually in Malta or €8,750 annually in Gozo or south Malta.

In addition, there is a requirement for an applicant to reside in Malta for a minimum of 90 days each calendar year, averaged over any five-year period. Individuals must not reside in any other jurisdiction for more than 183 days in any calendar year during which they benefit from the Malta Retirement Programme.

  • Tax Advantages Available to Individuals – The Retirement Programme

An attractive flat rate of 15% tax is charged on a pension remitted to Malta. The minimum amount of tax payable is €7,500 per annum for the beneficiary and €500 per annum for each dependant.

Income that arises in Malta is taxed at a flat rate of 35%.

  • Key Employee Initiative

Malta’s ‘Key Employee Initiative’ is available to non-EU passport holders and is applicable to managerial and/or highly technical professionals with relevant qualifications or adequate experience relating to a specific job.

Successful applicants receive a fast-track work/residence permit, which is valid for one year. This can be renewed annually.  

Applicants must provide proof and the following information to the ‘Expatriates Unit’: Annual gross salary of at least €30,000 per annum. Certified copies of relevant qualifications warrant or proof of appropriate work experience. Declaration by the employer stating that the applicant has the necessary credentials to perform the required duties.
  • Tax Advantages Available to Individuals

The standard Remittance Basis of Taxation apply. Individuals that intend to stay in Malta for some considerable time but do not intend to permanently establish themselves in Malta, will be classified as resident but not domiciled in Malta. Income earned in Malta is taxed on a progressive scale with a maximum rate of 35%. Non-Malta sourced income not remitted to Malta or Capital remitted to Malta are not taxed.

  • The Qualifying Employment in Innovation & Creativity Scheme

The scheme is targeted towards certain professional individuals earning over €52,000 per annum and employed in Malta by a qualifying employer on a contractual basis. The applicant can be a national of any country.

The scheme is available for a consecutive period of not more than 3 years.

  • Tax Advantages Available to Individuals

Income tax is set at a flat rate of 15% for qualifying individuals (instead of paying income tax on an ascending scale with a current maximum top rate of 35%).

  • Nomad Residence Permit

The Malta Nomad Residence Permit enables third country individuals to maintain their current job in another country, whilst they legally reside in Malta. The permit can be for a period of between 6 and 12 months. If a 12 month permit is issued then the individual will receive a residence card which allow for visa-free travel throughout the Schengen Member States. The permit may be renewed at the discretion of the agency.

Applicants for the Nomad Residence Permit must:

  1. Prove they can work remotely using telecommunication technologies
  2. Be third country nationals.
  3. Prove they work in any of the following categories:
  1. Work for an employer registered in a foreign country and have a contract for this work, or
  2. Perform business activities for a company registered in a foreign country, and be a partner/shareholder of said company, or
  3. Offer freelance or consulting services, mainly to customers whose permanent establishment is in a foreign country, and have supporting contracts to verify this.
  4. Earn a monthly income of €2,700 gross of tax. If there are additional family members, they will each have to satisfy the income requirements as specified by the Agency Policy.
  5. Tax Advantages Available to Individuals

Successful applicants will not be taxed on their income as the income will be taxed in their home country.

How Can Dixcart Assist?

Dixcart can assist in providing advice as to which programme would be most appropriate for each individual or family. We can also organise visits to Malta, make the application for the relevant Maltese residence programme, assist with property searches and purchases, and provide a comprehensive range of individual and professional commercial services once relocation has taken place.

Additional Information

For further information about moving to Malta please contact Henno Kotze: advice.malta@dixcart.com at the Dixcart office in Malta. Alternatively, please speak to your usual Dixcart contact.

Dixcart Management Malta Limited Licence Number: AKM-DIXC-22

Isle of Man

An Isle of Man Exempt Fund – What, How and Why?

Exempt Funds are an often-overlooked vehicle that could provide a client with a cost effective, tailored solution for meeting their long-term financial objectives.

Under an Isle of Man Exempt Fund regulatory requirements need to be met, however ‘Functionaries’ (such as the managers and/or administrators), have a lot of flexibility and freedom to achieve the fund’s purpose.

As a Functionary, Dixcart can assist professional service providers such as Financial Advisers, Solicitors, Accountants etc. in establishing Exempt Funds domiciled in the Isle of Man.

In this article, we will cover the following topics to provide a quick overview:

How is an Isle of Man Exempt Fund defined?

As the name might suggest, an Isle of Man Exempt Fund is established in the Isle of Man; therefore, Manx law and regulation apply.

All Isle of Man funds, including Exempt Funds, must conform to the meanings defined within the Collective Investment Scheme Act 2008 (CISA 2008) and regulated under the Financial Services Act 2008.

Under Schedule 3 of CISA, an Exempt Fund must meet the following criteria:

  1. The Exempt Fund to have no more than 49 participants; and
  2. The fund is not to be publicly promoted; and
  3. The scheme must be (a) a Unit Trust governed by laws of the Isle of Man, (b) an Open Ended Investment Company (OEIC) formed or incorporated under the Isle of Man Companies Acts 1931-2004 or Companies Act 2006, or (c) a Limited Partnership that complies with Part II of the Partnership Act 1909, or (d) such other description of a scheme as is prescribed.

The limitations on what is not considered a Collective Investment Scheme are contained within CISA (Definition) Order 2017, and these apply to an Exempt Fund. Modifications to the rules outlined within CISA 2008 are allowable, but only on application and approval from the Isle of Man Financial Services Authority (FSA).

Appointing an administrator of an Isle of Man Exempt Fund

A Functionary of an Exempt Fund, such as Dixcart, must also hold the appropriate license with the FSA. Management and administration of Exempt Funds fall under Class 3(11) and 3(12) of the Financial Services Act 2008’s Regulated Activities Order 2011.

The Exempt Fund must meet the compliance requirements of the Isle of Man (e.g. AML/CFT). As an acting Functionary, Dixcart is well placed to guide and assist on all applicable regulatory matters.

Available asset classes for an Isle of Man Exempt Fund

Once established, there are no restrictions on the asset classes, trading strategy or leverage of the Exempt Fund – providing a large degree of freedom for achieving the client’s desired objectives.

An Exempt Scheme is not required to appoint a custodian or have its financial statements audited. The fund is free to implement whatever arrangements are appropriate for holding its assets, whether through the use of a third party, direct ownership or via special purpose vehicles to segregate separate asset classes.

Why establish an Exempt Fund on the Isle of Man?

The Isle of Man is a self-governing Crown Dependency with a Moody’s Aa3 Stable rating. The Manx Government boasts strong relationships with the OECD, IMF and FATF; working together with the local Financial Services Authority (FSA) and service providers to ensure a global and modern approach to compliance.

The business friendly Government, beneficial tax regime and ‘whitelist’ status make the Island a leading international financial centre with a lot to offer inbound investors.

Headline applicable rates of tax include:

  • 0% Corporate Tax
  • 0% Capital Gains Tax
  • 0% Inheritance Tax
  • 0% Withholding Tax on Dividends

What holding structures are appropriate for establishing an Isle of Man Exempt Fund?

Whilst CISA 2008 provides a list of applicable structures, ‘Open Ended Investment Companies’ (OEICs), and ‘Limited Partnerships’ are the most commonly used.

The use of a company, or a Limited Partnership offers a number of distinctive features, with only the general characteristics being presented below. For more information, relevant to your client’s specific circumstances, please get in touch.

Using an OEIC Structure for an Isle of Man Exempt Fund

An Isle of Man company benefits from a 0% tax rate on trading and investment income. They are also able to register for VAT, and businesses in the Isle of Man fall under the UK’s VAT regime.

There are no prescriptive requirements regarding the composition of a board of directors or the Exempt Fund documentation. It is however advisable, for the benefit of the investor, to include as much detail regarding the purpose and objectives of the Fund, in so far as a reasonable person might expect, to make a well-informed decision.

An OEIC can be established by the incorporation of a company under either the Companies Acts 1931, or the Companies Act 2006; the outcome of either vehicle will be comparable, but in some areas the legal form and constitution are quite distinct. Dixcart can assist with the effective establishment and administration of an OEIC holding structure for an Exempt Fund domiciled in the Isle of Man.

Using a Limited Partnership for an Isle of Man Exempt Fund

The Limited Partnership entity is a category of ‘Closed-ended Collective Investment Scheme’. The Limited Partnership will be registered under the Partnership Act 1909, which provides the legal framework and requirements of the vehicle, such as:

s47(2)

  • Must have one or more General Partners, who are liable for all debts and obligations of the firm.; and
  •  One or more persons called Limited Partners, who shall not be liable beyond the amount contributed.

s48

  • s48(1) Every limited partnership must be registered in accordance with the 1909 Act;
  • s48A(2) Every limited partnership shall maintain a place of business in the Isle of Man;
  • s48A(2) Every limited partnership shall appoint one or more persons resident in the Isle of Man, authorised to accept service of any process or documents on behalf of the partnership.

Many of the services required for the establishment of a Limited Partnership on the Isle of Man can be provided by Dixcart. These include those relating to; General Partners, the registered place of business and the administration of the Limited Partnership.

The General Partner must be responsible for the day-to-day decision-making and management of the Partnership. However, the Partnership can engage third party intermediaries for advice and management services with respect to the assets.

Investment is typically made by way of an interest-free loan that is repaid on maturity, along with any remaining balance by way of growth, to the Limited Partners. The exact form that this takes will be determined by the terms of the Partnership and the personal tax circumstances of each specific Limited Partner. Limited Partners will be subject to the tax regime in which they are resident.

A working example of a Isle of Man Exempt Fund

Key Benefits of an Isle of Man Exempt Scheme Summarised 

  • Simplicity of ownership – consolidates assets of any class into one vehicle with reduced administration for the Client.
  • Flexibility of asset class and investment strategy.
  • Cost efficiency.
  • The Client can retain a degree of control and can be appointed as a fund adviser.
  • Privacy and confidentiality.
  • The Fund administrator/manager is responsible for compliance and to meet the regulatory obligations. 
  • The Isle of Man holds an Aa3 Stable Moody’s rating, has strong international relationships and is highly regarded as a jurisdiction.

Get in touch

Exempt Funds are outside the scope of normal fund regulation in the Isle of Man, and with the variety of holding structures available, this category of Fund is particularly suited for private investment.

Dixcart provide a single point of contact for the setup and management of Exempt Funds and Fund vehicle; establishing the fund and organising the formation and management of the underlying holding companies.

If you require further information regarding Isle of Man Exempt Funds or any of the vehicles discussed, please feel free to get in touch with Steve Doyle, at Dixcart Isle of Man, to see how they can be used to meet your objectives:

advice.iom@dixcart.com

Alternatively you can connect with Steve on LinkedIn.

Dixcart Management (IOM) Limited is Licensed by the Isle of Man Financial Services Authority***

***This information is provided as guidance as at 01/03/21 and should not be considered advice. The most appropriate vehicle is determined by individual client needs and specific advice should be sought.

Multi Jurisdiction

Funds – Thinking Outside The Box

Certainty/Uncertainty

At the end of the first quarter of 2021, optimism is starting to rise and the challenges of 2020 and the start of 2021, are beginning to slowly diminish. Vaccine programmes have started to be put in place in a number of countries, with some achieving excellent vaccination rates, in a relatively short space of time.

For the UK and for Europe, Brexit has also taken place. There will be some heated discussions along the way, but the high element of uncertainty has been reduced.

There is a new era of politics in the US, with Joe Biden adopting a more conventional approach and hopes of less division and a more positive period for USA international policy.

However, many uncertainties remain and are likely to do so throughout 2021 and into 2022.

This climate has led to new trends emerging in the fund arena and has reconfirmed other existing trends, a number of these are detailed below: 

Ethical Investing and Renewable Energy

There has been a significant increase in sustainable and ethical investing. The fallout due to a worldwide pandemic has reinforced fears of a similar outcome, if carbon emissions are not reduced.

The pandemic has encouraged more people to be aware of and embrace environmental causes. The temporary lull in economic activity during lockdown, with its positive effects on air quality being appreciated by many, has prompted calls for an even more rapid move towards carbon neutrality. The US has already re-entered the Paris Climate Change Agreement and green issues are increasingly being discussed, as part of the political agenda in most countries.

As Governments seek to stimulate their economies, renewable energy, such as wind and solar power, are becoming popular areas to invest into. There is also likely to be increasing resources directed towards solutions in terms of how to store the excess power generated from renewable energy sources, for use, when it is needed.

Technology: Cloud Computing, Automation and Artificial Intelligence

A number of significant areas of the tech industry are becoming stronger; cloud computing for example.

Such technology has enabled millions of people to work,  shop and to play from home. The downloading of music and films, and taking part in eGaming has increased. E-learning has also mushroomed. The delivery of take-away meals is another sector that has increased significantly and again relies on cloud computing.

Whilst there will be a gradual return to people going back to work at their ‘place’ of employment and shopping in the high street, many patterns and routines have irrevocably changed.

As the world starts to recover from covid-19, a world-wide growth in entrepreneurship is predicted to occur, again relying on cloud computing technology. Even greater numbers of people will be starting their own ventures in the wake of covid-19, as the likelihood of unemployment looms large for many.

The pandemic is likely to accelerate investment into technology such as robotics and artificial intelligence. Organisations will be motivated to reduce the number of employees on the ‘shop floor’ and the growth in e-commerce demand is a phenomenon heavily reliant on API.

Healthcare

Bio Tech companies have multiplied as gene and cell therapies have offered exciting advances in the way diseases are treated, cured or vaccinated against.

Pharmaceutical companies such as AstraZeneca and Pfizer have proved themselves to be innovative and efficient in terms of developing a vaccine and the mass production of these medicines. There are a number of other pharmaceutical companies developing additional vaccine solutions.  

Ongoing Uncertainty – Particularly for Certain Sectors

It is difficult to predict the speed with which life might return to normal, post-covid, and this is likely to vary from country to country.

There is potential for airlines, leisure companies and the hospitality sector to thrive in the second half of 2021 and 2022, but only if the world moves out of the pandemic reasonably quickly.

The key to a successful business will be, a high quality product or service, an efficient organisational structure and a strategy that allows for more than one outcome. Diversification may be needed to insure against the possibility of a slow recovery from the pandemic.

Digital Transformation of Business Services

As with other sectors, business services have needed to rapidly adopt digital solutions to keep in touch with clients and contacts.

For many such organisations, including those in the funds sector, this has necessitated the introduction of updated governance and reporting mechanisms.

Additional Information

This Article summarises recent influences affecting the Funds sector.

If you would like additional information regarding Funds and the solutions that Dixcart can offer, please contact Antonio Pereira at the Dixcart office in Portugal: advice.portugal@dixcart.com.

Why Consider Using a Malta Private Trust Company for Estate and Succession Planning?

Introduction

The Private Trust Company (PTC), is a concept introduced into Maltese law in 2014. PTCs offer high net worth individuals and their families, a tailor-made solution for their estate and succession planning.

Such solutions give families the possibility to manage their own estate, through a bespoke estate planning tool, to suit their specific needs.

Benefits of a PTC

A PTC is a trustee, acting for a family trust, which is the corporate equivalent of a private individual trustee. Malta can therefore offer an alternative to the more traditional and common professional trustee/administrator or individual private trustee.

Why is a Malta PTC Attractive?

  • Malta PTCs are considered to be an attractive option to incorporate within a family estate succession plan, due to the simplicity and speed of the registration process.

Another advantage of a PTC is that it allows a degree of family involvement in the administration of the trust. Family members may be appointed to the board of directors of the PTC. Those involved in the management of the assets will have better knowledge of the asset performance in the trust and the flow of information can also be improved, via the board. Information relating to the family trust, can easily be shared with the family members.

An additional benefit of a PTC is the management cost. PTCs can typically be integrated within a family business, and can share a common board of directors and administrative facilities, as the family business, which in turn reduces costs. The initial set-up costs of a PTC might be higher, but the ongoing running cost will be reduced.

PTC Registration Process

A PTC is not required to undergo the full authorisation process, with the Malta Financial Services Authority (MFSA), that professional trustees and/or the administrators of foundations are required to undergo.

As long as all of the criteria are met, a PTC can then apply to register with the MFSA. This relatively simple registration process gives PTCs a significant advantage compared to  professional trustees and/or administrators, in terms of the reduced compliance obligations that need to be met, and the time taken.

PTC Objectives

PTC Objectives and Activities are limited to the following:

  • Acting as a trustee in relation to a specific settlor or settlors;
  • Providing administrative services in respect of a specific family trust or trusts;
  • Trustee services, available through a PTC must not be offered to the public;
  • Trustees must not frequently act as a trustee, and must not do so for more than 5 settlors of a family trust, at any given time.

Requirements for the Establishment of a PTC

A PTC should be a limited liability company based in Malta, to be eligible for registration, and must submit a form requesting inclusion in the ‘Register of Trustees for Family Offices’.

A PTC must have insurance cover proportionate to the size and nature of the trustee’s business operations.

The board of directors must comprise of at least 3 directors, each of which are collectively responsible. One director must take up the role of Money Laundering Reporting Officer (MLRO), and at least one of the directors of the company must have knowledge and experience in relation to the administration of trusts. The directors must be individuals, deemed by the MFSA, to be fit and proper individuals.

The Memorandum and Articles of Association of the PTC must limit the Objects and Activities to providing; trustee services, including administrative services to not more than 5 settlors at a time.

Additional Information

If you would like further information regarding PTCs in Malta, please speak to Jonathan Vassallo, or Maria Muzarowska: advice.malta@dixcart.com, at the Dixcart office in Malta or to your usual Dixcart contact.

The Malta Aircraft Registration Regime – A Favourable Aviation Base in the EU

Background

Malta has implemented an aircraft registration regime, structured in a manner to accommodate efficient registration of smaller aircrafts, in particular business jets.  The regime is governed by The Aircraft Registration Act Chapter 503 of the Laws of Malta which will serve as the framework for registration of aircrafts in Malta.

In recent years Malta has actively positioned itself as a favourable aviation base in the EU.  It has attracted several international carriers to operate from Malta and more importantly, the successful establishment of aircraft maintenance facilities such as those of SR Technics and Lufthansa Technik.

The Aircraft Registration Act addresses several important issues such as different types of registrants, the concept of fractional ownership and the protection of creditors and special privileges which may exist on the aircraft.  Aircraft registration is administered by the Authority for Transport in Malta.

The Registration Process – Key Information

An aircraft may be registered by the owner, operator, or its buyer, under a conditional sale. Only qualified persons and entities are entitled to register an aircraft in Malta.

Qualified persons are citizens of the European Union, EEA or Switzerland and qualified entities are entities that should be beneficially owned at least to the extent of 50% by individuals who are citizens of the European Union, EEA, or Switzerland. Qualification for registration is more flexible when it comes to the registration of private jets. 

An aircraft which is not used for ‘air services’ may be registered by any undertaking established in an OECD Member State. Registration caters for issues of confidentiality in the sense that it is possible for the aircraft to be registered by a trustee. Foreign undertakings registering an aircraft in Malta are obliged to appoint a Maltese resident agent.

Maltese registration allows the possibility for separate registration of the aircraft and its engines. An aircraft which is still under construction may also be registered in Malta. The notion of fractional ownership is fully recognised by Maltese law allowing the ownership of an aircraft to be split into one or more shares. Details recorded on the public register include the physical details of the aircraft, physical details of its engines, name and address of the registrant(s), details of any registered mortgage(s) and details on any irrevocable de-registration and export request authorisation.

Registering a Mortgage on an Aircraft

Maltese law allows the aircraft to act as a security for a debt or other obligation.

A mortgage on an aircraft may be registered and as such all registered mortgages including any special privileges are not affected by the bankruptcy or insolvency of its owner.  Furthermore, the law protects the judicial sale of the aircraft (instituted by the registered mortgage) from being interrupted by the administrator overseeing the bankruptcy proceedings of the owner. A mortgage may be transferred or amended according to the relevant preferences and circumstances of the creditor. Special privileges are granted in respect of certain judicial costs, fees owed to the Malta Transport Authority, wages payable to the aircraft’s crew, debts owed in relation to the repair and preservation of the aircraft and, if applicable, to wages and expenses in relation to salvage. Interpretation of the provision of the governing legislation has been consolidated and facilitated by Malta’s ratification of the Cape Town Convention.

Taxation of Aviation Activities in Malta

The regime is supported by attractive fiscal incentives:

  • Income derived by a person from ownership, operation of leasing of aircrafts is not taxable in Malta unless this is remitted to Malta.
  • 0% withholding tax on outbound lease and interest payments made to non-resident persons.
  • Beneficial depreciation period for wear and tear.
  • The Fringe Benefits (Amendment) Rules 2010 – in some cases, entities may be exempt from fringe benefit taxation (for example, the private use of an aircraft by an individual who is not resident in Malta and who is an employee of an entity whose business activities include ownership, leasing or operation of aircraft or aircraft engines, used for international transport of passengers/goods, shall not be considered as a fringe benefit, and is therefore, not taxable as a fringe benefit).

The Malta Highly Qualified Persons Programme and the Aviation Sector

The Highly Qualified Persons Programme is directed towards professional individuals earning over €86,938 per annum, employed in Malta on a contractual basis within the aviation sector.

This scheme is open to EU nationals for five years, and to non-EU nationals for four years.

Tax Advantages Available to Individuals – Highly Qualified Persons Programme

  • Income tax is set at a flat rate of 15% for qualifying individuals (instead of paying income tax on an ascending scale with a current maximum top rate of 35%).
  • No tax is payable on income earned over €5,000,000 relating to an employment contract for any one individual.

How can Dixcart help?

Through our team of experienced professionals, Dixcart Management Malta Limited will assist you in all aspects of registering your aircraft in Malta. Services range from incorporation of the entity owning the aircraft in Malta and full corporate and tax compliance, to the registration of the aircraft under the Maltese Registry, whilst ensuring full compliance with Maltese Aviation legislation.

 Additional Information

If you would like further information regarding Aircraft Registration in Malta, please speak to Henno Kotze or Jonathan Vassallo (advice.malta@dixcart.com) at the Dixcart office in Malta or your usual Dixcart contact.

The Benefits of Ship or Yacht Registration in Portugal, with the International Shipping Register of Madeira (MAR)

The International Shipping Register of Madeira (MAR) was established in 1989 as part of the Madeira International Business Centre (“MIBC”) “package” of taxation benefits.

Over half a million vessels are now registered with MAR and it is ranked the fourth international shipping register in the EU. If you are in the process of deciding where to register your vessel, Portugal should be considered.

Vessels registered with MAR carry the Portuguese flag and are subject to the International Treaties and Conventions entered into by Portugal. The register is of a high standard, has EU credibility, is not regarded as a flag of convenience, and is whitelisted in both Paris MoU and Med MoU. Moreover, it has never been regarded by the ITF as a flag of convenience.

It is important to note that the Portuguese Government is determined to boost the maritime economy, taking concrete steps to put MAR among the leading European flags. In this context we must point out that MAR is one of the first flags to fully introduce an efficient digital system, allowing for the dematerialisation of all procedures and the issuing of electronic certificates following the IMO Guidelines for the use of electronic certificates.

In the words of MAR’s Technical Commission, “Portugal considers digitalization in the maritime transport as a very relevant development, namely in respect to expediting sharing of information, improving security and traceability of documentation and reducing administrative burdens.”

It is therefore clear that MAR is offering the best quality package to owners worldwide, as any individual or entity can register a vessel with MAR. There are no nationality requirements for ship-owners of vessels registered in MAR and they are not required to have their head office in Madeira. In addition, if the entity is registered with the International Business Centre of Madeira (MIBC), and undertakes maritime transportation, it can enjoy specific tax incentives provided by the MIBC.

Advantages of Yacht Registration with MAR:

  • EU register – yacht registration in MAR provides unrestricted access to EU waters.
  • Yacht owners are not required to have their head office in Madeira (it is sufficient to have local legal representation with adequate powers).
  • Low levels of taxation.
  • The yacht does not have to sail or be moored in Madeira.
  • No citizenship requirements for the crew of commercial yachts and a flexible social security regime.
  • The existence of a flexible mortgage system which allows the mortgagor and the mortgagee, by written agreement, to choose the legal system of a particular country that will govern the terms of the mortgage.   
  • Reduced costs of registration.

Advantages of Ship Registration in MAR:

  • EU Flag – the register is of a high standard and has complete EU credibility, with access to continental and island cabotage.
  • The register is included in the Paris MoU Whitelist.
  • Competitive registration fees, there are no annual tonnage taxes.   
  • Only 30% of the safe manning must be “European”. This includes nationalities such as Polish, Russian, and Ukrainian, as well as citizens of Portuguese-speaking countries. This requirement may also be derogated if duly justified. This allows for flexible manning.
  • Crew wages are exempt from income tax and from social security charges in Portugal.
  • If an MIBC company is formed, with the object being maritime transportation, there is no share capital requirements.
  • Shipping companies licensed to operate within MAR benefit from a corporate income tax rate of 5% until 2027. They also enjoy:
    • automatic VAT registration,
    • access to the Portuguese double taxation treaty network,
    • exemption from withholding taxes on the distribution of dividends,
    • exemption from withholding taxes on interest, royalties and service fees paid to non-residents,
    • and exemption from capital duty, notary, and registration fees.
    • If certain requirements are met, shipping companies may also be exempt from capital gains tax when subsidiaries are sold.
  • The existence of a flexible mortgage system which allows the mortgagor and the mortgagee, by written agreement, to choose the legal system of a particular country that will govern the terms of the mortgage.   
  • Eight International Classification Societies are recognised in Portugal. MAR can delegate some of its functions to these societies. This can be simpler and more convenient for ship owners.          
  • Temporary registration is allowed by law (bareboat charter: “In” and “Out”).
  • Vessels under the Portuguese flag are included in the Qualship 21 Index of the United States of America. This certificate recognises the exceptional standards of the Register.

Summary

If you are interested in registering your vessel in Portugal and would like to take advantages of the benefits listed within this article, please contact: advice.portugal@dixcart.com, or your usual Dixcart contact. 

Luxury Yachts – Top Tips for Tax Efficient Registration

Where to Moor Up for More Benefits

Choosing the right jurisdiction for the registration and domiciliation of a yacht is key. Especially for your luxury yacht.

Malta’s  reputation as an international centre of Maritime excellence, makes it a popular choice for yacht registration. This applies for both commercial registrations whereby a yacht undertakes commercial chartering, and also in terms of pleasure registrations where leasing is popular.  

Cyprus is another attractive jurisdiction in the EU for yacht registration and leasing.

Alternatively, Guernsey, close to the UK, is of interest to owners of certain types of pleasure yacht, and the Isle of Man is attractive due to a number of tax efficiencies.

The Dixcart office in Madeira (Portugal) has registered yachts in the Azores and in the low tax international business centre of Madeira. The Azores (Portugal) can be a preferred location for yacht importation into the EU due to its low rate of VAT.

Whether you are a prospective buyer or an existing owner – these top tips are for you.

  • Registering your Luxury Yacht – Speak to an Adviser

Advisers often need to guide clients on the most suitable jurisdiction to flag a vessel. Historically, advisers have preferred tried and tested jurisdictions, but in today’s competitive world there is increasing importance on other issues such as jurisdiction perception, international transparency, time differences, appropriate legal systems, expertise, and growing costs associated with certain jurisdictions.

“Best practice” to select a suitable flag would generally include consideration of the following criteria:

  • Strong economic international standards – a minimum ‘A rating’.
  • Robust legal system.
  • A commercially run register – emphasis on service and response.
  • A strong performance in the areas of safety, security, and environmental protection.
  • A jurisdiction that is Whitelisted by the Paris & Tokyo Memorandum of Understanding (Paris/Tokyo MoU) – and has a low-risk rating.
  • A jurisdiction strong on reputation, compliance, and transparency.
  • A jurisdiction with low registration costs, simplified bureaucratic procedures, and an appropriate tax regime.

Owners who choose a flag outside of their country of residence do so for one of the above reasons. Just remember, once you have chosen where to register your vessel, some of that particular country’s laws may apply to your yacht since a yacht is considered as an extension of the country under which it is flagged.

  • Understanding VAT

VAT is chargeable on any commodities imported into the EU, and yachts are no exception. VAT is also charged on commercial use of such yachts within EU territorial waters. Therefore, it is important to understand how VAT affects you.

As expected, EU member states have different VAT rates and also have their own interpretation regarding certain EU VAT directives. There may also be local practical procedures which differ from those of other countries – so it is important to speak to a professional adviser to clarify the legislation and procedures that could apply to you. Once the VAT element is settled, a yacht can circulate freely throughout the EU.

On the other hand, any private yachts owned by a non-EU resident registered under a non-EU flag may be allowed to enter EU waters for up to 18 months without VAT implications, on a Temporary Import Basis. If this applies to you, more information can be provided on request: advice@dixcart.com.

Ownership Structures

Corporate entities can register yachts, and this is the option chosen by the majority of yacht owners. Most yacht owners will choose an LLC in order to reduce their personal liability associated with the yacht, however alternative options also exist.

But why? What are the benefits? One of the most common reasons is limited liability. By registering a yacht under a limited liability company, the owner can mitigate their personal liability and protect their personal assets.

In addition, if the decision is made to sell the yacht, by holding it under an entity, the ease of transferring the shares from the holding company to the buyer, is far easier especially if the buyer wishes to maintain the existing structure, crew, flag, and setup. Instead of selling the yacht, the owner can sell the company itself, which may be exempt from sales tax, depending on the circumstances.

Summary

Where a vessel owner decides to register their yacht or ship and the relative owning structure is an important consideration. It can present significant implications in terms of managing the vessel and the tax effects that may result.

Structured ownership can provide various opportunities in terms of yacht acquisition and subsequent operation. The challenge is getting it right.

Dixcart Air Marine can assist clients with the registration of the yacht in a number of jurisdictions, provide a complete service in terms of the formation and management of the corporate entity, ongoing maintenance of the yacht registration itself, and additional concierge services, from assisting with crewing, including crew contracts, and payroll.

For more information, please contact:advice@dixcart.com or your usual Dixcart contact.

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

Dixcart Air Marine – Team Introduction

The Team and Activity

Dixcart Air Marine assists clients with the registration of yachts, ships, and aircraft in a number of different jurisdictions.

Our team of experienced professionals across the various Dixcart offices, provide a complete service for clients. Professionalism, coupled with practical experience, help guarantee a smooth process for our clients and enables them to access a range of attractive measures that are available in the different jurisdictions.

Dixcart Air Marine can coordinate the entire yacht, ship, or aircraft purchase and/or ownership. To maximise the benefits, one of our professionals should ideally be involved as early as possible – as soon as the thought of owning the asset has occurred to the client. To see the full range of services available, please click here.

Introduction to Jonathan Vassallo and Gisela Martins

Jonathan Vassallo from the Malta office and Gisela Martins from the Madeira office are two key members of the Dixcart Air Marine team that we are introducing you to today.

Jonathan joined Dixcart in September 2009. He is a member of the Association of Chartered Certified Accountants, the Malta Institute of Taxation, the Malta Institute of Accountants, and the Malta Institute of Management. Jonathan is also a member of the Yachting Business Section of the Malta Chamber of Commerce, Enterprise and Industry. He is the Managing Director of the Dixcart office in Malta.

Gisela Martins joined the Dixcart Group in 2010 as a senior lawyer in the legal and compliance department. Her practice is focused on Corporate, Tax, Shipping and Residency programmes. Gisela graduated in Law from the Catholic University of Portugal, in Lisbon, and worked for the international law firm Miranda & Associados.

She holds a Post-Graduate Degree in Management and Tax from the Portuguese Institute for Finance and Tax Studies (IESF).

Jonathan Vassallo – Jonathan.vassallo@dixcart.com

Jonathan Vassallo

Jonathan was appointed Director of Dixcart Management Malta Limited at the start of 2013 and Managing Director during 2018. His role is to develop and implement strategy for the Malta office ensuring that the Group’s high standards of compliance and operational control are maintained. He manages a number of relationships with international clients and particularly specialises in the areas of yachting, residence, and VAT. He has extensive experience with the registration of yachts and superyachts, the formation and administration of the relevant holding structures, and the ongoing management of yachting structures.

Before joining Dixcart, Jonathan Vassallo was involved in the manufacturing industry in Malta for thirteen years. During this term, he served as an Accountant and Financial Controller for two major furniture firms in Malta.

Gisela Martins – Gisela.martins@dixcart.com

Gisela Martins

Gisela is a member of the Air Marine department at the Dixcart office in Madeira (Portugal). She has extensive experience regarding yacht and ship registration, gained over 20 years, and is a member of the Women’s International Shipping & Trading Association (WISTA).

Gisela provides advice on the setting up of appropriate ownership structures for the vessel, assists with VAT and yacht importation, and has been involved in several yacht and ship transactions and mortgages.

Gisela has been involved in a wide variety of domestic and international transactions, advising corporate clients in sectors such as mergers, commercial contracts, corporate transactions, including share acquisitions and disposals, and corporate reorganisations and restructuring. She has also provided tax and legal assistance to several private clients wishing to relocate to Portugal in order to benefit from the special tax regime, the Non-Habitual Residents Programme.

Why Should You Consider The Isle of Man for Yachting, Post-Brexit?

2020 was mired with uncertainty, but with an end to Brexit negotiations, vaccines, and the promise of further freedoms around the corner, 2021 will hopefully be a return to calmer waters. You, or your clients, may even have started to consider what happens next with regards to their Yachting activities.

With the dust settling in the wake of the UK’s departure from the EU, resulting in a nearly 1,300 page EU-UK Trade and Cooperation Agreement, there is now more clarity on the Agreement’s impact on Yachting activities and potential tax implications.

One such clarification being that, following the UK’s exit from the EU, the Isle of Man is no longer deemed EU resident by association. As such, Yachts owned via an Isle of Man entity may qualify for Temporary Admission into EU waters. In this article, we will be covering the following topics to provide a quick overview:

  • Temporary Admission (TA) for Private Yachts
  • How to Meet the Requirements of Temporary Admission (TA)
  • What Next? Things to Consider When Planning Your Yacht Fiduciary Services

Temporary Admission (TA) for Private Yachts

Temporary Admission (TA) is a Customs procedure, in line with the Istanbul Convention 1990, which allows certain goods (including means of transport – e.g., private Yachts) to be brought into the Customs Territory with total or partial relief from import duties and taxes, subject to conditions.

For example, the goods must be imported for ‘Specific Purpose’ and are intended for re-exportation within a specified period.

Whilst owners established outside of the Customs area are exempt from VAT under TA, Customs Duty relief varies, dependent on the jurisdiction’s classification of the vessel and its Specific Purpose for being imported.

For quick reference we have provided a table of the headline details/requirements below:

EU TA
The Vessel is registered outside of the Customs Union. (The flag state of the Yacht is non-EU)  
The vessel is used by an individual established outside of the Customs Union. (The owning entity is established outside the EU)  
The vessel must be operated by an individual established outside of the Customs Union. (Ultimate Beneficial Owner must be resident outside the EU)  
Some further conditions to note:
a) The goods must be imported with the intention of re-exporting them at a later date (Maximum 18 months);
b) No alteration of the goods is intended (allowing for maintenance/upkeep), i.e. no value is to be added;
c) The goods can be clearly identified (e.g., hull identification number etc.);
d) The overall Customs requirements are met; and A guarantee is provided, if required (specific to the Member State).  

How to meet the requirements of Temporary Admission (TA)

Thankfully there is a lot of scope for meeting the requirements for those wishing to set sail in the EU under TA:

  1. Registration of the vessel

For a TA procedure to apply with full VAT and Customs Duty relief, the Yacht must be registered in a jurisdiction outside of the EU (it will use the flag of a Non-Member State).

Following its departure from the EU, the Isle of Man now meets this criteria, alongside traditional favourites such as the Cayman Islands.

  • Establishment of the individual

For our purposes, ‘individual’ refers to both Natural Persons and Corporate Entities. In this way we can have an individual established in a separate jurisdiction to the Ultimate Beneficial Owner (UBO) – often by way of a holding company, that will own the Yacht and which in turn will be subject to the local tax regime.

The jurisdiction of establishment in this case does not necessarily have to be the same as the chosen flag of the vessel.

  • Establishment of the Ultimate Beneficial Owner (UBO) 

For the purposes of TA, so long as the UBO is resident outside of the EU, they will qualify.

What Next? Things to Consider When Planning Your Yacht Fiduciary Services

When selecting a suitable ownership structure for the registration of a Private Yacht, which will benefit from TA within EU waters, we would suggest checking the following broad criteria.

Choosing a Jurisdiction for the Holding Structure

  • Strong economic international standards – a minimum ‘A rating’. (S&P / Moody’s)
    • Robust legal standards.
    • An OECD Whitelisted jurisdiction with a strong reputation for compliance and transparency.
    • Beneficial tax regime taxes.

Choosing a Yacht Fiduciary Service

To assist with the specialist advice, corporate structuring, and administration of the Yacht, we would recommend ensuring that your service provider ticks the following boxes:

  • Geographic location – with relation to the local tax regime and time zone (for accessibility and ease of dealing). 
    • A proven track record –how established the provider is in the sector, as well as familiarity with this category of service.
    • Access to experts – with many providers, their scale often prevents direct and regular dealings with senior qualified staff members; you will want access to experts whenever you have a query or action that is required, and not to always have these dealt with by juniors.
    • Your business is valued – in an ideal situation, your business will be a priority to the provider, not just another client on the books. Finding a provider that is adaptable and responsive is key to service excellence.

What are Your Yacht Fiduciary Service Options?

With so many well-established shipping registrars and a wide selection of beneficial jurisdictions for incorporating a holding structure, you would be forgiven for having flashbacks of 2020’s uncertainty. This is where we can help.

At Dixcart, your needs are our priority – we provide a bespoke and personal service for those looking to manage and administer their luxury assets; giving you access to experts as and when you require them.

Because we are based in the Isle of Man, we benefit from our Aa3 rated jurisdiction’s political, economic and environmental stability. The Island is a self-governed Crown Dependency, setting its own laws and rates of taxation.

Whilst we can access any number of shipping registers, our local registrar has an exceptional track record of service excellence; providing an approach that blends modern flexible services and competitive rates without compromising on quality.

The beneficial tax regime, business friendly government and OECD ‘Whitelist’ status ensure that the tax vehicles we offer can help you achieve your goals whilst remaining globally compliant.

An Isle of Man registered Company enjoys the following benefits:

We have been assisting clients and their advisers for over 45 years with the effective structuring and administration of wealth, having experience of utilising multiple shipping registers to ensign vessels in line with their desired purpose. If you would like to discuss how we can assist you in achieving the effective and efficient administration of a vessel we would be delighted to hear from you. Please contact Paul Harvey at the Dixcart Office in the Isle of Man: advice.iom@dixcart.com.

Alternatively, you can connect with Paul on LinkedIn or find out more about our Dixcart Air Marine services here.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

This information is provided as guidance as at 01/03/21 and should not be considered advice. The most appropriate vehicle is determined by individual client needs and specific advice should be sought.