Double tax treaty between UK and Isle of Man enters into force
A new double tax treaty entered into force last month between the UK and the Isle of Man. This treaty replaces the previous 1955 Arrangement between the two governments for the avoidance of double taxation.
The new treaty has been created in line with the recommendations of the OECD following its report on ‘base erosion and profit shifting’. This report refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no tax locations.
The UK has entered into a number of treaties recently which will have an impact on existing structures in the Channel Islands. These structures have previously been used to legitimately reduce UK tax on various profits. Anyone with an Isle of Man structure that derives income or gains from the UK should seek advice as to how this new treaty might affect them. It is likely that these arrangements will also increase the flow of information between the two jurisdictions.
For advice on Tax matters, please contact Graeme Perry, Head of International and Cross Border Tax.