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Substance Requirements

Substance Requirements

Requirements for certain Isle of Man resident companies


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The Isle of Man's draft Income Tax (Substance Requirements) Order 2018 was published on 6 November 2018.The draft Order provides detail as to which companies are affected, how the substance requirements will be applied and the penalties for failure to comply.

Among the proposals within the draft Order, we would highlight the following:

  • detailed definitions are provided in order to assess whether a company is a "relevant sector company";
  • the requirements to satisfy the economic substance test;
  • penalties for non-compliance which could be as high as £100,000 and, ultimately, the company being struck off;
  • in relation to "high risk IP companies", there is a rebuttable presumption that the economic substance test is not met;
  • certain information may be exchanged by the Assessor with other competent authorities in the EU.

The Assessor has also published draft guidance which discusses key aspects of the requirements.

As always, KPMG will be assisting its clients in getting ready for what is to come.

If you would like to discuss the above, do please contact us.

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