Isle of Man: Economic substance rules extended to partnerships

The substance requirements for partnerships are broadly similar to those for companies.

The substance requirements for partnerships are broadly similar to those for companies.

The Tynwald (the legislature of the Isle of Man) on 16 June 2021 approved measures to extend the economic substance rules to partnerships for accounting periods beginning on or after 1 July 2021. Under these measures, the economic substance rules also apply to limited liability corporations (LLCs).

The legislation also introduces a requirement for certain partnerships (including Isle of Man partnerships and non-Isle of Man partnerships with business activity on the Isle of Man) to register with the Assessor of Income Tax. Registration is to be made within 90 days or the later of:

  • The date when the partnership was formed
  • The date when the partnership moves its place of effective management to the island
  • The date when the partnership commenced business activities on the island
  • 16 June 2021 for partnerships currently in existence

As a result of the new rules, partnerships need to determine whether they have any income from a relevant sector in respect of each accounting period beginning on or after 1 July 2021 and if they have such income, then they need to satisfy the new requirements. Failure to comply may result in the imposition of financial penalties and potentially a “strike off.” The substance requirements for partnerships are broadly similar to those for companies. 
 

Read a June 2021 report prepared by the KPMG member firm on the Isle of Man

 

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