The Isle of Man is situated in the north of the Irish Sea between the Northwest of England, the Southwest of Scotland, and Northern Ireland. It has an area of 570 square kilometres (220 square miles) and is approximately 56 kilometres (35 miles) long and 20 kilometres (13 miles) wide at its broadest point.

Population and Language

The population of the Island is approximately 74,000, of whom about one-third live in Douglas, the capital. The spoken language is English.

Constitution and Law

The Isle of Man is not part of the United Kingdom, although its head of state as Lord of Man is the British sovereign, who is represented in the Island by a lieutenant governor. The Isle of Man is self-governing in all respects except foreign policy and defence, and has its own parliament, Tynwald, which claims to be the oldest legislative body in the world. Laws passed in the United Kingdom do not affect the Island unless specific clauses to that effect are inserted, in which case Tynwald will, where necessary, duplicate the British legislation with Acts of its own. The Island's legal system is largely based on that of England and Wales, and the influence of English case law is strong.

The taxation system in the Island is entirely separate from that of the United Kingdom, apart from value added tax which is charged in accordance with the same law that applies in the United Kingdom.

The Isle of Man has a special relationship with the European Union (EU). Under Protocol 3 of the United Kingdom's Treaty of Accession to the EU, the Island is within the EU but is effectively excluded from all provisions of the Treaty of Rome other than those relating to free trade in agricultural and industrial products within the Community. In particular, it is not subject to EU regulations aimed at the harmonisation of tax, corporate, and other laws, except where they concern the common customs tariff and some agricultural levies. The Island is a member of the OECD.


The Island's currency is the pound sterling (£ ), which is divided into 100 pence. The Isle of Man Government issues its own notes and coins; these are interchangeable in the Island with UK currency, but are not accepted in the United Kingdom other than by banks.


The Island's economy is dependent on international influences especially on the performance of the United Kingdom economy. Inflation and interest rates generally follow UK trends.

The Government has been instrumental in expanding the economic base from a dependence on tourism by encouraging growth in the financial sector and manufacturing with low rates of taxation, grants and loans available to new investors. The Island is now a particularly attractive location to high value added manufacturing concerns.

State ownership is limited to the electricity and water supplies, the airport and shipping terminal.


The Isle of Man is an established financial centre, particularly in the fields of banking and insurance.

The Manx government actively promotes the Island as a commercial and industrial centre. In addition to campaigns in the United Kingdom and Europe, the government has broadened its search for new investment. The establishment of a Freeport on the Island, the only one in Europe to be situated in a low-tax area, is encouraging investment from overseas.

Among the Island's advantages as a financial centre are its good communications with the United Kingdom, the relatively low cost of real estate (commercial as well as residential) and labour compared with the UK mainland and other offshore financial centres, its political stability, and the ready availability of expert financial, marketing, and other professional services. The Island, compared to some other offshore jurisdictions is relatively sparsely populated. It thus has plenty of space to enable further development. The Island, being an associate member of the European Union, also enjoys the advantages of a free trade area containing some 350 million people.

In addition, the Island can be used as a centre for the management and control of tax-exempt companies. Such companies, and any non-residents in receipt of benefits from them, are not liable to Manx income tax (see "Exempt Companies" under "Offshore Business"). Following the implementation of the Exempt Insurance Companies Act 1981, the Isle of Man also became an attractive location from which to operate insurance business, especially that of captive insurance companies (see "Exempt Insurance Companies").

Legislation also exists to exempt the whole or part of the profits or income of a managed bank from liability to income tax. (See tax exempt managed banks.)

Industrial developments with a high added value element (such as microelectronics) are particularly welcomed.

The information given is not exhaustive and is based on conditions existing at 5 May 1999. Readers are advised to consult with professionals, such as independent accountants, legal counsel, and investment bankers, before taking any formal action. Deloitte & Touche would be pleased to discuss specific problems.