The Special Treatment of Key Employees (Key Employee Incentive) can be extremely beneficial to new arrivals to the Island, if they are an entrepreneur setting up a new business, or a key employee being hired to develop or expand a new or existing company.
The incentive provides that an individual will only be liable to Manx income tax on Manx source income.
In essence, only the individual’s Manx source employment income, including benefits in kind and rent arising from property in the Island is subject to Manx income tax. This means that an individual’s non-Isle of Man source income (and certain Isle of Man source income such as dividends and interest) is not subject to Manx income tax. The special treatment applies for a maximum of the first three years after the date of commencement when the relevant individual becomes resident for tax purposes in the Isle of Man. It will cease to apply if the individual leaves the employment of the new business or employer within the three year period.
The special treatment is aimed at individuals who are or will be new residents and who are essential to the implementation and the operation of new business in the Island. This could be an entrepreneur setting up the new business itself or a key new employee that an existing business requires to move to the Island in order to expand or develop into a new area or market.
The business must be establishing or developing itself in the Island and its activity be in the interests of the Island’s economy. Furthermore, the business must provide additional productive employment in the Island.
This could be beneficial to those who have substantial income streams from global sources. Key workers and entrepreneurs must become Isle of Man resident, must be employed by the business on the Island and must be receiving a salary which reflects their key status.
It must be noted that the key employee special treatment is granted at the discretion of the Assessor of Income Tax. Applications are handled directly by the Assessor; however, there are a number of on-Island intermediaries and advisors who are able to provide further information on eligibility.
Eligible individuals must become Isle of Man resident
Most income, except Isle of Man employment income, is tax free
Maximum of 3 tax years
Employment must be in the interests of the economy of the Island
Suitable for key employers