Isle of Man *
Foundation
The Isle of Man, a self-governing British Crown Dependency with a long-standing reputation for political stability and regulatory integrity, offers a range of legal structures tailored for wealth management, succession planning, and charitable or private asset holding. Among these, the Isle of Man Foundation represents a distinctive hybrid legal entity that combines aspects of both trusts and companies. Introduced under the Foundations Act 2011, the Isle of Man Foundation provides a flexible and robust framework for both private and commercial purposes, catering particularly to international clients seeking asset protection and structured governance.
A foundation in the Isle of Man is a legal person in its own right, separate from its founders and beneficiaries. This distinguishes it from a trust, which is not an entity but a legal relationship. While it shares certain fiduciary characteristics with a trust—such as the obligation to act in the interest of beneficiaries or purposes—it also bears structural resemblance to a company, having a council (akin to a board of directors), a registered office, and a formal governance charter.
Foundations are particularly well-suited for civil law jurisdictions where the trust concept is not always recognised or fully understood. By providing an alternative structure that does not rely on common law trust principles, the Isle of Man Foundation appeals to a global clientele, particularly in Europe, the Middle East, and parts of Asia.
Isle of Man foundations are formed by submitting the necessary documents to the Isle of Man Companies Registry. These documents include:
- A foundation instrument (analogous to a company’s memorandum), which sets out the name, object, duration (if any), and initial endowment of the foundation.
- A foundation rules document, which governs the internal affairs of the foundation, including the duties of the council, procedures for appointing and removing council members, decision-making processes, and the rights of beneficiaries, if any.
The council is responsible for the day-to-day management of the foundation and must consist of at least one qualified person licensed under the Isle of Man’s Financial Services legislation. This requirement ensures oversight by regulated professionals. The founder may be a member of the council, although the structure can be designed to limit their influence post-establishment.
An optional but common feature is the appointment of a protector or enforcer, who may have powers to oversee the actions of the council, including veto rights over certain decisions. This can be particularly useful in ensuring alignment with the founder’s wishes, especially where beneficiaries lack standing to enforce the foundation’s objects.
The Isle of Man Foundation is a versatile legal vehicle and may be established for a wide variety of lawful purposes, whether charitable, private, or mixed.
1. Wealth and Succession Planning
Foundations are commonly used for long-term asset protection and intergenerational wealth transfer. As the foundation does not have shareholders or partners, assets are held for the benefit of specified individuals or classes, allowing families to maintain control over distribution across generations.
2. Charitable and Philanthropic Purposes
Foundations can be established exclusively for charitable objects or for a combination of charitable and private purposes. This allows for flexible deployment of philanthropic capital while maintaining oversight through a regulated governance structure.
3. Asset Protection and Holding Structures
Foundations are often used to hold ownership in operating companies, intellectual property, real estate, yachts, and other high-value assets. The separate legal personality and limited access rights of beneficiaries make it an effective structure for ring-fencing assets from third-party claims or political instability in the founder’s home jurisdiction.
4. Corporate Governance and Employee Benefit Schemes
They may also be employed in commercial settings, such as acting as the controlling entity in a group structure, or to operate employee share ownership or pension schemes where fiduciary oversight and neutrality are essential.
Isle of Man foundations must have a registered office on the island and are subject to ongoing regulatory requirements. While the name of the foundation and its registered office are publicly available, the foundation rules and the identity of beneficiaries are not automatically disclosed unless voluntarily filed or disclosed by court order.
From a tax perspective, an Isle of Man foundation is treated as a corporate taxpayer and subject to the island’s general corporate tax rate, which is 0% for most types of income. However, income derived from local land and property, or from certain regulated financial services, may be taxed at 10%. Foundations do not pay withholding tax on distributions to non-residents. However, beneficiaries may be liable to taxation in their own jurisdictions depending on applicable controlled foreign company (CFC) rules or anti-avoidance legislation.
Foundations must maintain adequate accounting records, although they are not required to publish financial statements or undergo an annual audit unless mandated by their governing documents or if they fall under specific regulated activities.
The Foundations Act 2011 includes provisions to safeguard the independence of the foundation’s council and to limit frivolous claims by dissatisfied beneficiaries. The Isle of Man courts maintain jurisdiction over foundation-related disputes, and the judiciary has a strong reputation for impartiality and legal rigor. Founders may incorporate arbitration clauses into the foundation rules, offering an alternative route for resolving internal disputes.
Legal *
Country code – IM
Legal Basis – Common law
Legal framework – Foundations Act, 2011
Regulatory board - Isle of Man Department of Economic Development
Entity – Foundation
Liability - An Isle of Man foundation has its own separate legal personality, the properties and resources of it constitute an independent patrimony from that of the Founders, the Foundation Council members, Protector, and Beneficiaries.
Dedication of assets – An Isle of Man Foundation does not require an initial dedication of assets.
Founder – The founder is who establish the Foundation, it may be a legal or a natural person.
The founder may reserve rights within the rules of the foundation, for example, a power to amend, revoke or vary the objects of the foundation, to appoint and remove council members or beneficiaries, or a requirement that his consent is obtained before the council carries out certain actions. Such rights may also be granted to third parties.
The founder can be a member of the foundation council and reserve powers to himself, be a beneficiary or an enforcer of the foundation. Its details are not publicly disclosed.
Foundation Council – The Foundation Council’s role is to administer the foundation’s property and to ensure that its objects are met. The council must consist of at least one member, which may be a corporate entity. There is no requirement that council members must be located in the Isle of Man. The members of the council must act in good faith and in the best interests of the foundation. The council members must also exercise the care, due diligence and skill that a reasonably prudent person would exercise in comparable circumstances Name and address of Council Members are publicly disclosed.
Enforcer – Enforcer is only required for foundations with a non-charitable purpose object. Otherwise, an enforcer is optional. An enforcer may be a natural person or a corporate body. The purpose of the enforcer is to ensure that the objects of the foundation are met. The founder may also be the enforcer.
Beneficiaries – A beneficiary has no automatic interest in the assets of a foundation. A beneficiary may, however, become entitled to a benefit under the foundation at such time and to such extent as may be provided for in the Instrument and Rules.
The beneficiaries of the Foundation have the right to confidentiality. Information cannot be disclosed to a third party without the express or implied consent of a beneficiary. Corporate bodies or natural persons may be beneficiaries.
Beneficiaries' Right to Information - Beneficiaries have a right to certain information, which right can be disapplied by the foundation rules, in which case the beneficiary may apply to the court for the information.
Registered Agent – Every foundation is required to have a registered agent which is the holder of a Class 4 license issued by the Isle of Man Financial Services Authority under the Financial Services Act 2008.
Foundation Instrument - The Instrument is the major constitutional document of a foundation and, amongst other things, sets out the objects of the foundation. The foundation instrument states the name of the foundation; its objects; the names and addresses of the council members; and the name and address of the registered agent.
The instrument document is publicly available.
Foundation Rules – The Rules is a private document that governs how a foundation operates constitutionally.
The rules of the foundation must make provision for the establishment of the council, the appointment, retirement, removal, and remuneration of council members, the functions of the council and how council decisions are to be made; the appointment, retirement, removal and remuneration of the registered agent; if the foundation is to have an enforcer, the appointment, retirement and remuneration of the enforcer and what his functions are; a record of all dedications of assets to the foundation; how the assets of the foundation are to be applied on winding-up; and if the foundation is to be wound up after a fixed period or on the happening of a particular event, or if a person has the right to have the foundation wound up, details of that period, event or right.
The rules may also provide for other matters relevant to the foundation, as the addition and removal of beneficiaries; the means by which amendments to the foundation instrument and the rules may be made; and the appointment, retirement, removal, and remuneration of any other office- or powerholders.
Re-domiciliation – A foundation established in another country may continue in the Isle of Man (if permitted under the law of the other country), and vice versa. The administration fee to continue in the Isle of Man is £100; to discontinue in the Isle of Man the fee is £550.
Mergers - Treasury may make regulations in respect of the mergers of foundations.
Charitable/Philanthropic Purposes - Permitted.
Compliance – The foundation must retain the following documents and records within the Isle of Man: up-to-date copies of the foundation instrument and foundation rules; a register showing the names and addresses of the council members; records sufficient to show and explain its transactions, including minutes of meetings of the council and resolutions of the council; a record of the appointment of any enforcer - the name, address and date of appointment; records that disclose, with reasonable accuracy, its financial position; and a register of the names and addresses of all dedicators to the foundation.
The foundation must maintain reliable accounting records which are sufficient to allow financial statements to be prepared. If a foundation has not prepared financial statements for a continuous period of eighteen months or more, a person with sufficient interest may demand that financial statements be prepared for that period.
- Corporate founder permitted * *
- Corporate council members permitted * *
- Protector/Guardian required * *
- Local regulated person required * *
- Founder not disclosed in a public registry * *
- Council members not disclosed in a public registry * *
- Protector/Guardian not disclosed in a public registry * *
- Beneficiaries not disclosed in a public registry * *
- Beneficiaries have right to information * *
- Merge permitted * *
- Redomiciliation permitted * *
- Charitable purposes permitted * *
- Registered agent required * *
- Common law Base legal
- - Initial endowment of assets *
- 1 Minimum council members *
- £100 Registration fee *
- £380 Annual government fee *
- 2018 AEOI *
Taxes *
In the Isle of Man, a foundation is treated as a corporate taxpayer for income tax purposes.
Corporate tax standard rate is 0%.
Income from real property located in the Isle of Man is subject to 20% tax.
Capital Gains are exempt from taxation.
Dividends received from resident or non-resident entities are generally subject to 0% tax.
Interest and royalty income is taxed at standard rate of 0%.
- Offshore Income Tax Exemption * *
- Offshore capital gains tax exemption * *
- Offshore dividends tax exemption * *
- CFC Rules * *
- Thin Capitalisation Rules * *
- Patent Box * *
- Tax Incentives & Credits * *
- Property Tax * *
- Wealth tax * *
- Estate inheritance tax * *
- Transfer tax * *
- Capital duties * *
- 0% Offshore Income Tax Rate *
- 0% Corporate Tax Rate *
- 0% Capital Gains Tax Rate *
- 0% Dividends Received *
- 0% Dividends Withholding Tax Rate *
- 0% Interests Withholding Tax Rate *
- 0% Royalties Withholding Tax Rate *
- 1 Losses carryback (years) *
- Indefinitely Losses carryforward (years) *
- 20% Personal Income Tax Rate *
- 20% VAT Rate *
- 0 Tax Treaties *
Country details *
The Isle of Man is a British Crown Dependency formed by the main island and some islets located in the sea of Ireland, between Ireland and Great Britain. The sovereign is the British monarch, as lord of Man, who is represented by the governor-general. Its international representation and defense are the responsibility of the Government of the United Kingdom.
Like all other dependencies, it is not part of the United Kingdom, neither the European Union nor the European Economic Area. Although it does belong to the customs union of the European Union, thus benefiting from the free movement of industrial and agricultural goods.
As a member of the Common Travel Area, the free movement of citizens of the European Economic Area is also permitted.
The island is 572 sq. km. in extent and low elevation above sea level, with 621 meters of maximum altitude on Snaefell mountain. Around the main island, there are a few small islands such as Calf of Man, St Patrick, and St Michael.
The Isle of Man has about 80,000 inhabitants, of whom 26,000 reside in the island's capital, Douglas.
The English language is spoken by almost the entire population of the island and is also the official language. Manx Gaelic is the historical language and was traditionally spoken, but today there are few who speak fluently or on a daily basis.
The Isle of Man Pound is the official currency, which is not an independent monetary unit but is a special pound sterling (GBP) issued for the island.
The Isle of Man has a completely independent government, parliament elected by universal suffrage (Tynwald) and judicial system. The executive power of the island is in charge of the General Minister and his or her Council of Ministers. The General Minister is nominated by Tynwald after each general election.
Financial services are the main economic sector. Banking, insurance, financial and offshore business services alone constitute more than a third of the island's GDP. Recently, it has been opened an office of the International Stock Exchange to boost the financial industry of the island.
Manufacturing, tourism, and more recently gambling are other key sectors of its economy. Agriculture and fisheries, traditionally the major sectors, are currently relatively small in the Manx economy.