Isle of Man
Trust
The Isle of Man, an established international financial jurisdiction, offers a mature legal environment for the creation and administration of trusts. As a common law jurisdiction with a robust trust law framework, the island has long been a preferred destination for private and institutional clients seeking effective wealth structuring solutions. Isle of Man trusts are governed by a combination of statute and equity-based common law, offering flexibility while ensuring fiduciary accountability. In addition to standard trust arrangements, the jurisdiction also supports the use of Private Trust Companies (PTCs), allowing for bespoke control over trust administration in family or private wealth contexts.
The primary legislation governing trusts in the Isle of Man includes the Trusts Act 1995, the Trusts (Amendment) Act 2015, and other related statutes. These provide a modern legal basis that coexists with long-standing common law principles derived from English law. Key features include:
- Recognition and enforcement of trusts for both charitable and non-charitable purposes;
- Codification of certain trustee powers and duties;
- Statutory protection for trustees acting in good faith;
- Flexibility in the duration of trusts, including the ability to create non-charitable purpose trusts with a potentially unlimited lifespan.
The jurisdiction recognises both express trusts (created intentionally by settlors) and implied or resulting trusts, depending on the circumstances. Trusts can be discretionary, fixed interest, protective, charitable, or purpose-based, with the specific form determined by the trust deed.
An Isle of Man trust typically involves the following parties:
Settlor: The individual or legal entity establishing the trust and transferring assets to it. Depending on the structure, the settlor may retain limited rights, such as powers of appointment or reserve certain powers, although excessive control can raise tax and legal concerns.
Trustee: The party legally responsible for holding and managing the trust assets in accordance with the terms of the trust deed. Trustees owe fiduciary duties to the beneficiaries and must act prudently, loyally, and in good faith
Beneficiaries: Individuals or entities entitled to benefit under the trust. In discretionary trusts, the trustee has discretion over distributions among a defined class.
Protector: An optional party who may be appointed to supervise or approve certain trustee decisions, such as adding or removing beneficiaries, or amending the trust deed. This role is often used in international or family trust contexts to provide oversight.
The trustee may be a licensed trust company licensed by the Isle of Man Financial Services Authority (FSA) or a private trust company.
A Private Trust Company is a corporate entity formed to act as trustee of one or more trusts, usually for a single family or private group. Instead of appointing a professional trustee company as trustee, the settlor (or their advisors) establishes a bespoke corporate trustee—often structured to provide enhanced control, privacy, and flexibility.
PTCs in the Isle of Man are generally structured as private limited companies and are not required to be licensed by the Isle of Man Financial Services Authority (FSA), provided they act only as trustee for specific related trusts and do not offer trust services to the general public. However, a PTC must engage a licensed corporate services provider in the Isle of Man to provide certain administrative and compliance functions, unless the PTC itself becomes regulated.
PTCs are particularly effective for multi-generational estate planning, philanthropy, and complex asset holding structures such as those involving operating businesses or global investments.
Trusts in the Isle of Man are treated as tax-transparent unless they derive income from Isle of Man sources. In general:
- Non-resident beneficiaries of Isle of Man trusts are not subject to Isle of Man come tax on foreign-source income or capital gains realised within the trust.
- Trusts with Isle of Man-resident beneficiaries may be subject to local tax on income distributions.
- Trustees may need to register the trust for tax purposes if the trust earns taxable income on the island.
Isle of Man law includes statutory protection against forced heirship claims in other jurisdictions, provided the trust has been properly established and does not constitute a sham. This feature makes Isle of Man trusts attractive for clients in civil law jurisdictions where local inheritance laws may conflict with their intended succession plans.
Trusts may also offer insulation against certain creditor claims, subject to fraudulent conveyance rules. Transfers to a trust can be challenged only within defined timeframes and under strict evidentiary standards.
The firewall provisions in the Trusts Act help preserve the governing law of Isle of Man trusts, even where foreign judgments conflict with local principles, further strengthening the asset protection framework.
Isle of Man offshore trusts continue to serve as a versatile legal instrument for wealth management, succession planning, philanthropy, and asset protection. The jurisdiction’s modern trust legislation, professional trustee infrastructure, and support for Private Trust Companies provide a spectrum of options for both private individuals and institutions. As international regulatory standards evolve, the Isle of Man has demonstrated a consistent commitment to transparency, oversight, and legal integrity, reinforcing its position as a credible and well-regulated trust jurisdiction.
Legal
Country code – IM
Legal basis – Common law
Legal framework – The Isle of Man Trusts (Amendment) Act 2015
Formal name – Trust
Settlor – The settlor is the person who establishes and whose assets are put into the trust. It may be either an individual or a legal entity.
The settlor may reserve significant listed control powers for himself and may also be a beneficiary. a trust is not deemed void (or voidable) upon the insolvency of a settlor.
Trustee – Trustees are the legal owner of the assets who have a fiduciary and statutory obligation to act in the best interest of the beneficiaries.
Trustees may be corporate bodies or individuals. Licensed trustees are not required by law.
Beneficiaries – Beneficiaries are those who get benefit from the trust. Beneficiaries may be natural persons or body corporates.
There are specific provisions in the law to prevent beneficiaries from draining the trust of its assets and spending in a thrifty way. There are specific legislative provisions to avoid probate and forced heirship.
Protector – The appointment of a Protector is optional.
Disclosure – Details of the Settlor and Beneficiaries are not disclosed to any person other than the Trustee.
Protection from foreign judgments – The Trustee Act includes provisions to ignore and not enforce foreign judgments. The Hague Convention on Trusts does not apply in the Isle of Man.
Protection from creditors – Isle of Man does not apply the Statute of Elizabeth, so transfers by the settlor to the trust may not be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, which is clearly defined by the law. Creditors’ claims may not be brought jointly. If a fraudulent transfer is proven, the trust may be not declared invalid.
Protection for immigrant trusts – Trusts that migrate from other jurisdictions do not benefit from retroactive protection.
Community property – Community properties transferred to an Isle of Man trust may retain its community property character.
Exclusion of foreign law - There are provisions in the legislation to be able to exclude foreign law.
Choice of law – The choice of law of Isle of Man to govern the trust or a particular aspect of that trust, is binding, valid, effective and conclusive regardless of any other circumstances.
Duration – Isle of Man trust instruments may last indefinitely.
Compliance – There are no annual reporting requirements.
- Settlor as a beneficiary
- Bankruptcy protection
- Ignore foreign judgements
- Hague convention on trusts
- Choice of law is binding
- Protection from immigrant trusts
- Community property provisions
- Custodian trustee permitted
- Rule against perpetuities (years)
- Yes Specific exclusion of foreign law
- Yes Settlor can retain control
Protection of Settlor
Protection from foreign judgements
- Avoidance of forced heirship
- Spendthrift provisions
- Exclusion of Statute of Elizabeth laws
- Trust invalid if transfer fraudulent
- Creditor must prove fraudulent transfer
- Clear definition of fraudulent transfers
- Separation of creditor claims
- Statutory limitation on fraudulent transfer
Protection of Beneficiary
Transfers
Taxes
A trust established in the Isle of Man may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of the Isle of Man benefit from the trust and no physical assets are located there.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in the Isle of Man, transfer assets to it and receive profits from said assets.
- 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
- - Offshore Income Tax Rate
- - 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)
- 11.00% Social Security Employee
- 12.00% Social Security Employer
- 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.
Services
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