The Isle of Man is located at the geographic centre of the British Isles. Its one thousand year old Parliament (Tynwald) makes its own laws and is responsible for fiscal and social policies as well as all internal administration. The Island is a British dependency and, as such, the ultimate responsibility for good government rests with the United Kingdom. However, the UK does not act for the Island without the specific consent of the Isle of Man Government except for external matters, such as foreign representation and defence, both of which are administered by the UK on behalf of the Island.

The Island is a member of the Commonwealth and of the Organisation for Economic Co-operation and Development (OECD). It is not a member State of the European Union but has a special relationship by virtue of Protocol 3 of the Treaty of Accession 1972 by which the United Kingdom became a Member of the European Community, placing it within Europe for customs and free movement of goods.

The Island has excellent communications, being just an hour flying time to London, with flights daily to most of the major cities in the UK. As a sophisticated offshore financial centre, it is well served with banks, investment managers and advisers.

Factors to consider when choosing a domicile for a captive
94% of all captives are located in three main regions:

Companies that are located in the United States tend to gravitate to the onshore US and Caribbean domiciles, the major reasons are often associated with time zones, convenience and cost of travelling to and from the domicile both in terms of money and time.

European domiciles are convenient for the United Kingdom, Europe and South Africa (from the point of view of time zone) as well as for captives whose reinsurance programmes are placed in the London market. A visit to reinsurers is often combined with a Board Meeting of the captive.

Why Isle of Man?
One of the major reasons for locating a captive in an offshore domicile is that the laws which regulate captives are both appropriate and clear. The IOM Insurance Act 1986, having been drafted specifically with captives in mind, applies in the Isle of Man. The authorisation process is efficient and the capital and reporting requirements appropriate for the business. The Insurance Supervisor in the Isle of Man is well respected in the international captive insurance industry and indeed the Island has been a recognised captive domicile since 1982.

Onshore legislation is designed for conventional insurers: authorisation is normally slow, capital and reporting requirements are onerous, and companies are subject to restrictions (for example on spread of reinsurers) that may make the operation of a captive difficult.

All companies in the Isle of Man are taxed at a zero rate.

The Isle of Man is not a full member of the EU, hence is not subject to tax harmonisation within the EU. The Island has no wealth tax, capital gains tax or capital transfer tax.

Throughout the 1980's and 1990's, captives became an integral part of risk management and have offered and continue to offer one of the most effective and widely used methods of risk financing. During this period, the Isle of Man became and looks set to continue as one of the most successful captive locations, attracting business from many parts of the world.

Redomiciliation
The Isle of Man has in place legislation which permits the transfer of the domicile of a company to the Isle of Man from another country, known as redomiciliation or continuing a company in the Isle of Man.  The process is straightforward and allows the easy transfer of a captive from another jurisdiction to the Isle of Man.  Similarly, discontinuation or redomiciliation from the Isle of Man is easily achievable and provides flexibility to change the domicile of the captive if the future needs of the company or its parent change.