To qualify for the tax breaks, which include a zero rate corporation tax and VAT exemption on fees levied by Isle of Man-based fund administrators and investment managers, a private equity fund would be set up as a ‘specialist fund’.
The specialist fund has a minimum investment of $100,000 and requires a regulated administrator, but there is no mandatory custodian requirement or direct asset manager. Furthermore, there are no regulatory pre-approval requirements and no regulatory restrictions on asset class or trading.
The Isle of Man Government Department of Economic Development, which announced the new structure, said it collaborated with the industry in order to find a “strong and unique private equity proposition for new fund formations”.
Minister for Economic Development, Allan Bell MHK said: “The past few years have seen many changes to the financial services sector. Now, these upheavals are proving the catalyst in creating opportunities for those innovative enough to reconsider their business models and think "out of the box".
"The Isle of Man offers an excellent environment for new fund formations and for niche investment managers through using the ”Specialist Fund” – this proposition allows asset managers to take advantage of a lower cost base in a tax friendly environment.”
