Foreword by Andrew Chilvers
Despite these uncertain times, expanding overseas can be a key driver for future growth for an ambitious business. International expansion can breathe new life into a company, drive huge value and set it on a path of continued success.
Expanding a business overseas is a strategic opportunity that will help diversify revenue streams, revitalise product development and give high returns on investment. But expanding a business into different jurisdictions takes time – this is a long distance run, not a sudden sprint to the finish line. Furthermore, expanding operations into a new jurisdiction can be fraught with challenges and risks that need to be addressed long before the first boots are on the ground.
For any company turning up in a foreign country, a multitude of tax and legal issues need to be addressed. This can be a labyrinthine experience and not for the faint hearted – but then faint hearted businesspeople seldom set their sights on overseas expansion.
Tax and compliance have to be at the top of any board’s agenda, ensuring the correct steps are taken the moment the company representatives land in-country. It’s pivotal to learn these issues to avoid any costly mistakes from the start.
What are the main government incentives available in your jurisdiction to attract multi- nationals and FDI investment?
The Isle of Man Government is keen to attract multi-nationals and FDI investment and is continually working on various initiatives to encourage growth on the Island. The current, main focus initiatives are:
- The Employee Relocation Incentive – if your business is interested in relo- cating an employee to the Isle of Man, then the employee relocation incentive means that your business could receive up to 20% of your employee’s first year’s salary costs. This incentive provides a 20% grant of up to £10,000 towards the cost of a relocating employee’s first year net salary (minimum salary must be £25,000) paid one year post successful recruitment, and it can be used for existing or new roles within the organisation and includes back filled
- The National Insurance Holiday Scheme – those taking up employment in the Isle of Man could be up to £4,000 better off in their first year of work. The National Insurance Holiday Scheme came into effect in April 2019, and provides a refund on National Insurance contributions paid in the first 12 months of The scheme is open to anyone in any role with a gross salary of £21,000 or more.
- The Key Employee Concession (“KEC”) – this ensures that an individual will only be liable to Manx income tax on Manx source income, so in essence, only the individual’s Manx source employment income, including benefits in kind and rent arising from property in the Isle of Man is subject to Manx income
- The Tax Cap election – the Isle of Man offers a Tax Cap for new and existing resident individuals of £200,000 per annum and was specifically introduced for those who have annual income such that their tax liability would otherwise exceed the Tax Individuals who are resident in the Isle of Man for income tax purposes are able to benefit from the Tax Cap. The maximum liability for a jointly assessed couple is £400,000.
What industries do you feel there are opportunities in for international investors/ businesses in your jurisdiction? What factors do you think contribute to inward investment?
- Tech – The Island has the infrastructure which has been ideally set up for anyone in the tech space. The rapid development of the e-gaming industry on the Island now means there is an incredibly talented pool of tech staff available Although competition for the best staff is high in this sector, the availability of this calibre on your doorstep can’t be beaten.
- Gaming – The e-gaming sector itself is a huge success story on the Isle of Man and we continue to see it grow as one of the choice jurisdictions for gam- ing businesses in need of a business friendly and well respected regulator.
- Banking – Another unexpected growth area is With the recent intro- duction of the Alternative Banking Regime, the Government has worked with industry to provide a framework to encourage entrants to settle on the Island to better service the large financial sector here.
- Crypto and Blockchain – Building further on the advantages of starting a tech business on the Isle of Man, the business focussed Government has actively encouraged the use and development of crypto technology here and is working with businesses to establish a reputable regulatory system to provide consumer confidence and grow the use of crypto on an international scale, also providing a Blockchain Office and Sandbox to assist tech
Why is it important to hire a local firm to support international expansion? How can you help smooth the process for your clients and overcome common pitfalls?
Using a local firm on the Isle of Man, like Peregrine, has its advantages. As we work with other companies on the Island, over time, we have built good relation- ships with them and have become familiar with how they work, which can often make the process a lot easier as well as understanding where we can direct our clients for the best possible service depending on their needs.
We have also gained some strong contacts within the Isle of Man Government’s Department of Enterprise, having worked with them on several joint events over time, so we are well placed to help with any queries in relation to the Island as a whole.
Other businesses that we have worked with provide a full concierge service for those looking to relocate. This covers assistance with immigration and work permits, finding accommodation as well as assisting with finding the best fit schools and social communities to help integrate you into life here.
As documented in question one, there are several schemes to encourage busi- nesses and individuals to relocate to the Island. Whilst this is clearly a positive, it can become daunting when there is so much information to navigate through. Peregrine can assist in ensuring you are able to apply for and take advantage of the most appropriate options for those looking to move to the Island.