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Economy and Banking Sector of the Isle of Man

Isle of Man
Location
Europe
Population  (2011)
84 497
EU Status
not part of the EU
Currency
IMP (Manx pound)
Nominal GDP (2014)
4.3 bln GBP  (+0.06%)
Credit Ratings (as of Sep 2016)
-/Aa1
Consolidated Banking Assets (2016)
57 900.00 mln GBP  (-2.36%)
Deposit Guarantee
50 000 GBP
Number of Banks
19

The Isle of Man is a British Crown dependency, situated in the Irish Sea between England and Northern Ireland. The Isle of Man is a "self-governing possession" of the British Crown and is considered internationally as a "territory for which the United Kingdom is responsible" rather than a sovereign state. The Isle of Man is not a part of the European Union, although it's within the European Union's customs area.

Key sectors of the Manx economy are offshore banking, manufacturing and tourism.

The Isle of Man is a well established international banking and finance center. Banks in the Isle of Man cover the areas of retail banking, commercial banking, private and expatriate banking. Almost all of the banks operating in the Isle of Man are foreign-controlled, with the majority of banks having their head offices in the United Kingdom.

List of Banks in Isle of Man
Banking Sector of the Isle of Man

National Currency

Manx Pound (IMP)

The Isle of Man issues its own currency, the Manx pound (IMP) which is pegged at parity to the Pound sterling (GBP): 1 IMP = 1 GBP. However, the Manx pound can not be spent outside of the Isle of Man. The Pound sterling is also used on the island.

Pegged Rate

1 IMP = 1 GBP

GDP

Nominal GDP (2014)Real GDP Growth (2014)
4.3 bln GBP  (+0.06%)4.5 %  (2013: 2.9 %)

According to The Government of the Isle of Man, nominal GDP of Isle of Man in 2014 was 4.3 bln GBP.

Isle of Man outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.2% over the past 2 years (2012 - 2014). In 2014 real GDP growth was 4.5% which was above the Euro Area average (0.9%) and above the European Union average (1.3%).

Real GDP Growth in Isle of Man. Chart 1. Real GDP Growth in Isle of Man. Source: The Government of the Isle of Man.

Inflation Rate

CPI, Year Average (2015)
-1.6 %  (2014: 0.2 %)

According to The Government of the Isle of Man, inflation rate in Isle of Man in 2015 expressed as annual percentages of average consumer prices was -1.6% which was below the Euro Area average (0.0%) and below the European Union average (0.0%).

Inflation Rate in Isle of Man. Chart 2. Inflation Rate in Isle of Man. Source: The Government of the Isle of Man.

Unemployment Rate

Unemployment Rate (2015)
1.9 %  (2014: 2.0 %)

Credit Ratings (as of Sep 2016)

Fitch Moody's
- Aa1 (high grade), outlook negative

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of the Isle of Man: 11 Signed Agreements

Isle of Man signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Bahrain
 Estonia
 Guernsey (Jul 2013)
 Jersey (Jul 2013)
 Malta
 Qatar
 Seychelles (Dec 2013)
 Singapore (May 2013)
 United Kingdom

There are also several agreements between Isle of Man and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Belgium
 Luxembourg (Apr 2013)

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Exchange on Request: 31 Signed Agreements

Isle of Man signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina (May 2013)
 Australia
 Canada
 China
 Czech Republic
 Denmark
 Faroe Islands
 Finland
 France
 Germany
 Greenland
 Iceland
 India
 Ireland
 Japan
 Mexico
 Netherlands
 New Zealand
 Norway
 Poland
 Portugal
 Slovenia
 Sweden
 United Kingdom
 United States

There are also several agreements between Isle of Man and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Botswana (Jun 2013)
 Indonesia
 Italy (Sep 2013)
 Lesotho (Sep 2013)
 Switzerland (Aug 2013)
 Turkey

Automatic Exchange: Starts in September 2017

Isle of Man signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in the Isle of Man
IGA in effect since 13 December 2013, Model 1

Isle of Man has FATCA agreement with the U.S. in effect since 13 December 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in Isle of Man are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Manx financial accounts hold in U.S. financial institutions will be reported to Manx authorities.

Further Information

Deposit Guarantee Scheme

Maximum Protected Amount
50 000 GBP

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Isle of Man are summarised in Table 1.

Scheme Participantsall credit institutions operating in Isle of Man (including branches of foreign banks), branches of Manx banks abroad
Eligible Depositorsnatural persons, legal entities
Covered Accountsany credit balance on an account with a bank (for example, current accounts, notice accounts and fixed term accounts)
Covered Currenciesall
Maximum Protected Amount50 000 GBP
Paid In CurrencyGBP

Table 1. Deposit guarantee scheme in Isle of Man.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Manx pound) Foreign Currency
Aaa (prime) Aaa (prime)

Local currency (Manx pound) deposit ceiling for Isle of Man is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Banking Supervision

Financial Services Authority

Banking Sector Structure

Number of Banks
19
Consolidated Assets (2016)
57 900.00 mln GBP  (-2.36%)

Currently there are 19 credit institutions operating in Isle of Man.

In 2016 consolidated banking assets in the Isle of Man were 57 900.00 mln GBP. The consolidated banking assets' evolution is shown at Chart 3 below.

Consolidated banking assets in Isle of Man. Chart 3. Consolidated banking assets in Isle of Man.

All the credit institutions operating in Isle of Man can be classified into several categories. Table 2 summarises the number of banks in each category.

CategoryNumber of Banks
Banks9
Branches of foreign banks10

Table 2. Number of banks by category in Isle of Man.

There are 10 branches of foreign banks from 4 different countries in Isle of Man. Table 3 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 United Kingdom6
 Jersey2
 Cayman Islands1
 South Africa1

Table 3. Number of branches of foreign banks in Isle of Man grouped by country of origin.