Isle Of Man Enters Into Pioneering Tax Agreement With Holland

by Jason Gorringe, Tax-News.com, London

08 August 2006

Manx Treasury Minister, Allan Bell has announced that ground-breaking tax agreements between the Isle of Man and the Netherlands are now in operation.

The agreements are part of a Manx/Dutch economic deal – the first of its kind between a small international business centre and an OECD member – aimed at supporting business opportunities between the two countries.

They were signed in the Manx capital, Douglas, on 12 October 2005 by Mr Bell and the Deputy Finance Minister of the Netherlands, Joop Wijn. The agreements were ratified by the Isle of Man's parliament, the Tynwald, at its May 2006 sitting, and on 21 July 2006, the Isle of Man Government received confirmation that the Netherlands had also ratified the agreements. In accordance with the wording of the agreements, they came into force following receipt of the notification from the Netherlands.

According to the Manx government, the deal with the Netherlands is seen as confirming the economic recognition of the Isle of Man by an important European state. It also opens up international business opportunities and paves the way for similar agreements with other countries.

“Normal relations between countries are based on respect, understanding and appropriate agreements. Fiscal agreements, in particular, foster bilateral trade and investor confidence in both countries. The Isle of Man has negotiated skillfully a good package with the Netherlands and has never ignored its international obligations during those negotiations," observed Bell.

“We have come out of this as friends of the Netherlands and look forward to working closely with them going forward. We invite other countries that we are also in negotiation with now to finalise agreements with the Isle of Man underpinned by mutual benefits, respect and understanding as they would with any other well-regulated member of the international economic community," he added.

The agreement has been endorsed by the OECD.

Included within the framework of the agreement are:

• A shipping and aircraft taxation agreement ensuring that a relevant business based in the Isle of Man will not be taxed in the Netherlands so long as it is conducting international trade;
• A ‘transfer pricing’ agreement, meaning that the Isle of Man and the Netherlands will work together to ensure certainty of treatment when companies having operations in the two territories move goods and services between them;
• An agreement that Manx subsidiaries of Dutch companies will not experience any tax issues now that the Isle of Man has introduced its ‘0/10’ company tax system;
• A commitment to work towards a full double taxation agreement between the Isle of Man and the Netherlands which will further support Manx-Dutch business relationships; and
• A tax information exchange agreement.

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