Like many other Irish and British expats living in the GCC, I can appreciate the value of living somewhere other than the place you grew up. Making a new life and career for yourself half way across the globe helps provide perspective, and this is particularly true in Dubai, the melting pot of the Middle East. As a result, I think the Dubai professional community likes to think of itself as a pretty worldly bunch.
Yet sometimes, we really aren’t. Let me give you an example.
Comparing Offshore Financial Centres
For all our international links, the wealth management community tends to use the same handful of jurisdictions when they want to diversify asset structures out of the GCC. A couple of the Caribbean jurisdictions are very popular, as are Mauritius and Singapore. Some of the British expats might instead use Jersey for offshore work, because of its popularity with the folks back home, but it is less common. If I asked some local professionals to pick a good jurisdiction outside of that bunch, probably nine out of ten would struggle.
Today, one of the messages I repeat almost daily to ultra-high net worth families and their advisors is this: not only are there other good jurisdictions for international structuring out there, in many cases they are much better than the ‘go-to’ jurisdictions many local advisors rely on.
The Isle of Man is a fantastic example. As an independent ‘Crown Dependency’ with its own legislation, it has a similar legal system and constitutional arrangement to Jersey, Guernsey, or Gibraltar. Situated between Britain and Ireland and about an hour’s flight from London, it is home to 80,000 people, several unique species (including tailless cats and four horned sheep), and one of the strongest economies in the entire world. It has one of the highest GDP per capita, over three decades of unbroken economic growth, and an Aa1 rating from Moody’s. What is all this wealth based on? Mostly, on protecting international wealth and providing an extremely competitive tax position for domestically incorporated companies.
Compliant Wealth Management
So far, so normal – it just sounds like a wealthier (and less sunny) version of the BVI, right? Not quite. One of the big differences between the Isle of Man and the traditional Caribbean or Asian centres is that it has a ‘whiter than white’ regulatory framework, and a reputation to match. One of the key reasons that a GCC family might want to consider the Isle of Man over a Caribbean tax haven is that it lends similar tax benefits but simultaneously a great deal more legitimacy, because it isn’t a tax haven by any objective standard. It is at the forefront of global tax transparency and common standards, often implementing new regulations faster than even onshore centres such as London. If you are looking for legal and regulatory stability – which has a real dollar value in today’s wealth management environment – the Isle of Man is an easy decision. The potential tax benefits are, frankly, just a bonus.
Other possible reasons to consider the Isle of Man as an offshore hub include:
- In addition to being an excellent home for buildings trusts, it is also one of the few jurisdictions to also offer private trust companies and foundations, thereby offering greater flexibility in asset structuring.
- If you are building any kind of internet based business, it is a major technology hub with telecoms and power infrastructure that far outstrips that of most offshore jurisdictions.
- A direct-tax sharing agreement with the UK means that if you require a VAT registered company, you can incorporate in the Isle of Man.
- It has several interesting financial service options, including a very flexible alternative banking regime and membership of The International Stock Exchange (TISE).
At Boston we build corporate structures in the Dubai International Financial Centre (DIFC), which is in many ways now amongst the best jurisdictions in the world for wealth management. I advocate strongly for Middle Eastern families using it as a hub jurisdiction for incorporation. Nevertheless, where international holdings require a multi-jurisdictional strategy, it is important to understand the best countries outside of the GCC to build partnerships in. The Isle of Man is a brilliant example of a place with a lot of benefits that are poorly understood by most GCC advisers.
The Isle of Man is just one example, though, which is particularly relevant to UK-facing business or private wealth structuring. Another great example would be Malta, which is a superb partner jurisdiction for EU structuring, but that’s a story for another day!
If you are interested in international wealth structuring, you may enjoy our Guide to Structuring Middle Eastern Family Wealth.