Economic Substance

Legislation

The Economic Substance legislation is contained in Part 6A Income Tax Act 1970.

The Income Tax Act 1970 is available online at www.legislation.gov.im

Legislation Background

Part 6A Income Tax Act 1970 was introduced by a temporary taxation order but the provisions have now been incorporated into the primary legislation.

A change was approved by Tynwald on 16 June 2021 which extends the scope of substance to partnerships and Limited Liability Companies.

Current Guidance

The most recent guidance in relation to Economic Substance can be found here:

Economic Substance – Joint Guidance Guernsey, Isle of Man and Jersey (Version 2)

Economic Substance – Joint Guidance on the Application of Rule to Partnerships

The joint guidance should be read in conjunction with the legislation for each Island and, in the Isle of Man is issued under Section 80M of the Income Tax Act 1970.

Updated Key Aspects in relation to proposed economic substance requirements - Issued jointly by Guernsey, Isle of Man and Jersey

Guidance Background

Guidance in relation to Economic Substance is published by the Isle of Man, jointly with Guernsey and Jersey.

The first piece of guidance to be issued was the Key Aspects document published on 5 November 2018, and this was updated on 20 December 2018.

The second and more detailed piece of guidance was version 1 of the ‘joint guidance’, which was published on 26 April 2019, and then replaced by version 2 on 22 November 2019.
The third guidance was also jointly issued and provides additional guidance on the scope and application of the economic substance legislation regarding partnerships. This guidance was issued on 21 December 2021.

Links to all of the published guidance, including historic versions can be accessed via the links in the ‘published guidance’ section below.

For information on the Code of Conduct for Business Taxation and EU Listing Process from 2016 please visit the EU Listing pages.

Keeping Updated

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