Isle of Man extends scope of economic substance

On 16 June 2021, Tynwald approved legislation to extend the IOM’s economic substance legislation to partnerships (the definition of which, for these purposes, includes LLCs) for accounting periods commencing on or after 1 July 2021. Furthermore, the legislation introduced the requirement for certain partnerships (including IOM and non-IOM partnerships with business activity on the IOM) to register with the Assessor of Income Tax.

The notification must be made within 90 days or the later of:

1. the date on which the partnership was formed;
   
2. the date on which the partnership moves its place of effective management to the Island;
3. the date on which the partnership commenced business activities in the Island; and
4. 16 June 2021 for partnerships currently in existence.
   

As a result of the new legislation, partnerships will need to determine whether they have any income from a relevant sector in respect of each accounting period commencing on or after 1 July 2021 and, where they have such income, will be required to meet the substance requirements. Failure to do so may result in the imposition of financial penalties and, potentially, strike off. The substance requirements for partnerships are broadly similar to those for companies.

One can refer to the relevant legislation.