Trust Taxation

ISLE OF MAN TAX ISSUES

Manx tax legislation does not specifically refer to Trusts and instead taxes according to a mixture of both residence and source basing factors in each case.

For Manx income tax purposes a Manx trust is one where either:

1. At least one trustee is resident in the Isle of Man; or
2. The trust administration is conducted in the Isle of Man.

The trustees of a Manx trust are not liable to pay tax on the capital gains arising. The taxation of income depends upon the type of Trust and whether or not income is distributed as follows (see also Treasury Practice Note 141/07):

INTEREST IN POSSESSION TRUSTS

In such trusts an individual has an immediate entitlement to the income of that trust as and when it arises.