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Trading Companies

The Isle of Man has a "Common Purse " arrangement with the United Kingdom under which indirect taxes such as VAT are kept at the same level to eliminate the need for having a customs barrier between the Island and the United Kingdom. The Island also has a free trade arrangement with the EU by virtue of Protocol 3 of the Treaty of Accession signed by the United Kingdom.

This means that the Island is able to have a VAT registered company that can freely trade in the EU and pays no taxes. This has proved enormously attractive to non-EU traders who wish to trade within the EU without suffering the very costly cash flow problems that can arise if they were unable to make VAT free sales.