The Isle of Man and Bitcoin
The Isle of Man is sometimes referred to as ‘Bitcoin Isle’. Crypto became popular here early on – largely due to this March 2014 article which went viral.
In July 2014, we put on a very well attended ‘Crypto Valley Summit’ conference. The Bitcoin price at the time was US$630 – and you could buy a pint with Bitcoin at the Thirsty Pigeon pub for BTC 0.0047 – which in today’s money is £260!
In October 2015, Isle of Man Crypto businesses became subject to regulatory oversight by the Isle of Man Financial Services Commission (now the Isle of Man Financial Services Authority or FSA) as a ‘designated’ business but we still love Bitcoin today – and we reputedly have the highest penetration of Bitcoin in the British Isles.
Isle of Man Bitcoin Regulation
Bitcoin and other virtual currency businesses are now inside the regulated sector for money laundering purposes in the Isle of Man. Bitcoin exchanges do not need a licence but they are required to comply with money laundering (AML / CFT) rules which are set out in our AML/CFT Code 2019 and they are required to register as ‘designated’ businesses which means they are subject to regulatory oversight by our Financial Services Authority.
For more detailed information about registration see our article on setting up an Isle of Man crypto exchange or ask us.
Avoiding UK CGT on BTC profits
Okay – I am not super keen on my subheading – as this is not really an ‘avoidance’ strategy; it’s much simpler than that – ceasing UK tax residence will remove your obligation to UK capital gains tax so, once you have left the UK, you can sell or exchange your crypto assets without being subject to capital gains tax.
The Isle of Man is a great place to go as we have no capital gains tax here. For more information about becoming an Isle of Man resident – see our article Unravelling the mysteries of Isle of Man tax residency.
Isle of Man Banks vs Cryptocurrencies
We have a pretty limited banking universe in the Isle of Man. We wouldn’t describe them as crypto-friendly – although one of the clearing banks has been very helpful to one of our very wealthy crypto clients – so if you relocate to the Island with a largish bag, it’s worth asking us about that. We also have a couple of interesting ‘work arounds’ we can talk to you about.
Taxation of Bitcoin Profits in the Isle of Man
As there is no capital gains tax in the Isle of Man, profits from buying/holding and then selling crypto is tax-free here. Most investors fall into this category. For more information about Isle of Man tax see here.
However – for regular traders in crypto (e.g day / algorithmic traders) the situation is more nuanced. Depending on their trading frequency, they may be making ‘trading’ profits rather than capital gains and these profits could be taxable as income here. There are ways of dealing with this too so feel free to contact us.
Katz & Co Services For Isle of Man Cryptocurrency Businesses & Investors.
- We can provide/help you obtain the necessary tax advice if you are considering moving to the Isle of Man.
- We can help you register for tax in the Isle of Man.
- We can help you with strategies to ‘bank’ any cryptocurrencies that you convert to Fiat. eg to buy a house.
Using our local expertise, we can introduce you to key individuals at estate agents, banks, stock brokers, and other financial institutions and we can help you obtain advice on pensions, legal matters and pretty much anything else Isle of Man related.
You can learn additional information about moving to the Isle of Man here.
The Isle of Man Bitcoin Community
As you might imagine there is a growing (and thriving) community of crypto companies, investors and enthusiasts here on the Island. The Isle of Man is a great place to live for anyone but particularly for bitcoin enthusiasts. There are like-minded people – it’s safe, it’s stunningly beautiful, we have great travel connections and, of course, it’s tax-friendly.
Contact Martin Katz by WhatsApp +44 1624 777900 if you have any questions.
