The Isle of Man Treasury has announced the signing of a bilateral agreement with the Netherlands, based on economic benefit and co-operation.
Reportedly the first agreement of its kind between a small international business centre and a member of the Organisation for Economic Co-operation and Development (OECD), the bilateral is expected to increase business opportunities in the Dutch market for companies based in the Isle of Man.
The agreement was negotiated based on the OECD model to develop a global network of tax co-operation and information exchange. Isle of Man Treasury Minister Allan Bell said: *”This is an historic signing confirming the economic recognition of the Isle of Man by an important European state. It opens up international business opportunities and paves the way for similar agreements with other countries. We are pleased that the first such agreement has been concluded with a country of the stature of the Netherlands.”*
He added that the bilateral agreement, signed yesterday, includes:
• A shipping and aircraft taxation agreement ensuring a business based in the Isle of Man will not be taxed in the Netherlands as long as it is conducting international trade.
• A transfer pricing agreement. This provides “certainty of treatment” when companies with operations in the two territories move goods and services between them.
• Isle of Man subsidiaries of Dutch companies will not experience any tax issues as the Isle of Man moves to its 0/10 tax system in April 2006.
• A commitment to work towards a full double taxation agreement between the two countries.
• A tax information exchange agreement based on the OECD model of exchange of information on request on a case-by-case basis.
OECD Secretary-General Donald J. Johnston welcomed the agreement as an important step forward in the global effort to detect and deter abuses of the global financial system. *”I congratulate both parties for having strengthened their bilateral co-operation to counter tax abuses. This agreement confirms the Isle of Man’s commitment to implement high international standards, thereby reinforcing its stature as a responsible international financial centre ,”* he said.