Having taken advantage of the s615(6) scheme, the above employee reduced his overall tax and social contribution liability by nearly 44% (91.3.0% minus 47.5%).

The employer saved 1,296,800 kronor per annum.

The individual was 2,190,000 kronor better off each year, which he can have immediate access to as a cash sum upon material change of contract or leaving company service.

A total saving of 3,486,800 kronor.

Market Sector: Software Contracting

Country: Republic of Ireland

Employee Salary: 500,000 euros

AB was a software contractor in the Isle of Man. He was a single man with no dependents. His highly developed technical skills and financial services background opened opportunities to earn a high level of income from his own efforts and boost this by employing a number of like-minded, but less creative, individuals to enhance his personal performance. His principle areas of activity were in England, Ireland, Luxembourg and the Middle East.

Despite his Manx roots, when he became aware of the negativity the use of an Isle of Man company caused with the institutional clients to whom his company offered services, he elected to drop the Isle of Man company and to move his corporate activity to the UK. This was largely due to the involvement of his accountant who had become aware that section 615(6) might allow him a much more effective taxation package from the UK than would the Isle of Man structure.

The development of electronic communications allowed AB to temporarily relocate to Ireland as one of the locations where he spent a large part of his working time and increased the degree of contact he had with existing and potential financial services clients. During this period, he became aware of the punitive tax impact of accumulating capital within a business in Ireland but chose to re-direct profits from the company to a section 615(6) scheme instead which had no negative impact upon his personal tax position.

AB had no desire to return to the Isle of Man and instead intended to live in London when his personal circumstances allowed him to spend less time at his keyboard. Because his potential earnings period was likely to be limited by changing technology, re-training, and an evolving industry from which he gained his income, he enjoyed the knowledge that he could draw a tax-free lump sum from his section 615(6) scheme at any age upon a material change of contract or termination of company service. This would suit his expenditure requirements in London when his peak earning days were behind him. If, however, he was able to establish his company sufficiently well, he could elect to defer claiming his section 615(6) benefits without impairing the income, capital gains, or inheritance tax efficiency irrespective of where he relocated to.