Month: January 2017

Malta

Thinking of Flagging or Reflagging a Vessel? – Could Malta be the Answer

Posted on | by Charlotte Clabon

A lot of uncertainty has been generated within Europe following on from the Brexit vote, and certain other countries who are beginning to reassess their position within the EU. This is having an impact on the marine industry, with a number of vessel owners seeking to reflag ships and yachts.

The choice of flag registration is an important decision and a jurisdiction must be selected that satisfies relevant criteria relating to how and where the vessel will be used.

The Jurisdiction of Malta and Ship and Yacht Registration

Malta, with its central and strategic position at the heart of the Mediterranean, offers a wide range of international maritime facilities and services. This jurisdiction offers an active International Ship Register, with an excellent reputation, and it currently ranks as the largest merchant shipping flag in Europe.

The Malta Flag is a European Flag, a flag of confidence and a flag of choice. Many leading ship owning and ship management companies register their vessels under the Malta Flag, and international banks and financiers often recommend the Maltese Register and Malta Ship Registration.

Benefits Offered to Ships and Yachts Registered in Malta: Fiscal, Corporate and Legal

A number of advantages are available to vessels registered under the Malta Flag, which include:

  • Vessels registered under the Malta Flag have no trading restrictions and are given preferential treatment in many ports.
  • The Malta Flag is on the white list of the Paris MoU, Tokyo MoU and on the Low Risk Ship List of the Paris MoU. In addition, Malta has adopted all International Maritime Conventions.
  • All types of vessel, from pleasure yachts to oil rigs, may be registered in the name of legally constituted corporate bodies or entities (irrespective of nationality), or by European Union citizens.
  • A Maltese vessel may also be bareboat charter registered under another flag.
  • There are no trading restrictions for the vessels.
  • Vessels less than 25 years old may be registered. Where relevant, the following criteria apply:
  • Ships aged 15 years and over, but under 20 years, must pass an inspection by an authorised flag state inspector before or within a month of, provisional registration.
  • Ships aged 20 years and over but under 25 years, must pass an inspection by an authorised flag state inspector prior to being provisionally registered.

Registration of a Vessel in Malta – the Procedure

The procedure for the registration of a vessel in Malta is relatively straightforward.  Provisional registration, which in terms of the law has the same effect as permanent registration, can be effected very quickly.

Authority to provisionally register a ship will only be given once the Malta Maritime Administration is satisfied that the vessel conforms to all of the standards required by the relative international conventions.

Provisional registration is valid for six months, although this can be extended by a further six months; by this time all of the documentation must have been completed for the permanent registration. Specifically this must include evidence of ownership from a former registry, unless the vessel is new. Authority to operate remains dependent on meeting the relevant manning, safety and pollution prevention measures as detailed in international standards.

Bareboat Charter Registration

Maltese law provides for bareboat charter registration of foreign ships under the Malta flag and for the bareboat charter registration of Maltese ships under a foreign flag.

Vessels so registered enjoy the same rights and privileges and have the same obligations as a ship registered in Malta.

The main factor relating to bareboat charter registration is the compatibility of the two registries.  Matters regarding title over the ship, mortgages and encumbrances are governed by the underlying registry, while the operation of the vessel falls under the jurisdiction of the bareboat registry.

A bareboat charter registration lasts for the duration of the bareboat charter or until the expiry date of the underlying registration, whichever is the shorter, but, in any event, for a period not exceeding two years.  It is possible for the bareboat charter registration to be extended.

Yacht Registration Services Offered by Dixcart Malta

Dixcart Management Malta Limited has extensive experience in registering yachts under the Malta Register and providing the ancillary services needed to maintain such a registration.

Dixcart can establish the ownership structure for the vessel and provide advice on the most efficient structure, depending on the type of use of the vessel as well as the place of use.

For further information, please speak to your usual contact at Dixcart or email the Dixcart office in Malta: advice.malta@dixcart.com

Image Rights Registration and the Future Benefits This Can Offer

Posted on | by Charlotte Clabon

Guernsey’s innovative legislation on Image Rights (IR) became law in November 2012 and it remains the only jurisdiction in the world to date where an individual, group or legal entity can register their Image Rights on a public register.

Registrations have been steady since that date, with currently 64 IR registrations for individuals and entities from a broad range of human activity, including sport, entertainment, finance, business, music and charities.

A number of the names registered are recognisable global figures, including international sporting celebrities and a Formula 1 racing team.

Reasons Why Individuals May Wish to Register their Image Rights in Guernsey

Registrations have generally been made to evidence and defend an individual’s “valuable” image rights against unauthorised commercial exploitation and possible abuse. A Guernsey registration can add security to an existing “package of rights” providing protection against infringement and will add weight to any claims for compensation.

Additional reasons for registering image rights:

  • To place the image rights within a holding structure that can licence these rights as part of a commercial enterprise.
  • As part of inheritance and legacy planning. Some individuals have companies that hold the rights and receive image-related income as part of their pension planning.
  • Part of a collective of individuals whose income-related earnings are managed by a club or agent.

Reasons to Register a Young, Hopeful “Star of the Future”

A number of young people have registered in Guernsey. These include aspiring musicians, a number of footballers and talented rugby players. Listed below are several reasons why young people who currently have no recognisable significant image with the wider general public should consider registering their image rights:

  • Registering is relatively inexpensive – the Guernsey registration fee for a 10 year application is £500.
  • Image protection – a deterrent against abuse and exploitation of a young person’s image.
  • Additional publicity – being in the public domain, an IR registration can be used as a PR/marketing opportunity.
  • To be the first of their sport/genre to register their image rights.
  • Early control for individual/club/family – clear ownership from the start can avoid “issues” of sale, ownership and exploitation in the future.
  • Professional advice – with the appropriate advice relating to the valuation, assignment, licensing and sale of Image Rights, a “star of the future” can plan to manage and protect their asset before their fortune has been created.

Rising Cricket Star – Ideal IR Registration

A 19 year-old batsman has just been introduced  as a member of the England Test Cricket squad. As yet there is no professional cricketer registered on the Guernsey IR register.

After an impressive debut in India, this young man is likely to become very well known. A registration of his image rights a year ago would have been very useful, as his advisers would have already put in place a framework to manage and protect his image rights.

There is nothing to stop him registering those rights today – but, as his success grows, so will the potential value of those rights, together with the associated costs and related taxes should he decide to exploit or even assign the rights formally.

Deals are undoubtedly already being discussed  with this young man to maximise the use of his image for financial benefit. With an Image Rights registration, and possibly a holding structure in place, these deals could be secured in a way that protects and exploits the financial gain presented by these opportunities.

What Information is Required?

The IR Public Register is available via the Guernsey Registry website. Most of the registrations provide minimal details (name of personality, image(s) to be registered, date of registration and registering agent) and they give no detail regarding the ownership of these rights or the rationale behind the registration. This preserves confidentiality.

How Can Dixcart Help?

The Dixcart office in Guernsey is able to manage Image Rights applications and conduct the due diligence work necessary to submit an application. Two Dixcart managers in the Guernsey office are approved by the Guernsey Intellectual Property Office as Registered Image Rights Agents and can assist individuals seeking to register their rights and advise on the most efficient way to do so.

If you require any additional information on this topic, please speak to Bruce Watterson at the Dixcart office in Guernsey: advice.guernsey@dixcart.com.

Why are Swiss Intellectual Property Holding Companies so Popular?

Posted on | by Charlotte Clabon

Switzerland is an attractive location for Intellectual Property (IP) companies. It combines a proactive business and tax approach with a stable political and economic environment.

Holding and administering IP rights in one jurisdiction under one central IP company considerably simplifies the management of group IP rights and enables stronger control.

Switzerland: A Formidable Intellectual Property Jurisdiction

The World Economic Forum’s global competitiveness report for 2015-16 ranked Switzerland third in terms of IP protection and the world’s most competitive country for the seventh year in a row. Geneva is also the headquarters of the World Intellectual Property Organization (WIPO).

Switzerland is a member of all the major international IP treaties. These include: the Paris Convention, the Berne Convention, the Madrid Agreement, the Patent Cooperation Treaty and the Hague Agreement.

A Swiss company can therefore register IP rights in a large number of jurisdictions through its centralised registration system, without the need to mandate local representatives in each jurisdiction. The treaties enable a Swiss registrant to claim the priority date of a Swiss registration for the registration of IP rights in other countries.

A Swiss IP Company and Taxation

A Swiss IP company is generally taxed as a mixed company. This is because its business activity will typically, primarily be related to activities abroad.

Corporate Income Tax: Mixed Companies

  • The effective combined Swiss tax rate (federal, cantonal, communal) will be between 8% and 11.5% on foreign sourced net royalty income, depending on the company’s location. The precise status is granted based on an Advance Tax Ruling.

    The principal requirement, to benefit from this status, is that at least 80% of income and expenses must be foreign source related.

  • Taking into account tax deductible expenses (e.g. IP amortisation) it is possible for a Swiss IP company to achieve a significantly reduced tax rate, and perhaps for this to even be reduced to less than 1%. Details regarding qualifying expenses and the maximum annual amortization allowable are available from the Dixcart office in Switzerland.

Substance

There needs to be sufficient substance, management and activity to comply with international transfer pricing rules and the OECD Model Tax Convention on Income and Capital. All of the key decisions regarding IP need to be made by the Swiss Company.

Withholding Tax Efficiencies

Switzerland benefits from a large double tax treaty network, with over 110 treaties, and also benefits from  the EU Parent/Subsidiary Directive and the EU Interest and Royalties Directive.

  • More than 25 Swiss double tax treaties provide for a 0% rate of withholding tax on royalties. This enables a Swiss IP company to collect royalty payments with no foreign tax being withheld.
  • Switzerland also offers a tax credit system for non-refundable foreign taxes such as withholding tax. Precise details vary depending on whether a double tax treaty is in force and, if so, what the terms of the treaty specify. Additional information is available from the Dixcart office in Switzerland.

There is NO Swiss withholding tax on royalty payments to local or foreign recipients.

Transfer of IP Rights to Switzerland

The transfer of IP rights to Switzerland does not generally trigger Swiss tax. However, the tax position in the country of origin of the rights would need to be established.

Swiss Company with a Foreign IP Branch

Switzerland unilaterally exempts foreign branches from Swiss income tax if the foreign activities constitute a Permanent Establishment (PE), from a Swiss domestic tax perspective.

Accordingly, if IP related activities in the foreign branch, from a Swiss perspective, are at a level to constitute a PE, the income will be taxed locally and not in Switzerland. Depending on the industry and the circumstances of each case, a foreign PE location might include tax efficient jurisdictions, such as Dubai, Singapore or Liechtenstein. In most cases it is not necessary to have a double tax treaty with the country where the foreign PE is located.

Summary

In addition to the prestige offered by Switzerland as a location for IP companies, Swiss IP companies offer a number of tax advantages in relation to corporation tax and withholding tax.

Additional Information

If you require additional information regarding Swiss IP companies, please speak to your usual Dixcart contact or to Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

The Benefits of a Swiss Investment Holding Company

Posted on | by Charlotte Clabon

Why are Swiss Holding Companies so Popular?

There are many reasons why Switzerland is a favoured location for international business. These include:

  • Political, financial, social and economic stability.
  • A favourable fiscal environment.
  • Geneva and Zug are major centres for commodity trading.
  • Excellent business support structures and a wide variety of professionals including: lawyers, bankers, accountants, insurance companies, inspection companies and corporate service providers such as Dixcart.
  • A high quality and multilingual local workforce.
  • Location in the centre of Europe, enabling real time communication with Europe and within the same working day as the US and Asia.

Tax Efficiencies

Various tax exemptions or concessions exist for holding companies in relation to federal and cantonal taxes when specific criteria are met. These advantages are described below.

Geneva

There are 26 cantons in Switzerland, with Geneva being one of the most important financially. This information note considers the tax advantages that are available to holding companies located in Geneva, Switzerland.

  • CANTONAL TAX EXEMPTION

The Swiss tax system grants holding companies privileged tax status at the cantonal level when the following three conditions are met:

  1. The company articles must state that the main activity of the company is the long-term management of equity investments.
  2. The company must not have any operating business activity in Switzerland. Certain activities are accepted. These include: management of the company and its investments, providing services on behalf of a consolidated group, debt financing of subsidiaries and/or the holding and exploitation of intellectual property.
  3. In the long term, either the company’s participations must represent 2/3 of the assets in its balance sheet, or the income derived from such participations (dividends/capital gains) must represent at least 2/3 of its total income. The shares of corporations, limited liability companies and cooperatives are considered to be participations, as well as certificates of participation.

When the above conditions are met, no income tax is levied at the cantonal level. This also means that income from dividends, interest, royalties, commissions and management fees are exempt from cantonal income tax.

  • CONCESSIONS RELATING TO FEDERAL TAX

At the federal level income is subject to an effective tax rate of 7.83%.

However, dividend income derived from, and capital gains made on, the disposal of qualifying participations are subject to a participation deduction, which generally results in a complete tax exemption.

Dividends

  • Company tax on dividends received

A participation deduction provides relief from taxation on dividends received from qualifying participations.

Qualifying participations are:

  1. a participation of at least 10% of the equity (capital stock), OR
  2. a participation with a market value of at least CHF 1 million.

For dividend income purposes, there is no holding period requirement.

  • Withholding tax on distributed dividends

A Swiss holding company is generally required to withhold 35% tax on dividends paid to its shareholders.

Tax treaties, however, can reduce or eliminate the withholding tax on distributed dividends and Switzerland has an extensive double tax treaty network of more than 100 double tax treaties.

Switzerland also has a bilateral agreement with the EU, giving access to the EU Parent/Subsidiary and Interest/Royalties Directives.

In addition, withholding tax is reduced to zero on dividend distributions when the following conditions are met:

  1. The parent company holds at least 25% of the Swiss subsidiary and has held this minimum percent for at least two years.
  2. The shareholder company is based in the EU.
  3. Both companies are subject to corporate tax and both are limited company structures.

Capital Gains

The participation deduction detailed above for dividends is also valid for capital gains on the sale of qualifying participations.

The participation sold has to represent at least 10% of the company’s equity (capital stock) and has to have been held for a least one year prior to the sale.

International Pressure and the Future

Switzerland is reviewing its corporate taxation system in response to growing international pressure.

It is anticipated that certain regimes, for example the special cantonal tax regime for holding companies, may be abolished.  However, many cantons such as Lucerne, Schwyz and Zug already have business-friendly low corporate income tax rates.

Geneva has announced that it will reduce cantonal tax rates to retain its attractiveness to companies.

Changes are scheduled to come into force on 1 January 2018.

Additional Information

If you require any additional information relating to Swiss holding companies, please speak to your usual Dixcart contact or the Dixcart office in Switzerland: advice.switzerland@dixcart.com.