The Isle of Man – Your New Island Home?

The beautiful Isle of Man is situated in the heart of the Irish Sea, centrally located between England, Ireland, Scotland and Wales.  Whilst the island may be small, just 572 km2, with its rugged coastline and rolling hills it can give you and your family space to breath, relax and enjoy what island life has to offer.

The Isle of Man has been a self-governing Crown Dependency since 1866, and this political independence, combined with its strong democratic values, has enabled the Isle of Man to be governed efficiently over the past 150 years.

Advantages Offered by the Isle of Man

The Isle of Man Government has always adopted a forward thinking and pragmatic domestic and international approach, which allows the close knit community of approximately 87,000 people to benefit from the following advantages:

  • Lifestyle

The natural resources of the island enable residents to pursue a variety of recreational and sporting activities. The growth of the sporting community on the island has been supported by the Isle of Man Sports Council www.isleofmansport.com  and the Manx National Lottery Fund.

  • Crime (or lack of it)

The Isle of Man has one of the lowest crime rates in the EU. This is further enhanced by a strong community spirit.

  • Low Unemployment

The Isle of Man currently (April 2016) has an unemployment rate of 1.8%.  Whilst there is a requirement for non local residents to hold a work permit for the first 5 years of residency, the work permit process is, in most instances, a relatively straightforward process. www.gov.im/categories/working-in-the-isle-of-man/work-permits/faqs

  • Housing

The Isle of Man is consistently rated as having a standard of living equal to those regions with the highest standard of living in the UK. There are no restrictions on buying property for those not born or raised on the island.

  • Education

The Isle of Man has a high quality of education. Recently the Government invested in a programme to modernise all of the schools, and the island achieves one of the top sets of comprehensive school results in the UK, with private schools also positioned well in the UK rankings.

  • Transport

The island has excellent transport links. The large international carriers, including British Airways, easyJet, and Flybe offer routes from the Isle of Man to Dublin, Edinburgh, Geneva, Liverpool, London and Manchester. In addition, the island has the runway capacity to handle large private aircraft, including the Global Challenger 7000.

  • Tax Advantages for Individuals

The standard rate of income tax in the Isle of Man is 10%, with a higher rate of 20%. A tax cap of £150,000 (£300,000 for jointly assessed couples) exists on personal income tax liabilities in any one tax year for individuals living in the Isle of Man. To be tax resident in the Isle of Man the Assessor of Taxes must be satisfied that there is an intention to establish residence on the island, rather than there being a presence on the island for a temporary purpose.

  • The Key Employee Concession (KEC)

The KEC can be extremely beneficial to new arrivals on the Island and may even be more beneficial than the tax cap, in certain circumstances. It applies to individuals who are required to move to the Isle of Man by their employer and who are essential to the implementation and operation of new business on the Island. In order to grant the KEC, the Treasury must be satisfied that the new business is in the economic interests of the Isle of Man and will provide additional productive employment on the Island.

When the Concession applies the individual will be resident for Isle of Man income tax purposes and therefore subject to resident income tax rates, allowances and reliefs. However the majority of additional income sources will be treated, for Isle of Man tax purposes, as if the individual was not resident on the island.

This could be extremely beneficial if, for example, a wealthy entrepreneur who has substantial income streams from non-Manx sources moves to the Island and sets up a business on the Island. Of course, for the KEC to apply to them, they would have to be employed by that business on the Island.

  • Tax Advantages for Companies

A zero rate of corporation tax applies to company profit.

The only exceptions to this zero rate are banking business, which is taxed at 10%, retail businesses with profits in excess of £500,000, which are also taxed at 10%, and income from land and property in the Isle of Man, which is taxed at 20%.

There is a requirement to prepare annual accounts, however, for private companies there is no requirement to file these. There is also a requirement to complete an annual tax return.

  • Government Support for Inward Investment

The Department of Economic Development has solid experience in assisting businesses to relocate to the Isle of Man. A Relocation Manager can be appointed to act as a single point of contact for all relocation matters relating to the Isle of Man. In addition, the island’s Financial Assistance Scheme provides a range of grants to eligible businesses within qualifying sectors.

  • Immigration

UK Immigration Rules are extended to the Isle of Man for regulating the entry into, and the stay of persons in the Isle of Man. Whilst the Isle of Man has its own Immigration Rules (based on UK immigration rules), the United Kingdom represents the Isle of Man’s interest in Diplomatic and Foreign Affairs. British Embassies overseas accept and process visa applications for the Isle of Man and other Crown Dependencies (CDs), referring the applications to the islands’ Entry Clearance Officers to determine a decision.

Additional Information

If you would like further information regarding the advantages offered by the Isle of Man and how you might take up residence there, speak to Steve Doyle at the Dixcart office in the Isle of Man or to your usual Dixcart contact.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority

New “60 Day” Tax Residency Rule for Individuals in Cyprus

In July 2017, the Cyprus Parliament voted for an amendment to the current criteria used to determine Cyprus tax residency. In addition to the 183 day rule, a second test is being introduced in relation to an individual’s tax position in Cyprus.

The  current “183 day rule” applies to individuals who have physically resided in Cyprus for more than 183 days during one calendar year.

In addition to this, a second test will be implemented whereby an individual will be able to become Cyprus tax resident in 60 days. This rule will be applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction. It is anticipated that this amendment will be effective retrospectively as from 1 January 2017 (the start of the Cyprus tax year).

Criteria to be Met for an Individual to be Considered Cyprus Tax Resident in 60 Days:

The “60 day rule” applies to individuals who in the relevant tax year:

  • reside in Cyprus for at least 60 days;
  • operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus. Individuals must also have a residential property in Cyprus which they own or rent;
  • are not tax resident in any other country;
  • do not reside in any other single country for a period exceeding 183 days in aggregate.

Days Spent In and Out of Cyprus

For the purpose of the rule, days “in” and “out” of Cyprus are defined as:

  • the day of departure from Cyprus counts as a day out of Cyprus;
  • the day of arrival in Cyprus counts as a day in Cyprus;
  • arrival in Cyprus and departure on the same day counts as a day in Cyprus;
  • departure from Cyprus followed by a return on the same day counts as a day out of Cyprus.

Cyprus Tax Rules

Cyprus tax rules also apply to tax resident non-domiciled individuals.

The key tax benefits are:

  • a zero rate of tax on interest
  • a zero rate of tax on dividends

Additional tax advantages are available to individuals fulfilling the tax residency criteria and  comprehensive details are available in Dixcart Article 467: Another Reason to Choose Cyprus – The Cyprus Non-Domicile Regime

How Can Dixcart Help?

Dixcart can help individuals to assess their tax position under the new rules and can provide advice regarding the action that needs to be taken.

Additional Information

For further information about the attractive tax regime for non-resident individuals who are classified as tax resident in Cyprus under the “60 day rule”, please contact Robert Homem at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Malta

Spanish: Un Nuevo Esquema de Residencia En Malta Y Cambios Favorables Al Actual Programa de Residencia Y Visas

Resumen

  • El programa ‘Key Employee Initiative’ en Malta permite la emisión de permisos de trabajo / residencia a potenciales empleados clave (que no sean ciudadanos de la UE) dentro de los cinco días utiles posteriores a la fecha de solicitud.
  • Los cambios al “Programa de Residencia y Visas” de Malta permiten ahora que el solicitante y sus principales dependientes soliciten derechos de residencia de larga duración en Malta después de cinco años de residencia.
  • Además, los padres y / o abuelos del solicitante principal y / o cónyuge tanbien pueden postularse al programa.

Antecedentes

Malta es un destino de reubicación atractivo para personas y familias de todo el mundo.

Varios programas permiten a personas de alto valor patrimonial y personas altamente especializadas a reubicarse en Malta, brindando la oportunidad de residir indefinidamente en Malta y acceder a la ventajosa tributación en basis de remitencia.

En 2015, Malta lanzó el “Programa de residencia y visados” que permite a los solicitantes que no sean ciudadanos de la UE y sus dependientes obtener la residencia en Malta. Recientemente se han introducido una serie de cambios que hacen que este régimen sea aún más atractivo.

Malta ha presentado un nuevo programa, la ‘Key Employee Initiative’. Los detalles con respecto a este programa y los cambios introducidos en el Programa de Residencia y Visados se resumen a continuación:

‘Key Employee Initiative’ de Malta

La ‘Key Employee Initiative’ de Malta ofrece un servicio rápido a nacionales altamente especializados que no sean ciudadanos de la UE empleados en Malta. Bajo este programa, los permisos de trabajo / residencia se emiten a los posibles empleados clave dentro de los cinco días laborables a partir de la fecha de la solicitud.

El esquema es aplicable a profesionales gerenciales y / o altamente técnicos con calificaciones relevantes o experiencia adecuada relacionada con un trabajo específico.

Los solicitantes aprobados reciben un permiso de residencia válido por un año. Un permiso puede renovarse por un período máximo de tres años.

Los solicitantes deben proporcionar prueba de la siguiente información a la ‘Unidad de Expatriados’ en la sección ‘Identity Malta’:

  • Salario bruto anual de al menos € 30,000 por año.
  • Copias certificadas de las calificaciones relevantes, garantia o prueba de experiencia laboral apropiada.
  • Declaración del empleador que indique que el solicitante tiene las credenciales necesarias para realizar las tareas requeridas.
  • La ‘Key Employee Initiative’ también se extiende a los innovadores involucrados en proyectos de nueva creación que hayan sido aprobados por ‘Malta Enterprise’.

Cambios al Programa de Residencia y Visados de Malta

El «Programa de Residencia y Visados» de Malta está disponible a los titulares de pasaportes que no pertenecen a la UE.

Los siguientes cambios se introdujeron en julio de 2017:

  • El solicitante principal y los dependientes son elegibles para solicitar la residencia de larga duración en Malta, después de cinco años de residencia.
  • Los padres y / o abuelos del solicitante principal o el cónyuge del solicitante principal pueden postularse al programa, en la etapa de solicitud. Se requiere un pago adicional de € 5,000 por persona. Anteriormente, solo los padres dependientes podían postularse.
  • Se ha renunciado al límite de edad de 27 para hijos solteros y económicamente dependientes.
  • Los hijos del solicitante principal y / o cónyuge no perderán sus derechos de residencia cuando alcancen la edad de 27 años. Esto se aplica incluso si se han vuelto económicamente independientes o están casados.
  • Los niños nacidos o adoptados por el solicitante principal después de la fecha de aprobación de la solicitud inicial pueden ser incluidos. Se requiere un pago de € 5,000 por persona.

Los siguientes criterios financieros continúan aplicándose:

Se requiere una inversión de tres niveles:

  • Un pago de € 30,000 al gobierno de Malta (esto cubre al solicitante, cónyuge e hijos del solicitante y / o cónyuge) Y
  • Una inversión de un mínimo de € 250,000 en Malta o Gozo, que debe mantenerse durante un mínimo de 5 años Y
  • Compra de una propiedad en Malta por un valor mínimo de € 320,000 (€ 270,000 si la propiedad está situada en Gozo o en el sur de Malta), o alquiler de una propiedad por un mínimo de € 12,000 por año en Malta (€ 10,000 por año si la propiedad está situada en Gozo o en el sur de Malta). La propiedad debe ser detenida o alquillada por un mínimo de 5 años.

Ventajas fiscales disponibles para residentes no domiciliados en Malta

Las personas fisicas están sujetas a impuestos sobre los ingresos con origen en Malta y ciertas ganancias que surgen en Malta. No se gravan ingresos de fuente no maltasa que no se remitan a Malta. Además, no se gravan las ganancias de capital incluso si estos ingresos se remiten a Malta.

Información Adicional

Si necesita más información sobre la ‘ Key Employee Initiative ‘ de Malta y / o el Programa de residencia y visas de Malta, le solicitamos se comunique con Jonathan Vassallo en la oficina de Dixcart en Malta: advice.malta@dixcart.com.

What is the UK Remittance Basis of Taxation and How Can it be of Benefit?

The UK continues to offer significant tax advantages for individuals who are resident but not domiciled in the UK. This is due to the availability of the remittance basis of taxation. The availability of the remittance basis for longer term residents was restricted from April 2017 and additional details are available on request.

Non-UK domiciliaries who are resident in the UK (whether on a short-term basis or a long-term basis) should take specialist advice from a firm such as Dixcart, which has expertise in this area,  ideally before they become UK resident.

Advantages Available Through the Use of the UK Remittance Basis Of Taxation

  • The remittance basis of taxation allows UK resident non-UK domiciliaries, who retain funds outside of the UK, to avoid being taxed in the UK on the gains and income that arise from those funds. This is as long as the income and gains are not brought into or remitted to the UK.

In addition, clean capital (i.e. income and gains earned outside of the UK before the individual became resident, that have not been added to since the individual became resident in the UK) can be remitted to the UK with no further UK tax consequences.

What is the UK Remittance Basis of Taxation?

Generally, the remittance basis applies in the following circumstances:

  • If unremitted foreign income is less than £2,000 at the end of the tax year (6 April to the following 5 April), the remittance basis applies. The remittance basis automatically applies without a formal claim and there is no tax cost to the individual in the UK. UK tax will be due only on foreign income or gains remitted to the UK.
  • If unremitted foreign income is over £2,000 then the remittance basis can still be claimed, but at a cost:-
    1. In all cases the individual will lose the use of his or her UK annual tax free personal allowance and capital gains tax exemption.
    2. Individuals who have been resident in the UK for less than 7 out of the prior 9 tax years do not have to pay a Remittance Basis Charge in order to use the remittance basis.
    3. Individuals who have been resident in the UK for at least 7 out of the prior 9 tax years have to pay a Remittance Basis Charge of £30,000 per annum in order to use the remittance basis. This remains the annual charge until they have been in resident the UK as specified in point 4 below.
    4. Individuals who have been resident in the UK for at least 12 out of the prior 14 tax years must pay a Remittance Basis Charge of £60,000 per annum in order to use the remittance basis.
    5. Anyone who has been resident in the UK in more than 15 of the previous 20 tax years will not be able to enjoy the remittance basis, and will therefore be taxed in the UK on a worldwide basis for income, and capital gains tax purposes.

Identifying Income and Chargeable Gains

The starting point is to identify what type of income and/or chargeable gain is covered by the rules. In some cases this is relatively straightforward. For example, if an individual’s sole source of foreign income is interest arising on a foreign deposit account, then the interest is clearly the individual’s foreign income. However, in reality, matters are often more complex.

The concept of income and chargeable gains includes not only income from sources owned by the individual personally, or gains realised from personally held assets, but also income and gains treated as being received by the individual.

There are many scenarios that might be included in the latter category and some examples are detailed below:

  • Income arising in non-UK structures (i.e. trusts and companies) of which the individual is the settlor/transferor (i.e. the person who created the structure or, in some circumstances, who added property to it) where the income is treated as theirs;
  • Gains deemed to be those of the individual by being attributed to him through certain closely held foreign corporations – note that these provisions generally only apply where the individual’s ability to participate in the gains and income of the company (normally through a shareholding) amount to a participation of more than 25%; and
  • Certain types of deemed income – including on the disposal of non-reporting status offshore funds (i.e. most hedge funds), or income deemed to arise under the “accrued income scheme”, or gains from the disposal of other securities, known as deeply discounted securities.

Having identified what constitutes the individual’s “income and chargeable gains”, it is necessary to track the income and chargeable gains in order to see if they have been remitted to the UK.

Definitions: Remittance, Relevant Persons and Relevant Debt

The legislation creates a broad meaning for remittance and a wide class of persons capable of triggering a remittance. It is important to fully understand the definitions that apply to: “remittance”, “relevant persons” and “relevant debt”. Please contact Dixcart for this detailed information.

The Remittance Rules in Practice

The remittance rules are designed to stop an individual and any “relevant person” using unremitted foreign income or gains to finance an item of UK expenditure without a remittance occurring.

As a result, and subject to the exceptions outlined briefly below, the purchase of any asset in the UK, the payment for any service in the UK, the importation of any asset into the UK by an individual or by a “relevant person” using the individual’s income or chargeable gains, will be deemed to be a remittance.

Example 1:

John purchases a work of art at an auction in Switzerland. John does not have sufficient clean capital to fund the purchase, so he uses overseas income in order to do so. He then brings the art to the UK and displays it in his  house. “Property” has been “brought to” and “received in” the UK by John; therefore this is treated as a remittance of the income used to purchase the picture.

Example 2:

Brian and Claire are husband and wife. Their child David is at school in the UK. The school bills Claire for David’s school fees. Brian gives foreign investment income to Claire to finance the payment of the school fees. Claire is a “relevant person”. Claire has received income which she then spends in the UK by paying David’s school fees. A remittance by Brian is deemed to have occurred.

Example 3:

The facts are the same as in example 2 above, except the school has a foreign bank account into which it invites non-UK domiciled parents to pay the school fees. In this case, no money or other property is “brought to”, or “received” or “used in the UK”. However, a service (in other words the education of David) is provided in the UK to David, who is a relevant person (i.e. Brian’s minor child). Therefore the payment of the school fees by Claire is deemed to be a remittance by Brian.

Exceptions to the Remittance Rules

  • Under an exception introduced from 6 April 2012, no tax charge arises on remittances to purchase certain UK investments (this includes the purchase of an interest in a commercial property business).

In addition, there are other exceptions to the remittance basis of taxation.  One of these is exempt property, which includes:

  • Clothing, footwear, jewellery and watches if they are for the personal use of a “relevant person”.
  • Property where the amount of foreign income or gains (that would otherwise be deemed to be remitted) is less than £1,000. “Property” for these purposes does not include “money” or any negotiable instrument (e.g. travellers cheques).

The Mixed Funds Rules

Since 6 April 2008 new rules have applied which create an order of priority of distribution from “mixed funds” to determine the type of monies that have been remitted to the UK.

Effectively, each account that contains “mixed funds” has to be analysed to determine the type of funds held in that account. This exercise must be undertaken for each tax year in which amounts have been credited to the account. The account will therefore contain a number of layers, each of which will contain a different composition of income and gains as defined in the mixed funds rules. The purpose of the mixed funds rules is to identify the type of funds being remitted to the UK.

This can give rise to complex situations and, wherever possible, we advise individuals coming to the UK to structure their affairs in a suitable manner before becoming resident in the UK. Dixcart is experienced in providing this type of advice.

The simplest way would be to establish three accounts outside of the UK:

  1. Capital arising before the individual became resident in the UK, from which remittances can be made tax free;
  2. Capital with capital gains arising after the individual became resident in the UK – remittances from this account will attract tax at 20% on the proportion remitted to the UK (with gains being taxed in priority to capital at the same 20% rate); and
  3. Other – this would include income; such as interest paid on the first account, deemed income and capital that has become mixed with other sums, except gains.

The intention would be that the individual would keep the capital in account 1, free from any further additions. These amounts could then be remitted to the UK without any further UK tax charge.

If the capital in account 1 was subsequently exhausted, remittances should then be made from account 2, ensuring a lower tax rate than if amounts were taxed as income from account 3.

Temporary Non-Residence in the UK

Non-UK domiciliaries who have unremitted foreign income and gains, and who cease to be resident in the UK, will need to leave the UK and be non-resident for at least five complete years, if they wish to use the non-UK income and gains, that they held prior to becoming non-resident, to fund UK expenditure during their absence from the UK.

The most likely example of the funding of UK expenditure during an individual’s absence would be the repayment of a debt incurred during the individual’s period of residence in the UK. If the individual returns to the UK to become resident within the five year period, pre-departure non-UK income and gains which have been remitted to the UK will be taxed.

In addition, dividends or loans from closely held companies, certain employment income, pension income and chargeable event gains from certain insurance policies will be taxed on return to the UK after a period of temporary non-residence.

Additional Information

If you require any additional information on this topic, please speak to Paul Webb at the Dixcart office in the UK: advice.uk@dixcart.com or to your usual Dixcart contact.

UK Tax Residence – Planning Opportunities, Case Studies and How to Get it Right

Major reforms regarding how UK tax resident, non-UK domiciliaries (“non-doms”) are taxed were introduced in April 2017.

The changes impact on individuals who have been tax resident in the UK for 15 years or more.

The Attractive Remittance Basis of Taxation will Continue for Many Non-UK Domiciliaries

The availability of the remittance basis of taxation for non-UK domiciled individuals who have been resident in the UK for fewer than 15 years will continue. The availability of the remittance basis allows for some interesting tax planning opportunities.

The “15 year” Rule and Implications Regarding Income Tax and Capital Gains Tax

Since April 2017, anyone who has been tax resident in the UK for 15 of the previous 20 tax years became “deemed domiciled” for tax purposes.  This means that these non-dom individuals no longer have the option to use the remittance basis of taxation and are taxed on a worldwide basis.

UK Tax Residence and the Possibility of “Resetting” the Clock

The “deemed domiciled” 15 year rule is based on the tax residence of the individual non-dom.  Individuals should consider their tax residence position and endeavour to spend less time in the UK to terminate their UK tax residence status and to thereby potentially avoid becoming deemed domiciled, if they wish to do so.

As detailed above, the rule is that an individual is deemed domiciled in the UK if tax resident in the UK for 15 of the previous 20 tax years.  Through appropriate planning, ceasing to be UK tax resident for 6 years can mean that individuals will lose their deemed domiciled status.  Should they then wish to return to being a UK tax resident, they will have reset the year count for the deemed domiciled test.

Additional detail regarding the factors affecting UK resident and non resident status can be found in the following Dixcart Article: The UK Resident/Non Resident Test

TAX PLANNING OPPORTUNITIES

Individuals Seeking to Lose their UK Tax Residence for the Requisite 6 Year Period

A Planning Example

Mr and Mrs Taxpayer spend between 125 and 140 days per year in the UK and have done so for 14 years (all of which they have been UK tax resident).  While in the UK they stay in an apartment they own in London.  For the rest of the year they mainly live in Spain.  They are non-doms for UK tax purposes.  They do not have children.

Mrs Taxpayer is a consultant and spends the equivalent of one day per week (i.e. 52 working days) providing consultancy services to UK based clients while they are in the UK.

UK tax residency considerations will take into account the following factors:

  • Mr and Mrs Taxpayer currently spend more than 120 days in the UK per year;
  • Each spouse is UK tax resident;
  • They have both spent more than 90 days in the UK in the previous 2 tax years;
  • They have an apartment available to them while they are in the UK; and
  • Mrs Taxpayer works in the UK for more than 40 days per year.

Mr Taxpayer is UK tax resident and has 3 connecting factors. Mrs Taxpayer is UK resident and has 4 connecting factors.

They both realise that under the new “deemed domiciled” rule, from April 2017 they will be taxed in the UK on a worldwide basis and similarly will be subject to UK inheritance tax on a worldwide basis.  This would be a significant cost to them and they would therefore like to reconsider their UK tax residence position.

They would both, however, still like to spend time in the UK, particularly Mrs Taxpayer who does not intend to cease her UK consulting work.

To cease their UK tax residence, both their day count in the UK and their “connecting factors” as specified in the UK Resident/Non Resident Test need to be considered.

Question – Is it possible to maintain the same day count?

Answer – If they wish to retain the same day count in the UK, they would both need to remove all connecting factors.  This is not possible as they have already triggered the connecting factor of more than 90 days in the previous 2 tax years.  It is therefore not possible to maintain this day count.

Question – if all connecting factors are retained, how many days would they need to drop their day count to?

Answer – Mr Taxpayer would need to reduce his day count to below 90 days.  Mrs Taxpayer to below 46 days (which would prevent her from working her current number of days in the UK).  It is worth noting that if they drop to this level, after 2 years, they will no longer trigger the “90 day” connecting factor and after 3 years they will be considered to be “arrivers” so additional planning options might be available at this time.

Question – how many days can they spend in the UK each year?

Answer – the connecting factors and their status as “arrivers” or “leavers” will change over the years and therefore each year will need to be considered separately.  If they are not prepared to sell the apartment, and/or for Mrs Taxpayer to stop working as many days while in the UK; the table below shows the maximum number of days they could spend in the UK and at the same time lose their tax residence status for the requisite 6 year period (assuming Mrs Taxpayer works all the days she is in the UK for the first 2 years).

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Mrs Taxpayer 45 45 90 90 90 90
Mr Taxpayer 90 90 120 120 120 12 

Question – how would their day count change if Mrs Taxpayer ceased working in the UK?

Answer – this would mean she would lose one of her connecting factors.  Their day count would therefore mirror each other’s:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Mrs Taxpayer 90 90 120 120 120 120
Mr Taxpayer 90 90 120 120 120 120 

Question – if Mrs Taxpayer does not want to reduce the number of days she works in the UK  but they sold their apartment and stayed in a hotel while in the UK, would this change their position?

Answer – yes, as long as care was taken to ensure that this placed them in a position to avoid the accommodation connecting factor, they would both have lost one of their connecting factors:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Mrs Taxpayer 90 90 120 120 120 120
Mr Taxpayer 120 120 120 182 182 182

The Positive Effects of Tax Planning

The example of Mr and Mrs Taxpayer illustrates the complexities of the statutory residence test and how, for a married couple, joint planning is crucial.

It also highlights how a single change (in this example, Mrs Taxpayer not working in the UK, or the apartment being sold) might mean that their UK day count need not change significantly for them to become non-UK tax resident for the requisite 6 years.

  • At the end of this 6 year period they would be able to return to being UK tax resident and would not become deemed domiciled for a further 15 years. This would mean that they would therefore not be taxed on a worldwide basis for this additional 15 year period.

Additional Information

If you require any additional information on this topic, please speak to Paul Webb or Peter Robertson at the Dixcart office in the UK, or to your usual Dixcart contact.

Updated August 2019

Moving Location – A Critical Time to Plan Succession

Wealth – a Responsibility

The transfer of wealth to the next generation is a critical issue. The ability and understanding of the next generation as to how to deal with the organisation and management of the wealth being passed to them is also a vital consideration.

A family’s financial wellbeing can be lost or reduced in disputes over control and management of the wealth. Unfortunately the old English expression “from rags to rags in three generations” can often become true.

Planning is Critical

Extensive initial planning, during the lifetime of the creator or current custodian of a family’s wealth, needs to take place to ensure that the next generation successfully receives, manages and enjoys the wealth. The next generation must also understand the benefits to be gained by accessing appropriate professional expertise to protect and preserve their inheritance.

In situations of substantial family wealth it is fundamental for a successful transfer of the wealth, to establish an atmosphere of trust and communication between the members of the family. In addition, an understanding of the issues to be addressed with long standing and trusted professional advisers should be considered. It can be of great value to organise a family office structure either in conjunction with a professional advisory firm or independently.

Importance of the Availability of Family Office Services in a Number of Jurisdictions 

During the past forty-five years, the Dixcart Group has developed the ability to establish family office structures through a number of Dixcart offices in a variety of jurisdictions.

This has enabled family offices, which are managing the wealth of international families, to develop holding and investment structures in a tax neutral manner. This is key as family members often live in different jurisdictions, experiencing a variety of taxes and with  each jurisdiction demanding a different structuring approach.

A Changing World: Challenges and Opportunities

The transparency of ownership within international investments places greater emphasis on suitable and robust investment structures. Where the access to wealth is publicly acknowledged and disclosed this can potentially create a personal security problem for many wealthy individuals, which can provide motivation for individuals to move jurisdiction.

Changes to taxation expectations around the world are also now dictating the movement of individuals to jurisdictions where the imposition of tax has less impact than in the countries in which they currently live.

This movement of family members around the world presents opportunities to:

  • Put in place tax neutral structuring of investment positions for the benefit of the current generation
  • Provide the initial overview and planning necessary to ensure the responsible maintenance, management and distribution of the wealth to the next generation

What is Dixcart’s Approach?

Dixcart works with each family wealth structure to coordinate communication with the family and to provide access to, and liaison with, additional independent, professional advisers.

Plans can be put in place to allow for changes in a family’s structure and relationships to be recognised. Dixcart can coordinate variations in structure to accommodate individual and specific family wishes, whilst complying with the overall family office policy.

Summary: Appropriate Structures and Effective Communication from the Start

As wealth owners move from one jurisdiction to another, an opportunity to  restructure  the ownership of family wealth for succession planning purposes presents itself. Simultaneously, this provides an opportunity to implement the initial organisation of an ongoing family office and the tax neutral organisation of  family affairs.

When wealth passes down generations, openness between the family, together with effective communication and coordination, will help to ensure that potentially destructive family disputes are avoided or, at minimum, are more easily contained.

Additional Information 

If you would like further information regarding effective structuring and planning for inheritance please speak to your usual Dixcart contact or to one of the professional advisers in the UK office: advice.uk@dixcart.com.

Please also see our Dixcart Domiciles page.

Malta-nomad-residence-permit

Portuguese: Nova Via de Obtençao de Residência Em Malta E Mudanças Favor veis Ao Actual Programa de Residência E Vistos

Resumo

  • O programa, denominado “Iniciativa para Empregados Essenciais”/”Key Employees Initiative” em Malta permite a emissão de autorizações de trabalho e residência a futuros funcionários (desde que não residentes na UE) no prazo de cinco dias úteis a contar da data do pedido.
  • As alterações ao “Programa de Residência e Vistos” de Malta permitem agora ao requerente e aos principais dependentes candidatar-se a residência de longa duração em Malta após cinco anos de residência.
  • Além disso, pais e/ou avós do principal candidato e/ou cônjuge podem inscrever-se no programa.

Considerações

Malta é um destino atraente para indivíduos e famílias de todo o mundo que considerem neste momento a alteração da sua residência.

Uma série de programas permite que indivíduos de patrimônio elevado e profissionais altamente especializados se mudem para Malta, proporcionando uma oportunidade para residir indefinidamente em Malta sob um regime de tributação de remessas bastante vantajoso.

Em 2015, Malta lançou o “Programa de Residência e Vistos”, permitindo que candidatos de fora da UE e territórios dependentes obtivessem residência em Malta. Algumas mudanças foram recentemente, tornando esse regime ainda mais atraente.

Malta introduziu um novo programa, a “Iniciativa para Empregados Essenciais”. Os detalhes sobre este programa e as mudanças introduzidas no “Programa de Residência e Vistos” são resumidos infra:

“Iniciativa para Empregados Essenciais” em Malta

A “Iniciativa para Empregados Essenciais” em Malta proporciona um serviço rápido para profissionais altamente especializados que não sejam cidadãos da UE empregues em Malta. De acordo com o esquema, as licenças de trabalho/residência são emitidas aos futuros funcionários-chave dentro de cinco dias úteis a partir da data do pedido.

O esquema é aplicável a gestores e/ou profissionais com funções de caracter técnico com qualificações relevantes ou experiência adequada relacionada com um trabalho específico.

Os candidatos aprovados recebem uma autorização de residência válida por um ano, autorização essa que pode ser renovada por um período máximo de três anos.

Os candidatos devem fornecer aos serviços “Indentity Malta”/“Unidade de Expatriados” prova ou declarações quanto ao seguinte:

  • Salário bruto anual de pelo menos € 30,000 por ano.
  • Cópias certificadas de qualificações relevantes, certificados ou prova de experiência de trabalho apropriada.
  • Declaração do empregador declarando que o requerente possui as credenciais necessárias para desempenhar as funções exigidas.

A “Iniciativa para Empregados Essenciais” também se estende aos inovadores envolvidos em projetos “start-up”, que tiverem sido aprovados pelos serviços “Malta Enterprise”.

Mudanças no Programa de Residência e Vistos de Malta

O “Programa de Residência e Vistos” de Malta está disponível para titulares de passaportes não pertencentes à UE.

As seguintes mudanças foram introduzidas em julho de 2017:

  • O candidato principal e os dependentes são elegíveis para se candidatarem a residência de longa duração em Malta após cinco anos de residência.
  • Os pais e/ou avós do candidato principal ou o cônjuge do candidato principal podem candidatar-se ao programa na fase de candidatura. É necessário um pagamento adicional de € 5.000 por pessoa. Antes desta alteração apenas os pais suportados pelo candidato principal se podiam inscrever.
  • O limite de idade de 27 anos para crianças não casadas e economicamente dependentes foi eliminado.
  • Os filhos do principal candidato e / ou o cônjuge não perderão seus direitos de residência quando atingirem a idade de 27 anos. Isto aplica-se mesmo se eles se tornarem economicamente independentes ou se forem casados.
  • As crianças nascidas ou adotadas pelo principal candidato após a data inicial de aprovação do pedido podem ser incluídas, sendo necessário um pagamento adicional de € 5.000 por pessoa.

Os seguintes critérios financeiros continuam a aplicar-se:

É necessário um investimento em três níveis:

  • Um pagamento de €30.000 euros ao Governo maltês (que abrange o requerente, o cônjuge e os filhos do requerente e/ou do cônjuge) E
  • Um investimento mínimo de € 250.000 em Malta ou Gozo, que deve ser mantido por um período mínimo de 5 anos E
  • Compra de um imóvel em Malta por um valor mínimo de € 320.000 (€ 270.000 se o imóvel estiver situado em Gozo ou no sul de Malta), ou arrendamento de um imóvel por um mínimo de €12.000 por ano em Malta (€10.000 por ano se a propriedade estiver situada em Gozo ou no sul de Malta). A propriedade deve ser detida ou arrendada por um periodo mínimo de 5 anos.

Vantagens fiscais disponíveis para residentes não domiciliados em Malta

Os redimentos e mais-valias com fonte em Malta aferidas por indivíduos residentes são sujeitos a tributação em Malta. Não são tributados os rendimentos de fontes não-Maltesas não remetidos para Malta. Além disso os ganhos de capital de fontes não-Maltesas são isentos de impostos, mesmo que esse rendimento seja remetido para Malta.

Informação Adicional

Se necessita de informações adicionais sobre a “Iniciativa para Empregados Essenciais” e/ou o “Programa Residência e Visto” em Malta, diriga-se a Jonathan Vassallo no escritório de Dixcart em Malta: advice.malta@dixcart.com.

Switzerland for Asset Protection in an Increasingly Challenging World

Background

Switzerland is an incredibly attractive jurisdiction for international companies and high net worth individuals, seeking economic and political stability.

Reasons Why Switzerland is a Favoured Location

  1. Political, financial, social and economic stability

The economy of Switzerland is one of the world’s most advanced economies. The service sector plays a significant economic role, particularly the financial services sector. The economy of Switzerland ranks first in the world in the 2019 Global Innovation Index, and fifth in the 2019 Global Competitiveness Report.

The economy of modern Switzerland is recognised as one of the world’s most stable. In addition, in terms of the ‘human development index’, a statistical composite of life expectancy, education and per capita income, Switzerland ranked second in the world in 2018, with a rating of 0.944

In terms of foreign policy, the country has a long-standing tradition of neutrality, and has been a constitutional democracy since 1848.

The stable political and economic environment of Switzerland makes it an appealing  jurisdiction from an asset protection perspective, with the added benefit of attractive tax regimes for both companies and individuals. These factors, combined with the country’s high regard for personal privacy and confidentiality, attract families and businesses from all over the world.

       2. A favourable tax environment for companies and foreign investors

Switzerland has long been known as a popular location for international trading companies. Due to its business-friendly environment, it has been home to all types of companies, from the headquarters of multinationals to small offices, with one employee.

Switzerland’s attractiveness to foreign investors, will be further enhanced in January 2020, with implementation of the Swiss tax reforms approved by Swiss voters.  Active operational companies will be taxed at between 12% and 14%, which can be reduced to as low as 9% with the application of instruments such as patent box.

Holding companies benefit from a ‘participations value deduction,’ when certain conditions are met. This means that they do not need to pay corporate tax on dividends received from participations and on capital gains.

Dividend distributions from subsidiaries to shareholders based in an EU jurisdiction or in Switzerland, are not taxed. In situations where the shareholders are not located in the EU or in Switzerland, but in a country with which Switzerland has a tax treaty, the withholding tax is generally between 0% and 5%.

        3. Banking advantages

Switzerland is the premier financial destination for international investment and private asset protection. It also offers one of the strongest and most commercial banking centers in the world.

It has a long history and expertise dealing with international currencies and open capital markets. Many banks have dedicated desks for particular jurisdictions, providing specific services to clients.

The main benefits of having a Swiss bank account are the low levels of financial risk and high levels of privacy

There is a wide variety of large domestic and overseas banks, experienced in operating accounts for different industries; trading, commodities, commercial, and also for private individuals.

Switzerland is well-known for its private banks, an exclusive niche for high net worth individuals, which provide sophisticated personal financial services and products to an exclusive clientele.

  1. Different types of Swiss corporate structures

As in many countries, Switzerland offers a number of different company structures, these include; Public Limited Companies (SA/AG), Limited Liability Companies (Sarl/GmbH) and branches of foreign companies. Less common than in other jurisdictions are Swiss ‘Associations’: 

Association (Verein)

The Swiss Association is a legal entity which can undertake commercial activities.  Formation is simple and does not require share capital. Members do not share liability for the debts or actions of other members. The identity of members and directors is not public. It is an ideal structure for a business organisation made up of a number of independent offices. This type of structure is often used by multinational professional firms and enables them to operate globally under one branch, whilst maintaining separate profit pools and ringfencing liabilities in each of the countries in which they operate.

  1. Trusts and Private Trust Companies as asset protection vehicles 

Widely used in Anglo-Saxon countries, a trust is  flexible and, in the right circumstances, can be an effective asset protection vehicle. It provides anonymity for families, and confidentiality regarding the assets and/or companies held within it. Trusts can be a useful aid in terms of succession planning, and can assist with long term inheritance matters.

A Private Trust Company (PTC) is a corporate entity authorised to act as trustee. The client and his/her family can actively participate in the management of the assets and decision-making processes, as well as sitting on the board of the PTC.

Switzerland recognised trusts with the ratification of The Hague Convention on the Law Applicable to Trusts (1985), on 1 July 2007. Whilst there is no domestic law governing trusts in Switzerland, trusts from other jurisdictions, and their specific rules, are recognised and can be administered in Switzerland.

In Switzerland the settlor (the individual who settles assets into the trust for the benefit of the beneficiaries) can choose the law of any specified trust jurisdiction to govern the trust. For example a Guernsey trust can be established with a Swiss Trustee.

The tax advantages available in using a trust with a Swiss Trustee essentially depend on the tax residence of the settlor and the beneficiaries. Professional advice should be taken.

The Dixcart office in Switzerland is a member of the Swiss Association of Trust Companies (SATC) and is registered with the Association Romande des Intermediaires Financiers in Switzerland (ARIF).

Additional Information 

If you would like additional information regarding the use of Switzerland for asset protection, please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com. Alternatively please speak to your usual Dixcart contact.

Russian Translation