Month: December 2020

Background

In 2020, the Maltese government has revisited its citizenship legislation to consider all matters relating to citizenship by birth, by registration, by naturalisation, dual and multiple citizenships and for exceptional services by direct investment.

A Residency Route Which Can Lead to Citizenship in Malta

‘Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment’ provides foreign individuals and their families, who contribute to the economic development of Malta, a route to becoming citizens of Malta.

Malta is a member of the European Union and all its citizens can travel, live, work, study and set up business in any of the member countries together with visa-free travel rights to more than 180 countries.

Community Malta Agency (the Agency) is the authorised Maltese Government Agency responsible for administering the processing of all applications, leading to Maltese Citizenship.

Under the new regulations, applicants can opt for residence in Malta, leading to  citizenship choosing between two options:

1. application after three years of residence in Malta, for a lower contribution fee; OR
2. application for citizenship after one year of residence in Malta.

To be able to apply for Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment, an applicant needs to make a direct investment to the Maltese economy, make a donation and hold a residential property.

Exceptional Services Requirements

• Direct Investment

Applicants, who can prove residency status in Malta for 36 months prior to the naturalization, are required to make a direct investment of €600,000 whilst applicants who prove a residency status in Malta for at least 12 months are required to make an exceptional direct investment of €750,000.

If the applicant is accompanied by qualifying dependants, a further investment of €50,000 per dependant is to be made. 

An applicant cannot apply for a certificate of citizenship by naturalisation for exceptional services, before he/she has proved that he/she has become a resident of Malta for the minimum period required.

• Philanthropic Donation

Prior to the issue of a certificate of Maltese citizenship, the applicant must donate a minimum €10,000 to a registered philanthropic, cultural, sport, scientific, animal welfare or artistic non-governmental organisation or society, or as otherwise approved by the Agency.

• Property Investment

Once an applicant is approved and prior to the issue of a certificate of Maltese citizenship, the application must either purchase or rent residential property in Malta. If the applicant opts to purchase a property, an investment of at least €700,000 must be made. An applicant may alternatively take a lease on a residential immovable property in Malta, for a minimum annual rent of €16,000. The applicant must retain the property for at least 5 years from the date of the issue of the certificate of Maltese citizenship.

Agent

All individuals interested in applying for this programme, are required to do so through a registered approved agent, who will be acting on behalf of the client in all matters related to the Application for Eligibility and Application for Citizenship.

The Dixcart office in Malta can assist with the agency services.

Eligibility Criteria for Applicants

The Malta government aims to attract people of the highest calibre through the Malta Citizenship by Direct Investment and grant them Maltese residence, following a rigorous due diligence process and adherence to strict criteria.

To be eligible for the Malta Citizenship by Direct Investment, an applicant must meet a number of criteria:

• Be 18 years of age, or older. Eligibility may also extend to applicant’s dependants including the spouse or de facto partner, or a person with whom a relationship is held through a status which is the same as or similar to marriage, children, parents and grandparents under certain terms;
• Is willing to contribute, through an exceptional direct investment, to the economic and social development of the Republic of Malta;
• Provides proof that he/she has been a resident in Malta for at least 12 or 36 months preceding the day of issue, of the certificate of naturalisation;
• Meets all the application requirements; and
• Commits to providing proof of residence in Malta and proof of title to a residential property in Malta in accordance with the regulations.

Quota

It is important to note that a maximum quota of 400 applicants per year will be accepted with a total maximum number of applicants set at 1,500 for the entire scheme.

Additional Information

If you would like any further information on the Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment please contact the Dixcart office in Malta: advice.malta@dixcart.com or your usual Dixcart contact.

Dixcart Management Malta Limited Licence Number: AKM-DIXC-23

Guidance on Tax Residence and Taxable Presence in St Kitts & Nevis

In September 2020, the Federation of St Kitts & Nevis published new guidelines relating to companies registered in this jurisdiction and the definition of tax residence.

A summary of this guidance is detailed below:

Tax Residence: Definition

Tax residence determines whether a company will be subject to worldwide taxation in St Kitts & Nevis.

• Tax residence is determined by the central management and control test, as established under common law.

Whether a company is tax resident is determined separately from where it has its legal ‘seat’.

If a company is incorporated in St Kitts & Nevis, it does not necessarily mean that it will be tax resident in this jurisdiction. Equally, it is possible for a company to be incorporated outside of St Kitts & Nevis and to be tax resident within it, if centrally managed and controlled in St Kitts & Nevis. The converse is also applicable.

Management and Control: Clarification

Generally, central management and control will be located in the jurisdiction where the Board of Directors (BoD) convene and make management decisions, on behalf of the company.

This will be further substantiated where:

• The BoD is comprised of individuals suitably qualified and capable of managing the affairs of the company;
• The key strategic decisions of the company (especially relating to its capital structure, business strategy, investments, and dividend policy) are made at the BoD meetings; and
• Documentation (e.g. minutes of the BoD meetings), clearly indicate that such meetings are the medium through which the strategic decision-making of the company is carried out.

The delegation of corporate secretarial type functions to third parties in St Kitts & Nevis, is not sufficient to consider these companies having central management and control undertaken in this jurisdiction.

A St Kitts & Nevis ‘Business Enterprise’

Where a company is not tax resident in St Kitts & Nevis, it needs to consider whether it has sufficient operational presence in St Kitts & Nevis to be considered to be a ‘Business Enterprise’. If so, it would then be considered taxable in this jurisdiction.

Definition of a ‘Business Enterprise’

A non-resident company will have a taxable presence in the Federation where it has a ‘Business Enterprise’ in St Kitts & Nevis, which is being run along commercial lines for profit.

To meet ‘Business Enterprise’ criteria, it is necessary for the business to have a physical presence in St Kitts & Nevis, for example by having an office or branch located in this jurisdiction.

Circumstances Not Meeting ‘Business Enterprise’ Criteria

Actions undertaken to ensure that the company complies with its corporate requirements in St Kitts & Nevis, such as the establishment of a financial business account, and investment in equity holdings in the Federation, will not necessarily mean that the non-resident company has a ‘Business Enterprise’ in St Kitts & Nevis.

The delegation of; corporate secretarial, shareholder stewardship, or other administrative functions to corporate service providers in St Kitts & Nevis, does not in itself lead to the creation of a ‘Business Enterprise’.

Liability to Taxation

Where a company has a ‘Business Enterprise’ in the Federation, it will be liable to tax on income generated through the activities undertaken by this entity in St Kitts & Nevis.

Alternatively, where a company is not tax resident in the Federation and does not have a ‘Business Enterprise’ in the Federation, it would fall outside the scope of tax and would not be taxable in St Kitts & Nevis.

Additional Information

Dixcart has had an office in St Kitts & Nevis for over 20 years. We are experienced in  offering comprehensive professional advice to clients wishing to establish a company or ‘Business Enterprise’ in this jurisdiction. We can also provide expertise regarding the potential tax advantages and liabilities that are legitimately available.

Please contact John Mellor at our office in Nevis: advice.nevis@dixcart.com or your usual Dixcart contact.