Yacht Registration is on The Rise – Where to Register Your Pleasure Yacht?

The global tourism industry was brought to a halt as COVID-19 restrictions saw holidays being cancelled ‘en masse’ last year. As international travel looks to be opening up again, HNWIs will play a key role in reviving the sector and one particular trend we have seen them be part of, is the purchase and registration of private yachts and/or the chartering of private yachts.

Registering your Yacht

As with any valuable asset, the ownership structure of your yacht must be carefully considered and the jurisdiction in which the yacht is to be registered is also very important. The flag chosen for registration is one of the most important decisions. Dixcart has extensive expertise in registering yachts in a variety of jurisdictions, where we have offices, in order to help simplify the process.  Here are also some top tips to think about when registering your yacht: Luxury Yachts – Top Tips for Tax Efficient Registration.

Here is a snapshot of some of the best jurisdictions for yacht registration around the world:

CYPRUS

Cyprus is a key maritime centre and is recognised as one of the most accessible registries in the EU. It has not only grown in size in the last two decades but has also made a considerable effort to increase the quality of its fleet and related services. As a result, the Cyprus flag is now classified on the whitelist of the Paris and Tokyo MOUs*.

Due to its strategic location at the gateway of Europe, Africa, Asia, and the Middle East, it is a hub for shipowners and investors from all over the world, and there has been a rapid growth in the number of Cyprus shipping companies in recent years.

The procedure for registering vessels under the Cyprus flag has been designed to attract foreign investment and to build a dependable reputation, to be recognised by all of the international shipping authorities. 

Cyprus offers competitive yacht registration fees, low ongoing annual fees for yacht owners, and an attractive tax treatment for officers and crew working on a Cyprus registered yacht (whereby they are not subject to income tax), as well as a series of other tax advantages including no tax on profits from operational or management profits, no tax on income or dividends received from a ship management company, and a favourable tonnage tax scheme, based on gross tonnage.

The common practice for those wishing to register a vessel under the Cyprus flag is to incorporate a company in Cyprus, which will either acquire the yacht in its name, or bareboat charter the yacht. Cyprus offers a competitive rate of corporate income tax at 12.5% and low operating costs for Cyprus-owned companies. In addition, there is no estate duty on the inheritance of shares in a Cyprus shipping company and no stamp duty is payable on the ship mortgage deeds.

Find out more: Key advantages of registering your pleasure yacht in Cyprus

GUERNSEY

As a crown dependency, Guernsey has a very reputable yacht registry. It is a member of the ‘Red Ensign Group’ of British ship registries and its yachts enjoy the high standards associated with the red ensign flag.

By registering a yacht in Guernsey, owners can benefit from the advantages of a tax efficient and stable jurisdiction and the favourable tax laws of the Bailiwick of Guernsey. There is also the advantage of using a Guernsey Corporate structure to own and operate a yacht which can provide asset protection for the owner, together with other benefits.

Guernsey registration is valid internationally and all documentation is issued in English which is widely accepted around the world. There are no requirements for a Guernsey-registered yacht to physically visit Guernsey and owners have the ability to obtain a provisional registration to cover the vessel for navigation immediately after purchase. 

Another very attractive factor is that Guernsey is outside the VAT territory of the EU making the register useful for non-EU resident owners wanting to operate their vessel VAT free in Europe, and who are eligible to do so under Temporary Admission (Temporary Importation) relief.

Find out more: Benefits of Registering a Yacht in Guernsey

MALTA

Malta has the largest shipping register in Europe and is the sixth largest in the world. The procedure for registering a yacht in Malta is relatively straightforward; the Maltese authorities are approachable, whilst at the same time, meticulously follow a rigid framework of guidelines and regulations, creating a cutting edge for Malta within this sector.

The Malta flag is a European flag, a flag of confidence and a flag of choice.

Many leading international banks and financiers often recommend the Maltese register. This is due to the several advantages available:

  • No trading restrictions and preferential treatment in many ports.
  • The Maltese 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 yachts can be registered in the name of legally constituted corporate bodies or entities (irrespective of nationality), or by European Union Citizens.
  • A Maltese yacht may also be bareboat charter registered under another flag.

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. 

Individuals interested in registering their yacht in Malta, might wish to consider using a Maltese Cell Company. Shipping and Aviation Cell Company Regulations provide the opportunity to use a new cell structure for companies operating in the fields of shipping and aviation, and are treated as separate legal entities. This means assets and liabilities relevant to the individual cell can be segregated from the assets and liabilities of non-cellular elements, and from the other cells which may be held within the structure. A relatively simple example might be where one cell owns yacht A, the second cell owns yacht B, the third cell owns yacht C, and cell D owns the business matters in relation to ‘yacht management’. They can all be separated within the structure to ensure extra protection of the assets.

Malta is continuously reviewing their maritime legislation and introducing new regulations, ‘leading the way’ in terms of new initiatives in this sector. This includes yacht owners that have larger vessels and need to meet obligations for commercial passenger ships.

It is widely recognised when considering the operational pattern and risk profile of yachts, that these requirements, are in some instances disproportionately onerous and impractical in terms of design and implementation. As the trend for larger commercial yachts is growing, the 12-passenger limitation rule has become more problematic, resulting in an increase in administration for a number of organisations. This, combined with encouragement from the yachting industry, has provided impetus for Malta to develop the ‘Passenger Yacht Code’, to meet industry demands.

The introduction of the ‘Malta Passenger Yacht Code’ is applicable to passenger yachts which carry between 12 and 36 passengers, do not carry cargo, and which sail internationally. It is certainly a welcome development for those who plan to register larger commercial yachts under the Malta flag. It offers a solution to the many technical issues and concerns which were previously faced by prospective registrants.

Find out more: Why Malta is a great location for flagging or reflagging a yacht

PORTUGAL – MADEIRA

Madeira is part of Portugal and has full membership of the EU. This enables yacht purchasers to fully comply with EU legislation and the International Shipping Register of Madeira (MAR) is internationally recognised as a credible and competitive option in comparison to other shipping registers.

MAR maintains the high quality and safety standards of an EU register. It is regarded by the International Transport Workers’ Federation (ITF) as a flag of convenience and is included in the Paris Memorandum of Understanding (MOU) White List*.

An advantage of registering a yacht in Madeira is that it is an EU Register which allows full access to navigation in EU waters without any types of restriction for either commercial or private yachts.In addition, its EU standing has the advantage of providing substance to the VAT status of yachts registered in Madeira that operate within EU waters.

Madeira also takes into consideration the purchase of second-hand yachts. Portuguese VAT is applied to the lower acquisition price, as rules allow for devaluation suffered by the yacht (deemed market value). This can lead to a significant reduction in VAT.

Yachts that are commercially registered in MAR and are (i) used for navigation on the high seas and (ii) engaged in commercial/charter activities, benefit from several VAT exemptions:

  • the acquisition price of the yacht;
  • repair, modification and maintenance operations of the yacht;
  • fuel and oil supply;
  • the supply of goods (provisions) to have on board; and
  • the supply of equipment.

In addition, there are no citizenship requirements for the crew, and they are exempt from personal income taxes. The crew also benefit from a flexible social security regime; crew members are not obliged to contribute to the Portuguese social security regime, provided that an alternative pension scheme is guaranteed.

As mentioned above, when we have looked at other jurisdictions, many yacht owners choose to register their vessel via a company structure. The International Business Centre of Madeira (MIBC), with its advantageous tax regime, provides a highly competitive package of tax benefits. Its reduced direct taxation, with effective corporate income tax rate of 5% until 2027, combined with an exemption from withholding tax (providing the shareholders are resident in an EU jurisdiction) on payments of dividends, interest, and royalties to non-residents of Portugal, makes it an attractive location for yacht operating companies.

Madeira companies also benefit from automatic VAT registration on incorporation and are instantly provided with a VAT registration number. This makes it easier for such companies to take advantage of the various benefits available.

Madeira yacht owning companies are exempt from the initial yacht registration fee and receive a 20% reduction in the annual yacht registration fee. Plus, withholding taxes on dividends can be eliminated by routing the investment in the Madeira company through an EU holding company, for example a Maltese holding company.

Find out more: Why consider Portugal for yacht registration?

Summary

Dixcart Air Marine assists clients who own, or wish to own, a yacht. Our team of experienced professionals can provide a wide variety of services including; pre-structuring and ownership advice, registering the yacht, the accounting, added value services, tax planning, assistance with crewing and payroll (if required), and ongoing annual requirements. If you would like to speak to one of our professional advisers, please get in touch:

*White List Paris and Tokyo MOUs: Flags securing the highest rating in relation to the Memorandum of Understandings on Port State Control.

Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey Registered Company Number: 6512.

Swiss Private Trust Company – the Ideal Vehicle for a Family Office Structure

Key Advantages

The key advantages of a Swiss Private Trust Company (PTC) are the additional elements of control and discretion which the PTC can provide. A PTC is the ideal structure for high net worth families to use as part of their wealth structuring.

Important Considerations: Professional Trustee or Private Trust Company

One of the first things to consider when establishing a trust is who to appoint as trustee. This is a sensitive question as the settlor is often unwilling to give away control of the assets to strangers in another jurisdiction. A number of individuals may prefer to establish their own private trust company, rather than to use a professional trustee.

A PTC is a standard privately owned company whose sole purpose is to act as trustee of one or more trusts, usually connected to one family. In principle, PTCs do not offer services to the general public. Usually the PTC holds shares in a family company or in an investment company.

PTCs and the Role of a Professional Licensed Trust Company

Like any other company, a PTC is run by its board of directors who make the trust decisions. The PTC allows the settlor and/or family members or trusted persons, to act as shareholders or to be members of the board. As such the settlor or family members are able to appoint or dismiss the directors of the company.

PTCs are often set up and administered by an existing licensed professional trust company, which advises the board members of the PTC, in terms of corporate governance and trustee issues. In some cases, a representative of the professional service company will sit on the board of the PTC together with family members. This combination of family and professional advisers allows the PTC to react quickly to the needs of an extended family and to meet its best business interests. 

Specific Characteristics of Swiss PTCs

A Swiss PTC ensures privacy, when it is formed as a Limited Company. It makes it easier to control access to and disclosure of confidential information. It also allows for  rapid commercial decisions to be made.

A Swiss PTC does not have to be licensed as a professional trust company.

Switzerland as a Family Office Jurisdiction

Switzerland is a, if not the main, hub for family offices.

 Discretion, expertise and security together with one of the best jurisdictions in the world for asset protection and for asset management makes it arguably the best place for a high net worth family to conduct its estate management and control of its assets.

Dixcart Switzerland

Dixcart Switzerland has been providing Swiss Trustee services for over twenty years, is a member of the Swiss Association of Trust Companies (SATC), and registered with the Association Romande des Intermédiaires Financiers (ARIF)

The Swiss Federal Act on Financial Institutions (FINIG) came into effect at the start of 2020, and professional trustees must now gain mandatory approval. Dixcart Trustees (Switzerland) SA meets all of the required regulatory obligations and continues to do so.

Additional Information

if you would like additional information regarding Swiss Private Trust Companies, please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

Why are Corporate Groups and Clients Continuing to Redomicile Companies to Guernsey?

What has been Happening?

For many years the movement of a company’s jurisdiction of registration has been driven by the degree of success, that International Finance Centres (IFCs) have achieved in implementing international standards. These standards, designed to combat money laundering, bribery and corruption and the financing of terrorism are issued by the Financial Action Task Force (FATF). The degree of success, the quality of legislation and the standard of on-going monitoring in an IFC affects how each jurisdiction is assessed by administrative authorities around the world.

The recent implementation of Economic Substance Requirements by IFCs, has added further motivation to a growing trend, for companies to consider relocating from their incorporated jurisdiction to jurisdictions which are higher ranked, as being fully compliant with international standards.

Why are Companies Migrating?

Economic Substance and Black Lists

Economic Substance Requirements (ESR) have now been adopted by most IFCs, in response to concerns raised by, amongst others, the European Union. These concerns relate to the possibility that IFCs might  be used in structures designed to shift, then roll-up profits in a low or no-tax jurisdiction, where there is little true substance in relation to the operations supporting the core income generating activity.

Where an IFC has not satisfactorily implemented FATF and ESR, these jurisdictions are then at risk of being placed on one of the 450+ administrative lists around the world of ‘Grey’ or ‘Black’ ranked jurisdictions.  The issue for structures in these jurisdictions is the impact on their ability to conduct financing and transaction activity, particularly banking, and their credibility in the global financial world.

Practical difficulties in such jurisdictions also include; not being able to obtain banking and lending services; missed investor opportunities or lack of investor interest and engagement and greater compliance scrutiny, each of which affect the ability of the structure to operate effectively, efficiently and possibly even viably.

Considerations when choosing the IFC to Migrate to

There are three leading factors driving the choice of jurisdiction:

  • The tax harmonisation compliance track record of that IFC; and
  • The practicality of operating from that IFC; and
  • The simplicity of the migration process itself.

Track record is often the first criteria assessed.  It is important that the jurisdictions considered are white-listed.  Clients will also want certainty that the jurisdiction will remain white-listed, as the international standards mentioned previously, and global tax harmonisation rules continue to evolve. 

Forums such as the Organisation for Economic Cooperation and Development (OECD) and assessment bodies such as MONEYVAL conduct periodic assessments to ensure that a jurisdiction has adhered to the highest level of; standards, implementation and monitoring. These assessments provide key information when assessing corporate re-domiciliation.

Practical operation of the company from the chosen jurisdiction is the second consideration. Can the company and its activities be conducted in line with ESR, where appropriate and applicable, in an efficient and effective manner? Geographical location, time zone, access to markets, access to professionals, advisers and financial services, appropriately qualified directors and other personnel, as well as transport links are all important considerations. 

Simplicity of corporate migration. The laws of the inbound jurisdiction need to permit corporate migration and the process should be simple and cost effective, to ensure that the process is commercially viable.

Guernsey offers these features.

Companies are migrating to jurisdictions where they can most readily comply with requirements such as substance. Corporate groups are consolidating multiple jurisdictional structures into single, or at least fewer, jurisdictions to create cost, compliance and substance efficiencies.

These considerations are not limited to the migration of existing structures, new structures are being established, which take into account the above trends and concerns.

Migration of Funds – Guernsey’s Fast Track Solution

It is not only corporations that are seeking to migrate to Guernsey, but also funds.

In recognition of the large number of expressions of interest from non-Guernsey domiciled fund managers seeking to relocate to Guernsey, the Guernsey Financial Services Commission has introduced a 10-day fast track application regime, to facilitate a simplified and speedy solution to migration.

Fund managers may wish to migrate to Guernsey for regulatory reasons, and /or to be geographically closer to UK/European operations, assets, and investors.

Further information on this fast track route can be found here: Migration of Funds – Guernsey’s Fast Track Solution.

Guernsey’s Tax and Regulatory Standards Track Record

Guernsey’s tax policy is underpinned by strong general anti-avoidance rules and the adoption of a number of international tax standards. Some of the more relevant developments are detailed below;

  • December 2017 – EU Code of Conduct Group on Business Taxation for the EU Economic and Financial Affairs Council (COCG), confirmed Guernsey to be a co-operative jurisdiction which complied with the general principles of “fair taxation” and raised no concerns regarding Guernsey’s standards of transparency or implementation of measures to counter base erosion and profit shifting (BEPS).
  • Guernsey committed to adopt economic substance legislation by the end of 2018.
  • During 2018, Guernsey worked closely with the COCG, EU Member States and the other Crown Dependencies to develop economic substance legislation, which was adopted in December 2018.
  • In 2019, the EU Council confirmed that Guernsey had met its commitment to introduce economic substance requirements and therefore removed Guernsey from the list of jurisdictions who had committed to make certain changes.
  • Guernsey has given its full support to the transparency principles central to the current G20, OECD and EU tax initiatives, and is working as part of the wider international community in the development and effective implementation of internationally agreed standards.
  • In 2004 Guernsey voluntarily entered into automatic information exchange and bilateral withholding arrangements respectively with all EU Member States under the European Union Savings Directive (2003/48/EC).
  • Guernsey committed in May 2013, to join the initiative of the G5 countries on establishing and piloting an international standard for automatic exchange of information between tax authorities.
  • In December 2013 Guernsey entered into an intergovernmental agreement with the United States of America in relation to the implementation of FATCA, which it implemented in June 2014.
  • In October 2013 Guernsey entered into an intergovernmental agreement with the United Kingdom in relation the United Kingdom’s own version of FATCA, which it also implemented in June 2014.
  • Guernsey joined in the joint statement on 19 March 2014 committing to the early adoption of the global CRS. On 29 October 2014 Guernsey was among over 50 jurisdictions to sign the OECD’s Multilateral Competent Authority Agreement in Berlin, as a further step towards implementation of the CRS.
  • Guernsey, along with over 50 jurisdictions, implemented the CRS into its domestic legislation with effect from 1 January 2016.
  • As a key member of the global community committed to transparency, Guernsey continues to implement developments in transparency and best practice, building upon its early adoption of FATCA and the CRS, and also being compliant with the BEPS minimum standards.

Data Protection – Guernsey is among a small group of third country jurisdictions that have been officially assessed as meeting current EU data protection standards and granted equivalence (“adequacy”) through individual Commission Decisions.

Next Steps

If any of the areas covered in this note are relevant to your or your clients, please get in contact to discuss the practical aspects, costs and timings of redomiciling structures to Guernsey. Please contact Bruce Watterson or Steven de Jersey at advice.guernsey@dixcart.com

A Madeira (Portugal) Company – An Attractive Way To Establish A Company In The EU

What and Where?

Madeira is part of Portugal, an island located south west of Portugal’s mainland, in the Atlantic Ocean.

It is well known for its tourist attractions but also offers the International Business Centre of Madeira, which offers appealing tax benefits to attract foreign investment.

Madeira is a Portuguese island and is therefore an integral part of the European Union. Individuals and corporations that are resident, or registered in Madeira, therefore have full access to all of Portugal’s international treaties and conventions.

What Are the Key Tax Advantages Offered by the International Business Centre of Madeira (IBCM)?

The IBCM offers a number of attractive tax benefits for corporations:

  • A 5% corporate tax rate which is guaranteed by the EU to remain in place, until at least the end of 2027.
  • Non-resident individual and corporate shareholders benefit from a total exemption from withholding tax on dividend remittances, as long as they are not resident in jurisdictions featured on Portugal’s ‘black list’.
  • No tax is payable on the worldwide payment of; interest, royalties and services.
  • Access to the wide network of Double Tax Treaties that Portugal has with other countries.
  • Madeira is accepted by the OECD as an on-shore, EU-compatible free trade zone.

Additional Advantages Offered by the Island of Madeira

The island offers an attractive quality of life and has one of the lowest costs of living in the EU. It is a top tourist and retirement destination and has a young workforce, with one third of the population being under the age of 24. It is a multi-lingual jurisdiction with English being the second language and regarded as the business language, alongside Portuguese.

Madeira also has an international airport, with many daily connections to Lisbon and several weekly connections to Germany, Switzerland, and the UK.

The IBCM covers a wide range of activities, including; commercial, industrial, service-related industries and shipping. The greatest benefits can be enjoyed by; e-business, managing of intellectual property, shareholding, trading and shipping and yachting businesses.  

Substance Requirements

An important feature of the IBCM regime is that the law clearly defines appropriate substance requirements to be met, for the company to obtain the relevant tax benefits.

These substance requirements essentially relate to the creation of jobs.

There are two key requirements, verifiable at different times:

1. After the incorporation of the company:

  • within the first 6 months of the activity, the IBCM company must hire at least, one worker, and undertake a minimum investment of €75.000 in fixed assets within the first 2 years of activity. OR
  • it can hire 6 employees during the first 6 months of activity, where it will be exempt from doing the minimum investment of €75.000.

2. On an ongoing basis, the company must have at least one full time employee on its payroll, paying Portuguese personal income tax and social security. This employee can be the Director or a Board Member of the IBCM company.

Capping of Benefits

The regime is very favourable and, not surprisingly, upper limits apply, to ensure that very large companies have a cap on the benefits that they can receive.

As detailed previously, the corporate tax rate of 5% applies to a company’s taxable income. There is an upper limit of income which can enjoy this favourable tax rate, based on the number of jobs that have been created in Madeira by the company.

These figures are detailed below:

Job CreationMinimum InvestmentMaximum of Taxable Income Reduced Tax Rate Applies to
1 – 2€75,000€2.73 million
3 – 5€75,000€3.55 million
6 – 30N/A€21.87 million
31 – 50N/A€35.54 million
51 – 100N/A€54.68 million
100+N/A€205.5 million

In addition, the total benefits granted to companies licensed to operate in the IBCM are capped at one of the following amounts:

  • 15.1% of the annual turnover; OR
  • 20.1% of the annual earnings before interest, tax, and amortisation; OR
  • 30.1% of the annual labour costs.

How can Dixcart Help?

Dixcart has had an office in Madeira for over thirty years.

We offer advice regarding the establishment of a company in the IBCM and provide a complete range of services relating to the incorporation and management of the company.

These services include meeting all of the company’s day-to-day obligations, including: accounting, legal, human resources, tax compliance and IT.

Additional Information

If you require further information regarding the IBCM and/or if you would like information regarding the type of company and tax frameworks available in Portugal, please speak to your usual Dixcart contact, or to Catarina Sardinha at the Dixcart office in Portugal: advice.portugal@dixcart.com.

UK

UK Companies and the Role and Importance of UK Professional Directors

Why use a UK Company?

Over recent years, the UK Government has introduced many changes to make the UK tax system more competitive, in particular in relation to; UK holding companies, the re-shoring of manufacturing and increased UK based research and development (R&D).

United Kingdom (UK) entities have a respectable international image and can be used tax efficiently for cross border trading and as international holding companies.

UK Resident Companies: Some of the Advantages/Opportunities

Since 1 April 2017 the corporation tax rate has been 19%. Given the unprecedented measures in response to the COVID 19- pandemic the Government has found it necessary to increase the rate to 25% which is still the lowest rate in the G7.

There are generous allowances for investment in R&D by small and medium sized entities. The tax relief on allowable R&D is 230%. That means that for every £100 spent on R&D you can claim a tax deduction of £230.

Where a company makes a profit from exploiting potential inventions those profits may be taxed at 10% rather than at the normal corporate tax rate.

UK Controlled Foreign Company Laws have been reformed with the aim of making the UK tax system competitive for multinationals.

There are no withholding taxes on dividends paid, from the UK, by companies.

Why Appoint Directors From Dixcart UK?

Clients typically appoint us because they initially do not always have the resources in the UK to provide the management and control of the proposed company in the UK. If management and control were to be exercised from a client’s home jurisdiction there would be a danger that the jurisdiction would seek to tax the profits of the UK company.

Professional Dixcart UK directors are also appointed due to their expertise and assistance in managing UK companies, many of which are subsidiaries of an international parent company.

Management and Control

The fundamental question is; where is a company managed and controlled, and what factors will tax authorities consider when assessing where management and control takes place?

The central management and control of a company would normally be the place where directors meet to manage the company’s business. Generally, this is the place where board meetings are conducted. This is only relevant if central management and control is in fact exercised by the directors in those meetings. It is essential to show that directors have authority and make independent and informed decisions concerning the central business policy of the company, rather than just ‘rubber stamping’ the decisions of others.

It is important therefore, that foreign shareholders appoint UK resident directors who are aware of these risks and ensure that they carry out their duties correctly, but also properly minute and evidence their actions, in order to be able to demonstrate management and control in the UK, if called upon to do so.

Where a UK entity is being used as an SPV for a number of different shareholders, we are often appointed because the shareholders want independent directors to run the company. Such directors will need to familiarise themselves with any shareholder agreement, and ensure that the controls and mechanisms put in place to govern the relationship between the shareholders and to protect minority interests, are observed.

Dixcart Directors and Additional Professional Support

Dixcart directors are supported by a team of professionals enabling us to provide a complete business management and administration service. This includes:

  • Company formation and secretarial services;
  • Book-keeping, accounting and tax compliance services;
  • Serviced office space;
  • Telephone answering and email services;
  • Human resource services, including help with recruitment, employment contracts and payroll services;
  • Immigration services to help clients who wish to recruit or transfer staff to the UK from abroad.

Additional Information

Clients wishing to establish a business in the UK are advised to contact Dixcart at an early stage so that we can gain a comprehensive understanding of the proposed business.

This will enable us to give relevant pre-arrival advice and demonstrate how our directors would add value, should you decide to form a company in the UK. Please contact:  Laurence Binge or Peter Robertson at the Dixcart office in the UK: advice.uk@dixcart.com

Aviation Funding And Leasing Services In Malta

Background

In the last decade, aviation has become an even more relevant sector to Malta, not only due to the fact that it is the primary way that the island connects with other countries.

The jurisdiction is well known for aircraft registration with almost 500 aircraft registered in Malta. Similarly, the number of Air Operator Certificate Holders has increased to 40.  It is no surprise that Malta has become the fastest growing Registry in Europe.

This growth has been spearheaded by the introduction of various incentives and changes in legislation during recent years.

Aircraft Leasing 

One of the niche sectors which Malta is keen to expand is the aircraft leasing sector. Charles Pace, head of Transport Malta’s Civil Aviation Directorate, stated that the tendency nowadays is for airlines to lease aircraft rather than buy.

Malta is working to attract major aircraft leasing players which will help boost the aircraft sector in Malta further, both in terms of registrations as well as; maintenance, repair and overhaul activities.

Taking the Cape Town Index into account, Malta ranks well and is featured in the top 10, with a score of 85%. Taking advantage of this opportunity, the Malta Civil Aviation Director Charles Pace, is clear that he wishes to expand the Malta aviation sector to compete with strong leasing jurisdictions, such as Singapore, Hong Kong, or Ireland.

Leasing Types

When it comes to rental business, regardless of the aircraft, there are two types of leases: short-term (also known as wet leases), or long-term (also known as dry leases). 

Short leases are generally used by airlines for clients who need a plane for specific events or when faced with some technical problems within their own fleet. The lessor will pay the airport fees, taxes, fuel, insurance, maintenance, and crew. The fee paid by the lessee will depend on how many hours the aircraft is used.

However, for long leases, the only thing included in the price is the aircraft. The customer (the lessee) will be responsible for all charges in relation to; insurance, fuel, taxes, maintenance and crew. 

Benefits of Malta Aviation Companies

  • Investment Aid initiatives are available through the Malta Enterprise Corporation. The  aim of this assistance is to ease financial pressure at start up, as well as incentives to lessen the burden during ongoing operations.
  • Loan guarantees/subsidies and soft loans provided to facilitate entry into market.
  • Key personnel employed in the Aviation industry may benefit from the ‘Highly Qualified Persons Rules’.
  • Access to the aviation park situated in Safi.
  • Attractive taxation incentives including tax depreciation and taxation refunds.

Additional Information 

If you require any further information regarding aircraft leasing or the funding available to set up an aviation company in Malta, please speak to Jonathan Vassallo at the Dixcart office in Malta: advice.malta@dixcart.com.

Availability Of Temporary Cyprus Residence Permits For Third Country National Employees Of Foreign Interest Companies

This Article outlines the options available to third country nationals employed by foreign interest companies and the criteria that need to be met.

Key Feature of a Cyprus Foreign Investment Company

A Cyprus Foreign Investment Company (FIC), is an international company which can employ non-EU nationals in Cyprus. Such a company can obtain work permits for relevant employees and residence permits for their family members.

Main Advantages

A key advantage is that after 7 years, third country nationals can apply for Cyprus Citizenship.

In the shorter term:

  • FICs can employ third country nationals, who can apply for appropriate residence and work permits, each of which will be valid for up to 2 years and are renewable.
  • Employees can exercise the right for their families to join them in Cyprus.

Criteria to be Met

The requirements to be met are as follows:

  • The majority of the company’s shareholders should be foreign shareholders, and, in the situation where the ultimate owners are foreign companies, they must be  approved by the Civil Registry and Migration Department.

The following cases are exempt:

  • Public companies registered in any recognised stock exchange.
  • Former offshore companies that were operating in Cyprus by approval of the Cyprus Central Bank, before the change of their offshore status.
  • Cypriot shipping companies.
  • Cypriot companies of high technology/innovation, as certified by the Deputy Ministry of Research, Innovation and Digital Policy.
  • Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
  • Persons who have acquired Cypriot citizenship by naturalization based on economic criteria, and able to prove that they continue to meet all of the criteria.
  • Companies which employ staff from third countries for the first time must invest at least €200,000 in Cyprus, for the purposes of operating the company.
  • If the percentage of foreign participation in the share capital of the company is equal to or below 50% of the total share capital, this percentage must represent an amount equal to or greater than €200,000.
  • The company must operate independent offices in Cyprus, in suitable premises, separate from any private housing or other office, except in the case of business ‘co-habitation’.

EMPLOYEE CLASSIFICATION:

Eligible companies which fulfil the above conditions can employ third country nationals in the following positions:

  • Directors
    • this term includes directors or partners, general managers of branches and of parent companies of subsidiary companies, departmental managers, project managers.
    • the minimum acceptable gross monthly salary for directors is €4,000, an amount that may be adjusted from time to time, depending on fluctuations in the wage index.
    • there are no restrictions on the residence period of these employees.
  • Middle-management staff, executive staff and any other key personnel

In this category the following third country nationals are included:

  • Upper/middle management personnel,
  • Other administrative, secretarial or technical staff

The minimum acceptable gross monthly salary for this category is €2,000. Amounts may be adjusted from time to time, depending on wage index fluctuations.

  • Specialists

The minimum acceptable gross monthly earnings for Specialists is €2,000, an amount that can be adjusted from time to time, depending on fluctuations in the wage index.

  • Support Staff

This includes all third country nationals not included in the above categories. Companies are expected to fill positions in this category, with Cypriot or European citizens. Where there are no qualified Cypriots or European citizens available, a company may employ third country nationals up to a maximum 30% of the total staff.

For this category, the General Employment Procedure is followed, after  receipt of a positive recommendation (sealed employment contract) from the Department of Labour, which confirms that the approved maximum percentage above, has not been exceeded. Please contact the Dixcart office in Cyprus: advice.cyprus@dixcart.com for details of the certificates/supporting documents that need to be submitted.

The market test is not necessary for third country nationals with free access to the labour market.

Length of Validity of the Temporary Residence and Employment Permit

Where the criteria are met, the third country national is granted a temporary residence and employment permit. The validity of the permit depends on the duration of the employment contract and can be up to two years, with a right of renewal. Directors, middle management executives and other key personnel, as well as specialists (staff categories 1-3), may reside in the Republic without a time limit, provided they hold a valid temporary residence and employment permit.

For support staff, the restrictions applicable to the general employment of third country nationals in the Republic apply.

Family Members

Third country nationals with residence and employment permits, under staff categories 1-3 of the policy, have direct access to family reunification with their family members (spouse and minor children), provided that the relevant conditions of the Aliens and Immigration Law, Cap.105 as amended, are met.

In such cases, third country nationals who are family members (spouse and minor children) can enter and reside in Cyprus after the sponsor has followed the procedure for family reunification.

Additional Information

If you require any additional information, please speak to your usual Dixcart contact or to the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Move out of the UK

Cyprus, Malta, and Portugal – Three of the Best Southern European Countries to Live in

There are many reasons why individuals and their families choose to take up residence in another country. They may wish to start a new life elsewhere in a more attractive and relaxing environment, or they may find the greater political and economic stability that another country offers, of appeal. Whatever the reason is, it is crucial to research and plan ahead, as much as possible.

Residence programmes vary in what they offer and, depending on the country, there are differences regarding how to apply, the time period that residence is valid for, what the benefits are, tax obligations, and how to apply for citizenship.

For individuals considering an alternative country of residence, the most important decision is where they and their family would like to live. It is critical that clients consider the long-term objectives for themselves, and their families, before applying for a particular residence (and/or citizenship programme), to help ensure that the decision is right for now, and in the future.

The main question is: where would you and your family most like to live? The second, and almost equally important question is – what are you hoping to achieve?


CYPRUS

Cyprus has rapidly become one of Europe’s top hotspots for expatriates. If you are considering relocating, and are a bit of a sun-chaser, Cyprus should be top of your list. The island offers a warm climate, good infrastructure, convenient geographic location, membership of the EU, tax advantages for companies, and incentives for individuals. Cyprus also offers an excellent private healthcare sector, a high quality of education, a peaceful and friendly community, and a low cost of living.

On top of that, individuals are drawn to the island due to its advantageous non-domicile tax regime, whereby Cypriot non-domiciliaries benefit from a zero rate of tax on interest and dividends. These zero tax benefits are enjoyed even if the income has a Cyprus source or is remitted to Cyprus. There are several other tax advantages, including a low rate of tax on foreign pensions, and there are no wealth or inheritance taxes in Cyprus.

Individuals wishing to move to Cyprus can apply for a Permanent Residence Permit which is useful as a means to ease travel to EU countries and organise business activities in Europe. Applicants can make an investment of at least €300,000 in one of the investment categories required under the programme, and prove they have an annual income of at least €30,000 (which can be from pensions, overseas employment, interest on fixed deposits, or rental income from abroad) in order to apply for permanent residence. If they choose to reside in Cyprus for seven years, in any ten-calendar year period, they may be eligible to apply for Cyprus citizenship by naturalisation.

Alternatively, a temporary residence permit can be obtained by establishing a foreign investment company (FIC). This kind of international company can obtain work permits for relevant employees and residence permits for family members. Again, a key advantage is that after residing for seven years in Cyprus, within any ten-calendar year period, third country nationals can apply for Cyprus citizenship.

Find out more: Benefits, Financial Obligations, and Additional Criteria of the Cyprus Permanent Residence Permit


MALTA

Located in the Mediterranean, just south of Sicily, Malta offers all of the advantage of being a full member of the EU and Schengen Member States, has English as one of its two official languages, and a climate many chase all year round. Malta is also very well connected with most of the international airlines, which makes travel to and from Malta seamless.

Malta is unique in that it offers 8 residence programmes to meet different individual circumstances. Some are appropriate for non-EU individuals while others provide an incentive for EU residents to move to Malta. From the Malta Permanent Residence Programme, which offers a fast and efficient way for individuals to obtain a European permanent residence permit and visa-free travel within the Schengen Area, the Digital Nomad Residence Permit for third country individuals to legally reside in Malta but maintain their current job remotely, the Highly Qualified Person’s Programme, targeted towards attracting professional individuals earning over a certain amount each year offering a flat tax of 15%, to Malta’s Retirement Programme. It should be noted that none of the Malta residence programmes have any language test requirements – the Malta Government has thought of everyone.

  1. Malta Permanent Residence Programme – open to all third country, non-EEA, and non-Swiss nationals with a stable income and sufficient financial resources.
  2. Malta Residence Programme – available to EU, EEA, and Swiss nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000
  3. Malta Global Residence Programme – available to non-EU nationals offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000
  4. Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment – a residence programme for foreign individuals and their families, who contribute to the economic development of Malta, which can lead to citizenship
  5. Malta Key Employee Initiative – is a fast track work permit application programme, applicable to managerial and/or highly-technical professionals with relevant qualifications or adequate experience relating to a specific job.
  6. The Malta Highly Qualified Persons Programme – available to EU nationals for five years (may be renewed up to 2 times, 15 years in total) and non-EU nationals for four years (may be renewed up to 2 times, 12 years in total). This programme is targeted at professional individuals earning more than €86,938 in 2021, and seeking to work in Malta in certain industries
  7. The Qualifying Employment in Innovation & Creativity Scheme – targeted towards professional individuals earning over €52,000 per annum and employed in Malta on a contractual basis at a qualifying employer.
  8. Digital Nomad Residence Permit – targeted at individuals who wish to maintain their current job in another country, but legally reside in Malta and work remotely.
  9. Malta Retirement Programme – available to individuals whose main source of income is their pensions, paying an annual minimum tax of €7,500

To make life even more enjoyable Malta offers tax benefits to expatriates and the attractive Remittance Basis of Taxation, whereby a resident non-domiciled individual is only taxed on foreign income, if this income is remitted to Malta or is earned or arises in Malta.

Find out more: A Snapshot of Malta’s Extensive Residence Programmes

PORTUGAL

Portugal, as a destination to relocate to, has been top of the list for several years now, with individuals attracted by the lifestyle, the Non-Habitual Resident Tax Regime, and the Golden Visa residency programme. Despite not being on the Mediterranean, it is partially considered a member state of the Mediterranean region (along with France, Italy and Spain), with a Mediterranean climate of hot, dry summers and humid, cool winters, and a generally hilly landscape.

Portugal’s Golden Visa is the perfect route to Portugal’s golden shores. Due to its flexibility and numerous benefits, this programme has proven to be one of the most popular programmes in Europe – providing the perfect solution for non-EU citizens, investors, and families looking for Portugal residency, plus the option to apply for citizenship after 6 years if that is the long-term objective.

With changes soon approaching at the end of 2021, there has been a rapid uptake of more applicants in the last few months. Forthcoming changes include Golden Visa investors not being able to purchase properties in high-density areas such as Lisbon, Oporto, and the Algarve, which opens up greater opportunities for investors in Portugal. Alternatively, there are very attractive advantages in any one of the other non-real estate routes (more information can be found here).

Portugal also offers a Non-Habitual Residents Programme to individuals who become tax resident in Portugal. This allows them to enjoy a special personal tax exemption on almost all foreign source income, and a 20% tax rate for employment and/or self-employment income, sourced from Portugal, over a 10-year period.

Last but not least, following on from the restrictions caused by the pandemic and the significant increase of people no longer working in an office, Portugal offers a temporary residence visa that can be used by freelancers and entrepreneurs, which digital nomads can take advantage of. The local government in Madeira has launched the ‘Madeira Digital Nomads’ project, to attract foreign professionals to the island. Those taking advantage of this initiative can live in the nomad village in Ponta do Sol, in villas or hotel accommodation and enjoy free; wi-fi, co-working stations, and specific events.

The Golden Visa may seem less important for EU citizens, as they already have a right to live in Portugal without formal immigration or investment being required, but the NHR has proved to be a major motivator for both EU and non-EU citizens looking to relocate.

Find out more: From Portugal’s Golden Visa to the Non-Habitual Residents Regime


Summary

Moving Abroad? What to think about!

If you require additional information regarding moving to Cyprus, Malta, or Portugal, or would like to speak to an adviser to find out which programme and/or country best suits you and your family’s needs, we have staff located in each jurisdiction, to answer your questions:

Introduction to Christine Breitler and Peter Robertson – Members of our Asset Protection and Trust Team

Each of the Dixcart offices has an Asset Protection and Trust Team, providing a variety of wealth management services as detailed below. 

Christine Breitler from our Swiss office and Peter Robertson from our Dixcart office in the UK, are the two members of the team we are introducing you to today.

Dixcart Asset Protections and Trusts

The Dixcart Group has almost 50 years of private client advisory expertise in the administration of trusts, foundations, and the provision of family office services. International clients can take advantage of these services from any one of our nine offices. We also have fully regulated, independent trust companies, located in the following jurisdictions: Cyprus, Guernsey, Isle of Man, Malta, St Kitts & Nevis, and Switzerland.

Dixcart provide the following international wealth management services:

  • Estate and international tax planning
  • Family office services
  • Formation and administration of family trusts
  • Formation and administration of foundations
  • Formation and management of managed trust companies
  • Formation and management of private trust companies / foundations
  • Provision of trustee services
  • Provision of protector services

Introduction to Christine Breitler and Peter Robertson

Christine joined the Dixcart Group in 1997. She was promoted to Head of the Dixcart office in Switzerland, in 2000. Christine has extensive experience in international tax planning as well as the formation and administration of Swiss and foreign companies.

Pete’s key area of expertise is assisting families and individuals to manage their multi-jurisdictional wealth, as well as planning for the future. He was appointed a director in 2013 and subsequently appointed Managing Director of the Dixcart office in the UK, in 2018.  

Christine Breitler

Christine Breitler

Head of Swiss Office

Advocate TEP

christine.breitler@dixcart.com

Christine has expertise regarding the establishment of trusts and foundations and provides advice on family office and wealth preservation services to both Swiss and international clients, including estate planning, tax, commercial matters, and immigration.

Relocation, and the movement of family members around the world, often presents opportunities to put in place tax neutral structuring of investments and provide the initial overview and planning necessary to ensure the responsible maintenance, management, and distribution of the wealth to the next generation.

Christine is on the Board of a number of client companies both in Switzerland and overseas.

Christine is a Law graduate of the University of Neuchâtel (Switzerland), and she qualified as a Swiss Attorney at Law in 1990 in Neuchâtel, and in 1993 in Geneva. She speaks English, French and Spanish and is a member of the Society Trust and Estate Practitioners, the British and Swiss Chamber of Commerce and the Geneva Art Law Centre.

Peter Robertson

Peter Robertson

Managing Director

LLB (hons) FCA TEP

peter.robertson@dixcart.com

Pete is a member of the international team at Dixcart UK and much of his work is with the Tax team and the Immigration team, working primarily with international, non-UK domiciled families in their planning for a move to or an investment into the UK.  This  often involves early stage tax planning, assistance with obtaining relevant visas to move to the UK and ongoing assistance over the subsequent years.

Pete also advises clients on their international tax residence and estate planning and is often asked for Dixcart UK’s assistance with families and individuals managing their multi-jurisdictional wealth and future planning.  This will normally entail working with advisers in the appropriate jurisdictions, to ensure that relevant tax and practical considerations have been incorporated into the planning.

Pete is a qualified Chartered Accountant and Solicitor.  He became a member of the Institute of Chartered Accountants in England and Wales in 2006, completing his training at Blick Rothenberg LLP. In 2008 Pete became a member of the Law Society, qualifying as a Solicitor with the central London firm Pemberton Greenish LLP (currently he is a non-practising solicitor). He is a member of STEP and the International Fiscal Association.

Dixcart Articles Available in Over 150 Languages

We are very lucky to have clients and contacts based in virtually every country across the world. We generally communicate in English but understand that our contacts may wish to read our articles in their first language.

Many of our contacts are professional advisers, and whilst your English may be very good, the English of a number of your clients may not be quite so good.

  • We have therefore added Google Translate to the Dixcart and Dixcart Domiciles websites.

We were slightly sceptical, as to the potential quality of the translations. We therefore asked a number of linguists to test out several of the translations, and were pleasantly surprised with the feedback as to the accuracy and high quality.

You will find the ‘Select Language’ box in the top toolbar of each website.

If you wish to share the translation, please use the share icons along the side of the website.

This functionality has also been made available on the mobile versions of our websites.

Further Information

If you would like to know more about Dixcart Articles, the topics and jurisdictions covered and how you can use filters to find what you are looking for, please contact the Dixcart Marketing Team: advice@dixcart.com