Dixcart has been approached by many clients wanting to redomicile their companies from other jurisdictions to the UK.
Re-domiciliation is the process by which a company moves its domicile from one country to another by changing the country under whose laws it is registered.
Changes Being Put in Place to be able to Re-domicile a Company to the UK
Currently, as of February 2022, it is not possible to redomicile a company to the UK, which has meant that Groups wishing to move business to the UK have had to undertake re-organisations, often crystallising liabilities.
All this is likely to change in the near future.
The UK Government is determined to strengthen the UK’s position as a global business hub with an open and competitive free market. The UK Government therefore intends to make it possible for companies to move their domicile, and to relocate to the UK, bringing it in line with other common law countries such as; Canada, New Zealand, Australia, Singapore and a number of US States.
Why is the UK Attractive to Corporates?
Clients are attracted to the UK as the UK is a leading destination for investment and business. It has world class regulatory systems, robust corporate law and governance, as well as a competitive corporate tax system especially for holding companies. Please see our Information Note The UK – A Truly Excellent Holding Company Regime.
A Need to Enhance Reputation
Some Groups with companies incorporated, for historic reasons in offshore jurisdictions, all be it legitimately, have suffered reputational damage by being cited in the Panama and Pandora papers. As a result many are keen to redomicile to protect themselves from reputational damage.
Benefits of Re-domiciliation
The act of re-domiciliation enables a company to maximise continuity of its operations while enabling it to shift its place of incorporation. This enables its corporate history, intellectual and other property rights, contracts and regulatory approvals to remain intact, despite the companies re-domiciliation.
What Happens Next?
The UK Government have just completed an initial consultation and legislation for the introduction of a UK Corporate Re-domiciliation Regime is expected within the next year.
The European Commission met on 22 December 2021 in Brussels, to discuss the Unshell Bill, the so called anti-tax avoidance Directive 3 (“ATAD 3”), to address the misuse of “shell”, or letterbox, companies that have been created for improper tax purposes.
The purpose is to discourage the use of “shell” companies, where there is little or no business activity, and/or where the vehicle is being used for aggressive tax planning or tax avoidance and evasion purposes. It will mean that in the future, deemed shell companies will not be able to access tax relief and related benefits, if certain criteria are met. The proposal is relevant to all businesses; small, medium and large.
The Misuse of Shell Companies
The misuse of shell companies exists in various forms and presents an opportunity to abuse tax obligations.
Shell companies are typically created to generate a financial flow through the respective company, in jurisdictions with no or very low taxes or where taxes are circumvented in some way. In other cases, individuals make use of shell companies to shield assets and real estate from taxes, either in the country in which they are resident or where the property is physically located.
Key Components of the Bill
The proposed Directive, once adopted, must be transposed into national law by the Member States before 30 June 2023, to come into effect from 1 January 2024.
This Directive sets out transparency standards, so that entities that merely exist ‘on paper’ can be more easily detected by the respective tax authorities.
The EU Commission proposes to introduce a filtering system to determine whether a company is deemed to be a shell company or not.
Companies that meet three gateway ‘cumulative’ requirements, will need to disclose information in their tax return to validate the company’s substance. This information will include providing supporting evidence regarding the company’s premises and bank accounts as well as the tax residency of its directors and employees.
The Indicators or Gateways
The key indicators or gateways are highlighted below:
Consequences of Gateways Being Met
If all three gateway specifications, as detailed above, are met, and there is a subsequent failure to meet the substance validation requirements, from the information provided in the relevant tax return, the company will be deemed a shell company and will not be able to access tax relief and any related benefits.
In addition, companies will not be able to obtain a tax residency certificate or will receive a certificate to say that it is a “shell”. The “shell” entity will be regarded as a “flow entity” and thus any payments to third countries, for example, will not be treated as flowing through the “shell” entity. Withholding tax will be applicable in the state of the “shell’s” shareholder/s.
Opportunity to ‘Appeal’
It is worth noting that companies will be able to rebut the presumption of shell status, through the submission of additional evidence. This information is likely to include additional data relating to the non-tax reason/s for its existence, as well as other additional evidence that is considered valid.
Sharing of Information
Member State authorities will automatically share information, regardless of whether companies are deemed to be a shell or not.
In addition, one EU Member State may require another EU Member State to carry out a tax audit for a company that is deemed to have shell company characteristics.
Penalties
In addition to the penalties that will be imposed and defined by the individual Member State(s), a penalty payment of at least 5% of the turnover of the company in the relevant tax year, will be imposed, for failure to comply with the notification obligations and/or false declarations on the tax return.
Summary
The introduction of this proposal will; provide more transparency among Member States, will ensure that shell companies have legitimate reasons for their existence, and will ensure a more even playing field for European businesses.
Dixcart Compliance Advice and Further Information
Dixcart professionals in the Dixcart Portugal office, as well as in our other Dixcart offices are fully conversant with this draft EU Directive.
We can provide detailed advice regarding transparency and compliance to our clients. If you require additional information, please contact Lionel de Freitas or Monica Santos at the Dixcart office in Portugal: advice.portugal@dixcart.com.
In this series we will examine the key elements of Offshore Trusts, taking a particular interest in Isle of Man Trusts. This is the first of three articles, and one that lays the foundation that we will build upon. This first article is aimed at those who have no prior experience with Trusts and those who wish to develop a deeper understanding of the constitution of a Trust. With that, some of the information may seem rudimentary to professionals but can at the very least act as a refresher.
The series will initially define the vehicle itself, breaking down the constituent elements of the Trust and who the relevant parties are and their features, responsibilities and general role in the Trust. The following articles will take a more considered view of the administration of the Trust and pitfalls to avoid, followed by the types of Trust and the reasons someone may implement them in their planning.
If you would like to read the other articles in the series you can find them here:
For the sake of completeness, we will first define what we mean when we say something is ‘Offshore’.
The term Offshore refers to any activity that takes place outside of the jurisdiction of residence. The Offshore jurisdiction will have a different legislative, regulatory and/or tax regime, which has traditionally provided the Ultimate Beneficial Owners (UBOs) of any offshore structure/asset with the opportunity to take advantage the benefits of that territory.
Therefore, an Offshore Trust is one that is settled and managed in a separate jurisdiction from the home country of its UBO. Popular offshore financial centres include island nations such as the Isle of Man, the Channel Islands, British Virgin Islands, but also landlocked locations including Zurich, Dublin, Dubai etc. – It is important to select a jurisdiction in good standing, such as the Isle of Man, that appears on the OECD’s ‘whitelist’ and holds a Moody’s rating of Aa3 Stable.
What is a Trust?
A Trust is a fiduciary agreement for the transfer of beneficial ownership. At its heart, this means a Trust is a legal arrangement with the Trustees for the management of assets which are usually administered for a specific purpose e.g. family wealth preservation, asset protection, tax optimisation, corporate incentive arrangements etc.
The details of the arrangement are contained within a Trust Deed, which is the constitutional document of the Trust. Trusts are not incorporated i.e. they are not a legal entity like a company or corporation. Therefore, a Trust does not benefit from the features of a legal entity, such as separate legal personality and limited liability e.g. it cannot make contracts or create charges in its own name. Instead, legal title of the assets is transferred to the Trustees, for which duties are owed – we will cover this in more depth in the next article within the series.
For there to be a bona fide Trust, there must be three certainties present:
Intention
Did the Settlor of the Trust intend to obligate or place the duty on the Trustees? This is tested objectively having regard to the reasonable man. If there isn’t sufficient certainty of intent the Trust may be void for uncertainty.
Subject Matter
Assets must be placed in Trust from outset. The assets settled into Trust must be identifiable and clearly defined. If not, then the Trust may be void for uncertainty.
Objects
Simply put, the objectives of the Trust must be clear as far as who the Beneficiaries are or could be. If it is not clear who can benefit from the Trust, it may be void for uncertainty.
Unlike a UK Trust, which has a maximum lifespan of 125 years, since 2015, Isle of Man Trusts have been able to continue in perpetuity i.e. until the Trust prescribes, Trustees decide to wind up the Trust or the Trust fund runs out. This gives the Trust supreme flexibility, allowing advisers to plan or defer chargeable events efficiently – for example, making distributions that help with the Beneficiary’s personal tax position. Isle of Man Trusts can benefit successive generations indefinitely.
Another distinction between UK and Offshore Trusts is the requirement to register. Since 2017 it has been mandatory for UK Trusts which are liable for UK taxes to register with HM Revenue & Customs (HMRC). In the Isle of Man there is currently no comparable requirement, so long as the income is derived from non-Isle of Man sources, and there are no Isle of Man resident beneficiaries. Where these requirements are met, the income and gains can roll-up free of tax.
Where an Offshore Trust has a liability, or becomes liable to any of the following UK taxes: Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax or Stamp Duty Reserve Tax, there is a requirement to register with HMRC. Recent changes require Offshore Trusts to also register with HMRC in certain other situations, such as the acquisition of and interest in UK real estate. However, it is common for Offshore Trusts to hold shares in an Offshore Company, such as an Isle of Man company, which in turn owns the assets and engages in any commercial or investment activity on the Trust’s behalf – this creates further separation and facilitates further subsidiary companies as required.
Now that we’ve established the basic parameters of a Trust, we will now consider the parties of the Trust and their roles and responsibilities.
Parties of the Trust: The Settlor
The instigator of a Trust is known as the Settlor, and this is the party who places the assets into Trust – thus creating a Settlement. Any legal person can establish a Trust, meaning that the Settlor can be both a natural person or a body corporate.
The Settlor must transfer assets into the Trust for it to come into existence. Whilst it is typical for there to be one Settlor, it is possible for the Trust to have multiple Settlors who place assets into the same Trust. Furthermore, the Settlements do not need to be at the same time. Depending on the circumstances of the Settlor, this can require further consideration with regard to tax.
Within the Trust Deed, certain powers can be reserved to the Settlor; such as the appointment and removal of Trustees, and the power to appoint a Protector.
Where a Discretionary Trust is established, the Settlor can provide further guidance through producing a letter of wishes. This document guides Trustees’ decisions in their management and distributions of the Trust assets.
Not to worry if there seem to be a lot of moving parts – usually the Settlor has been advised by a qualified professional, who will work with them throughout the planning process. This ensures that the type of Trust established meets the Settlor’s objectives, helping to identify the most appropriate Trustees and who should benefit and when, configuring the operational aspects and advising of any tax considerations and/or consequences among other things. Following the planning process, if an Offshore Trust has been advised, a Trust Service Provider such as Dixcart is contacted to arrange the establishment of the Trust, and who usually provide Trustees in that Offshore jurisdiction.
Parties of the Trust: The Trustee
When the Settlor places the assets in Trust, the legal title of those assets is passed to their appointed Trustees. The Trustees have strict obligations to manage the Trust Fund in accordance with the terms of the Trust Deed – these legal obligations allow Beneficiaries to enforce equitable rights in a court.
Whilst it is possible for the Settlor to be a Trustee, it is highly unusual and would defeat any tax planning objectives. In theory a Beneficiary could also be a Trustee, but this is normally excluded by the Trust Deed and would conflict with the Trustees’ duties discussed below.
Each common law jurisdiction will have its own suite of pertinent legislation that the Trustees must abide by. In the Isle of Man, the relevant law includes the Trustee Act 1961, Trust Act 1995 and Trustee Act 2001 among other Acts. Many of these entrench and develop on previously existing common law doctrines, as well as add to them, to provide more clarity and certainty e.g. the Trustees duty of care in relation to powers of investment and the professional standards expected of them.
In fact, duty of care lies at the heart of the Trustee’s role. All Trustees are beholden to fiduciary duties, like a company’s Directors. This means that Trustees are jointly and severely liable for the actions they take (or don’t take) in respect of the Trust. These general duties are briefly summarised below:
Exercise reasonable care and skill, considering the capacity of their appointment and any specialist skill or knowledge i.e. acting as a professional or lay Trustee etc.;
To understand and carry out their obligations in line with the terms of the Trust;
To maintain and act in the interest of the Beneficiaries, keeping it separate from their own assets;
To avoid conflicts of interest e.g. situations where the Trustee may make decisions for personal gain, or gain of others by disadvantaging the Beneficiaries;
To act fairly and with impartiality towards Beneficiaries;
To exercise powers only for the purposes they have been given and in good faith
To provide an accurate account of the Trust Fund upon the Beneficiary’s request.
There is also a duty for the Trustee to act gratuitously unless otherwise stated within the terms of the Trust; but most modern arrangements make provision for reasonable remuneration.
In the UK, Trustees are not regulated and do not need to be licensed. However, in jurisdictions such as the Isle of Man, in addition to the statutory and common law protections available, Professional Trustees are regulated by the Isle of Man Financial Services Authority and licensed under the Financial Services Act 2008.
As you can see, being a Trustee can be a complex undertaking, not least due to the legal obligations and subsequent liabilities incurred by the appointment. Further to this, there can be tax implications to consider that may create further liabilities for the Trustees. In the interests of brevity, we will cover various relevant considerations and best practices relevant to the role of Trustee within our next article in this series.
Parties of the Trust: The Beneficiary
When the Trust Deed is drafted, Beneficiaries or categories of Beneficiaries must be named. In doing so, the Settlor outlines who they wish to benefit, or to be eligible to benefit from the Trust. The Beneficiaries may benefit from:
The income of the trust e.g. property rental or investment income,
The capital of the Trust e.g. getting assets distributed to them under specific circumstances, or
Both income and capital.
Remember, Trustees are normally excluded from benefitting, although as stated above, Professional Trustees can receive reasonable remuneration. There are types of Trusts where the Settlor can retain an automatic interest to the income during their lifetime, for example an Interest in Possession Trust – This will be discussed in the next article.
Choosing the Beneficiaries or categories of Beneficiary can be a tricky exercise for the Settlor, who must weigh up various considerations, such as:
Is the Settlor married?
Does the current spouse need access to the fund?
Does the Settlor have a former spouse?
Does the Settlor have children?
Does the Settlor have children from a previous relationship?
Is anyone financially dependent on the Settlor?
Does the Settlor have any vulnerable dependents?
Who does the Settlor find deserving?
Are there any not-for-profits/charities that are close to the Settlor’s heart?
The Trust Deed can also include exclusions, which can detail anyone who the Settlor does not wish to be considered.
The Trust Fund can be apportioned into a main fund and sub fund elements, ringfenced for certain Beneficiaries. in practical terms, sub funds are created for the Beneficiaries or categories of Beneficiaries which only they can benefit from.
Should the Settlor wish to amend the list of Beneficiaries or categories, depending on the type of Trust, they can make a Deed of Variation. In the instance of a Discretionary Trust, the settlor would supply an updated letter of wishes to the Trustees – remember this document is not binding upon the Trustees and is only persuasive – Depending on the powers conveyed upon the Trustees, they will then consider the actions required.
The nature of the Trust will define the rights which the Beneficiary may seek to enforce. For example Discretionary Trusts, which are now regularly used in modern Estate Planning or Succession Planning due to their flexibility. Such Trusts convey few rights upon the Beneficiary, as the management and distribution of the Trust property is at the Trustees’ discretion. However, both Settlor and Beneficiary can take comfort in these circumstances from the Trustees fiduciary duties; whereby the assets must be managed in the best interests of the Beneficiaries.
Parties of the Trust: The Protector
Whilst not a mandatory requirement, the Settlor may choose to appoint a Protector from outset. The Protector of a Trust is an independent party who is not a Trustee, but is given powers under the Trust Deed. The Protector ensures the Trustees are administering the Trust in compliance with the Trust Deed and the Settlor’s wishes.
Typically the Protector will be a trusted and qualified professional, who may already have a relationship with the Settlor or their family, such as a Solicitor or Financial Adviser.
The Protector effectively provides a backstop to Trustees abuse of powers. For example, where a Protector is appointed, it is usual for the Protector to reserve certain powers, have the power to veto specified administrative actions, or those actions can require their sign-off in order to be bona fide. The power most commonly given to a Protector is the power to appoint or remove Trustees, or to consent to a distribution.
Other than guiding particular Trustee actions, the role of Protector can provide comfort to the Settlor that the trust is being administered as intended. However, Settlors should err on the side of caution when considering whether to appoint a Protector and which powers to reserve for them, as this can lead to many issues in the effective and efficient management of the Trust.
Parties of the Trust: Third Parties
Finally, with regards to the operation of the Trust Fund, the Trustees may seek to appoint various qualified professionals to ensure the best outcome for the Trust Fund and the Beneficiaries. The nature of the settled assets will determine which professional services are required, but these can typically include:
Investment Managers
Property Managers
Tax Advisors
Working with a Trust Service Provider
Dixcart have been providing Trustee Services and guidance for 50 years; assisting clients with the effective structuring and efficient administration of Offshore Trusts.
Our in-house experts and senior employees are professionally qualified, with a wealth of experience; this means we are well placed to support and take responsibility for the Offshore Trust, acting as Trustee and providing specialist consultancy services where appropriate. If required, the Dixcart Group can also assist individuals who require tax and wealth planning services.
We have developed an extensive range of offerings, which includes an array of Isle of Man structures. From pre-establishment planning and advice to the day-to-day management of the vehicle and troubleshooting issues, we can support your goals at every stage.
Get in touch
If you require further information regarding the use of Offshore Trusts, or Isle of Man structures, please feel free to get in touch with David Walsh at Dixcart:
Individuals and families are becoming increasingly mobile and the ability to hold a second passport is becoming more relevant. The Caribbean is an attractive destination for a number of reasons, including the relaxing lifestyle, beautiful scenery and the climate.
Why do Families and Individuals Require a Second Passport?
There are a variety of reasons why people wish to acquire a second or alternate citizenship:
To offer insurance against political, economic or fiscal change in the individual’s country of origin.
To make international travel easier. Nationals of many countries have to endure lengthy waiting periods to obtain visas for travel. This may be because they are nationals of a developing country or there may be animosity between their country and another.
To allow the passport holder to avoid discrimination.
To present new opportunities for the tax structuring of personal tax affairs. Generally, an individual’s residence and citizenship are the ultimate basis for the majority of taxation rulings.
Citizens of the United States of America are subject to tax on their worldwide income, irrespective of their country of residence. They are denied the residence-linked tax planning opportunities that are available to others. It is possible for such individuals to gain fiscal advantages by acquiring a new citizenship and renouncing their original citizenship.
Citizenship Options within the Caribbean
There are a number of different options for Citizenship within the Caribbean. The most popular passport schemes include St Kitts & Nevis, Grenada and Dominica.
These schemes each offer the option of residence in other CARICOM countries (Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St Kitts & Nevis, St Vincent & Grenadines, Suriname and Trinidad & Tobago).
Dixcart is a licensed Service Provider for the St Kitts & Nevis Citizenship by Investment scheme and can also assist with the coordination of applications for the Grenada and Dominica schemes.
The key characteristics of each scheme are detailed below.
St Kitts and Nevis
Key Features of the Scheme
Passport holders enjoy full Schengen privileges and do not require a visa to visit the UK. A St Kitts & Nevis passport enables travel to approximately 156 countries worldwide either on a visa free or visa on entry basis.
The ability to reside in other CARICOM countries (please see detailed list above).
The following taxes are NOT levied in St Kitts & Nevis: personal income tax, gift tax, death duties, estate taxes, inheritance tax or capital gains tax on worldwide income.
The St Kitts & Nevis citizenship by investment scheme Is one of the oldest citizenship by investment programmes in the world.
The application process is simple and Dixcart can assist with the collection and completion of the various forms before submission.
Citizenship by Investment – Three Investment Routes
The St Kitts & Nevis Economic Citizenship Programme offers three alternate investment routes:
Real Estate Investment
Investment in an approved real estate property worth a minimum of US$400,000. The real estate must be held for a minimum of five years after the citizenship has been granted. The property can then be re-sold with retained citizenship rights and could be available for a new buyer to use for their application.
OR
Investment in new luxury real estate worth a minimum of US$200,000. The real estate must be held for a minimum of seven years after the citizenship has been granted.
OR
2. Sustainable Growth Fund (SGF) Contribution
A single applicant can contribute US$150,000 to the Sustainable Growth Fund (SGF). The contribution for a family of up to four will be US$195,000. For additional dependants, regardless of age, the contribution requirement is US$10,000 per dependant.
3. Alternative Investment Option (AIO)
Applicants have the option to invest in an alternative project that has been approved by the St Kitts & Nevis Government. Alternative Investment projects can be Government or privately owned.
An investment of US$175,000 for up to a family of four, in a Public Good Project Developer (PGPD) project which is fully funded by the PGPD. All other fees will apply as per the real estate option.
An investment of US$200,000 for up to a family of four in a Private Enterprise Developer (PED), where the built or funded asset is privately owned. Standard real estate government fees also apply.
The addition of a sibling under the AIO, will be US$20,000.
For additional dependants (children or parents), the contribution requirement is US$10,000 per dependant.
Potential projects should be identified by the Government or can be suggested by private individuals with access to financing who approach the Government with potential projects that are not already on the Government’s infrastructure list. Once the asset has been completed and operated for a reasonable period of time (that allows for a reasonable return on investment) must be turned over to the Government in a maintained condition consistent with prudent ownership.
Fast Tracking
Usually, processing time for any of the routes above to gain St Kitts & Nevis Economic Citizenship is approximately three months. For an additional fee, the applicant can be fast tracked. More information can be provided on request.
Grenada
Key Features of the Scheme
Minimal processing fees and no interview, education, or management experience required.
Grenada is on the list of countries that can apply for an E2 USA visa.
Ability to reside in other CARICOM countries.
Well-known, stable, and established investment environment.
Same rights as other Grenadian Citizens and the right to hold dual citizenship.
Grenada has no foreign income, wealth, gift, inheritance, or capital gains tax.
Grenadian citizens can travel, without visa restrictions, to more than 115 international and Commonwealth countries, which include the United Kingdom, Europe, Singapore, Hong Kong and recently to the People’s Republic of China.
Grenada is a beautiful island to live on, with many pristine beaches.
The application process is simple; Dixcart can assist with the collection and completion of the various forms, before submission.
Citizenship by Investment Options
To qualify for citizenship, applicants must choose from one of the following available options:
Real Estate
The purchase of real estate, with a minimum value of US$220,000 from an approved real estate project. The real estate must be held for a minimum of five years.
OR
The National Transformation Fund (NTF)
Applicants must contribute a set amount, which depends on the number of dependants they have. As an example, an applicant and his/her family, up to four members, would need to contribute US$200,000. For additional dependants, after the third dependant, the contribution requirement is US$25,000 per dependant.
Dominica
Key Features of the Scheme
Economic and efficient application process.
Dual Citizenship allowed.
Visa-free travel to over 120 territories, including Singapore and Hong Kong, the European Union and United Kingdom.
Minimal taxation, including no wealth, gift, inheritance, foreign income, or capital gains tax.
Full residence status, with the right to live and work in Dominica.
Dominica is a signatory of double taxation treaties with the USA and the CARICOM.
Dominica Economic Citizens have the same rights as Dominica born nationals.
The ability to reside in other CARICOM countries
The application process is simple, and Dixcart can assist with the collection and completion of the various forms before submission.
Citizenship by Investment – Two Options
To qualify for citizenship in Dominica, applicants can choose from one of the following two options:
Real Estate
The purchase of real estate, with a minimum value of US$200,000 from an approved real estate project. The real estate must be held for a minimum of three years. If the applicant maintains ownership of the property for five years, they are eligible to re-sell the property under the Citizenship by Investment programme.
OR
The Economic Diversification Fund (EDF)
The following is an outline of the contribution costs to the fund.
Single applicant: US$100,000
Main applicant and spouse: US$175,000
Main applicant with up to three qualifying dependants: US$200,000
Additional dependants: US$25,000 each
Additional Information
Dixcart has an office in St Kitts & Nevis and is experienced in organising applications for the St Kitts & Nevis Economic Citizenship Scheme. We can assist with every aspect of an application from the gathering of appropriate documentation to the sourcing of property and schools and organising a move for those families who wish to relocate to the Caribbean.
Dixcart can also assist with applications to the Grenada and Dominica residence schemes.
Please contact John Mellor in the Dixcart office in Nevis: advice.nevis@dixcart.com if you would like additional information about the residence schemes in St Kitts & Nevis, Grenada, and Dominica.
Portugal is being re-discovered as a destination to relocate to, with iconic cities such as Lisbon and Porto, and stunning coastal areas, for example, the Algarve. It also offers very easy access to the rest of Europe.
Portugal is increasingly recognised as an international hub with 71 Double Taxation Agreements and 49 Investment Protection Treaties.
The Golden Visa
There are a number of different criteria that can be met to fulfil Golden Visa obligations, including direct investment into property. An increasingly popular route is the investment fund option whereby individuals can gain a Golden Visa, by investing in a Portuguese Venture Capital Fund.
Key Facts: The Golden Visa Programme
The Portuguese Golden Visa allows individuals to qualify for a residency permit, to live in Portugal for up to five years and does not necessarily trigger Portuguese tax residency. The applicant and his/her family are free to travel within the Schengen area. The Golden Visa also allows investors to work in Portugal if they choose to do so.
Investing in a Portuguese Venture Capital Fund – the Requirements
An investment of at least €500,000 must be made in a Venture Capital Fund with the objective of providing capital for companies. The capital must be injected for a minimum of five years and at least 60% of the investment must be made in commercial companies, with a head office in Portugal.
Taxation
The benefits of investing through a Venture Capital Fund include:
Withholding tax of 10%, on distribution of the income generated, if the investor is tax resident in Portugal.
Exemption from withholding tax, on distribution of the income generated, if the investor is not tax resident in Portugal.
Exemption from corporate income tax when the fund is established and operating under Portuguese legislation.
10% tax on capital gains derived from the sale of participation units.
Non-habitual Residents Scheme (NHR)
Portugal also offers an attractive personal tax regime, the ‘NHR’ regime, to EU and non-EU individuals who have not been tax resident in Portugal for the previous 5 years, but who wish to be tax resident in Portugal.
An individual can enjoy the NHR regime for 10 years, after which he/she will be taxed at the standard Portuguese tax rate.
The key advantages are:
Income derived from employment or independent personal services in Portugal is taxed at a special flat rate of 20% for ten consecutive years, as above. Portuguese employment income must be derived from high value-added activities of a scientific, artistic, or technical nature.
28% flat rate of withholding tax on interest, dividends and/or capital gains relating to Portuguese source income.
Pensions will be taxed at the rate of 10%
No capital gains on the sale of a permanent residence in Portugal as long as the gains are re-invested in another permanent residence in Portugal or another EU or EEA country.
If you require additional information regarding the Portuguese Golden Visa or the NHR regime, please speak to your usual Dixcart contact or email the Dixcart office in Portugal: advice.portugal@dixcart.com
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yt.innertube::requests
never
This cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
