Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment – helping Maltese Citizens


In 2020 the Maltese government updated the citizenship legislation relating to citizenship by; birth, registration, naturalisation, dual and multiple citizenships, and exceptional services by direct investment.

A new residency route which can lead to Citizenship in Malta, was the outcome.

What are the Details of this New Residency Route?

  • ‘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 become citizens of Malta.

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

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

What are the Criteria?

To apply for Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment, an applicant needs; to invest in the Maltese economy directly, make a donation and hold residential property.

Direct Investment

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

If the applicant is accompanied by qualifying dependants, a further investment of €50,000 per dependant needs 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 Nature of Direct Investment

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.

In addition, the main direct investment made by each applicant will be used by the Government to finance projects coordinated by The National Development and Social Fund, across Malta.

Projects that Benefit from The National Development and Social Fund

The National Development and Social Fund agency (‘Fund’) was established to manage and administer 70% of the contributions received from the Individual Investor Programme of the Republic of Malta, set up under the Malta Citizenship Act Cap.188.

The Fund’s mission is to; contribute towards, promote and support significant projects and initiatives of national importance and of public interest, which are intended to develop and improve the economy, public services, and the general well-being of present and future generations.

Between July 2018 and June 2019, the total contributions, including property purchases, rents, and investments, collected through the Programme amounted to more than €271 million. This equates to approximately 2.11% of Malta’s GDP in the same period. The total amount collected, since the changes implemented in the 2020 citizenship legislation, exceed €930 million. Of these funds, approximately €515 million have been allocated to the National Development and Social Fund.

More Details about the Projects

The fund has invested in the following projects:

  • €10 million to upgrade eight health centres and 54 clinics. Previously, the Fund awarded a grant of €950,000 to Mater Dei Hospital’s Cardiology Department to upgrade its two catheterisation suites, and €5 million to Puttinu Cares to purchase apartments for cancer patients and their families in London.
  • In Feb 2019, a memorandum was signed to commit €50 million towards a social housing project. Five hundred new social housing units to be built, across 22 different sites. These sites are spread over 12 localities; Paola, Kirkop, Rabat, Żabbar, Mellieħa, Luqa, Żurrieq, Żebbuġ, Qormi, Siġġiewi, Qrendi and Marsascala.
  • In Ħamrun, a planned roof garden of around 500m2, with more than 2,500 trees, shrubs and plants including mature carob, olive and oak trees, will be featured in the square. This garden will absorb around 900 kilograms of carbon dioxide from the atmosphere, whilst producing 660 kilograms of oxygen.
  • Other investments allocated by the Fund include;  €1.5 million for Caritas, a €1.5 million investment in artistic heritage, and €3.5 million in Urban Green projects.

In 2020, the Fund received €27.8 million from Community Malta Agency, with the total proceeds received from inception being €599.8 million.

Investment in Education

An agreement was signed at the Wardija Resource Centre, part of the Maria Regina College, offering special education beyond the compulsory school age. With an investment of around €40,000, teaching will take place in a multisensory room, where skills related to students’ senses will be developed.

In addition, in collaboration with the University of Malta, a new garden will be planted to create a habitat for endemic butterflies and to enhance their reproduction chances. Another section is to have an apiary where students can learn and enjoy their free time.

At St Paul’s Bay’s Primary School, a room dedicated to creativity and innovation will be launched with an investment of €35,000. Teaching will be undertaken in interdisciplinary ways, mixing; science, technology, engineering, and the arts to increase students’ scientific, literacy and critical thinking.

Finally, at Naxxar’s Senior School, an investment of around €30,000 will be used for new curtains and a mechanised projector for the school’s stage. This is to encourage students to participate in visual and artistic activities, as this will help them learn to think creatively and develop critical thinking, which can be applied in all areas of learning.

Quota for the New Residency Route

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

Additional Information

If you would like further information regarding Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment, please contact the Dixcart office in Malta: or your usual Dixcart contact.

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

Alternative Investing – Benefits of Maltese Hedge Funds

Key Data About Malta

  • Malta became a member state of the EU in May 2004 and joined the Euro Zone in 2008.
  • English is widely spoken and written in Malta and is the principal language for business.

Factors Contributing to Malta’s Competitive Advantage

  • Robust legal and regulatory environment with a legislative framework in line with EU Directives. Malta incorporates both jurisdictional systems: civil law and common law, as business legislation is based on English law principles.
  • Malta boasts a high level of education with graduates representing a cross-section of the various disciplines related to financial services. Specific training in financial services is offered at various post-secondary and tertiary education levels. The accounting profession is well-established on the island. Accountants are either university graduates or in possession of a certified accountant qualification (ACA/ ACCA).
  • A proactive regulator that is very approachable and business minded.
  • An ever-growing supply of high-quality office space for rent at prices cheaper than in Western Europe.
  • Malta’s development as an international financial centre is reflected in the range of financial services available. Complementing the traditional retail functions, banks are increasingly offering; private and investment banking, project finance, syndicated loans, treasury, custody, and depositary services. Malta also hosts several institutions specialising in trade-related products, such as structured trade finance, and factoring.
  • Maltese standard time is one hour ahead of Greenwich Mean Time (GMT) and six hours ahead of US Eastern Standard Time (EST). International business can therefore be managed smoothly.
  • International Financial Reporting Standards, as adopted by the EU, are entrenched in company legislation and applicable since 1997, so there are no local GAAP requirements to deal with.
  • A very competitive tax regime, also for expatriates, and an extensive and growing double taxation treaty network.
  • No restrictions on the granting of work permits for non-EU nationals.

Malta Hedge Funds: Professional Investor Funds (PIF)

Maltese legislation does not directly refer to hedge funds. However, Malta hedge funds are licensed as Professional Investor Funds (PIFs), a collective investment scheme. Hedge funds in Malta are usually set up as open or closed-ended investment companies (SICAV or INVCO).

The Malta Professional Investor Funds (PIFs) regime consists of three categories: (a) those promoted to Qualifying Investors, (b) those promoted to Extraordinary Investors, and (c) those promoted to Experienced Investors.

Certain conditions need to be satisfied to qualify under one of these three categories and therefore to be able to invest in a PIF. PIFs are collective investment schemes designed for professional and high-net-worth investors with a certain degree of expertise and knowledge in their respective positions.

Definition of a Qualifying Investor

A “Qualifying Investor” is an investor who fulfils the following criteria:

  1. Invests a minimum of EUR 100,000 or its currency equivalent in the PIF. This investment may not be reduced below this minimum amount at any time by way of a partial redemption; and
  2. Declares in writing to the fund manager and the PIF that said investor is aware of, and accepts the risks associated with the proposed investment; and
  3. Satisfies at least one of the following:
  • A body corporate that has net assets in excess of EUR 750,000 or part of a group that has net assets in excess of EUR 750,000 or, in each case, the currency equivalent thereof; or
  • An unincorporated body of persons or associations with net assets in excess of EUR 750,000 or the currency equivalent; or
  • A trust where the net value of the trust’s assets is more than EUR 750,000 or the currency equivalent; or
  • An individual whose net worth or joint net worth combined with his/her spouse exceeds EUR 750,000 or the currency equivalent; or
  • A senior employee or director of a service provider to the PIF.

What are Malta PIFs Used for and What are their Benefits?

PIFs are often used for hedge fund structures with underlying assets ranging from transferable securities, private equity, immovable property, and infrastructure. They are also commonly used by funds engaging in cryptocurrency trading.

PIFs offer many benefits, including:

  • PIFs are intended for professional or high-worth investors and do not therefore have the restrictions usually imposed on retail funds.
  • There are no investment or leverage restrictions and PIFs can be set up to hold just one asset.
  • There is no requirement to appoint a Custodian.
  • A fast-track licensing option available, with approval within 2-3 months.
  • Can be self-managed.
  • May appoint administrators, managers, or service providers in any recognised jurisdictions, members of the EU, EEA, and OECD.
  • Can be used to set up for virtual currency funds.

There is also the possibility of re-domiciling existing hedge funds from other jurisdictions to Malta. In this way, the fund’s continuity, investments, and contractual arrangements are continued.

Malta Alternative Investment Funds (AIF)

AIFs are collective investment funds that raise capital from investors and have a defined investment strategy. They do not require authorisation under the Undertakings for the Collective Investment in Transferable Securities (UCITS) regime.  

The recent transposition of the Alternative Investment Fund Directive (AIFMD), through amendments to the Investment Services Act and the Investment Services Rules and the introduction of subsidiary legislation has created a framework for the management and marketing of non-UCITS funds in Malta.

The scope of the AIFMD is broad and covers the management, administration, and marketing of AIFs. However, it mainly covers the authorisation, operating conditions, and transparency obligations of AIFMs and the management and marketing of AIFs to professional investors throughout the EU on a cross-border basis. These types of funds include hedge funds, private equity funds, real estate funds, and venture capital funds.

The AIFMD framework provides a lighter or de minimis regime for small AIFMs. De minimis AIFMs are managers who, whether directly or indirectly, manage portfolios of AIFs whose assets under management collectively do not exceed the following amounts:

1) €100 million; or

2) €500 million for AIFMs managing only unleveraged AIFs, with no redemption rights exercisable within five years from the initial investment in each AIF.

A de minimis AIFM cannot use the EU passporting rights deriving from the AIFMD regime.

However, any AIFM whose assets under management fall below the above thresholds, may still opt into the AIFMD framework. This would render it subject to all of the obligations applicable to full-scope AIFMs and enable it to use the EU passporting rights deriving from the AIFMD.

Additional Information

If you require any further information regarding PIFs and AIFs in Malta, please speak to Jonathan, at the Dixcart office in Malta or to your usual Dixcart contact.

UK High Potential Individual (HPI) Visa – What You Need to Know

The High Potential Individual (HPI) visa is designed to attract top global graduates from prestigious universities around the work, who want to work, or look for work in the UK, following the successful completion of an eligible course of study equivalent to a UK bachelor’s degree level or above. The study must have been with an institution listed on the Global Universities List, the table of global universities that will be accepted for this visa route as awarding institutions, which is updated regularly.

The new High Potential Individual route, launched on 30 May 2022, is an unsponsored route, granted for 2 years (Bachelors and Masters holders), or 3 years (holders of a PhD).

Eligibility Requirements

  • The HPI is based on a points-based system. The applicant needs to obtain 70 points:
    • 50 points: The applicant must, in the 5 years immediately before the date of the application, have been awarded an overseas degree level academic qualification which ECCTIS confirms meets, or exceeds, the recognised standard of a UK bachelor’s or UK postgraduate degree. From an institution listed on the Global Universities List.
    • 10 points: English Language requirement, in all 4 components (reading, writing, speaking and listening), of at least level B1.
    • 10 points: Financial requirement, applicants must be able to demonstrate that they can support themselves within the UK, with a minimum cash fund of £1,270. Applicants who have lived in the UK for at least 12 months under another immigration category, do not have to meet the financial requirement.
  • If the applicant has, in the last 12 months before the date of application, received an award from a Government or international scholarship agency covering both fees and living costs for study in the UK, they must provide written consent to the application from that Government or agency.
  • The applicant must not have been previously granted permission under the Student Doctorate Extension Scheme, as a Graduate or as a High Potential Individual.


A High Potential Individual can bring their dependant partner and children (under the age of 18) to the UK.

Staying Longer in the UK

The High Potential Individual route is not a route to settlement. A High Potential Individual is not able to extend their visa. However, they may be able to switch to a different visa instead, for example a Skilled Worker visa, Start-up visa, Innovator visa, or Exceptional Talent visa.

Additional Information

If you have any questions and/or would like tailored advice on any UK immigration matter, please speak to us at:, or to your usual Dixcart contact.

The Benefits of Applying the Notional Interest Deduction in a Cyprus Company

Background: Cyprus Companies

The reputation of Cyprus as an international financial centre has grown significantly over recent years. Cyprus is an attractive jurisdiction for trading and holding companies and offers a number of tax incentives.

The corporate tax rate in Cyprus 12.5%, which is amongst the lowest in Europe.  Another feature is that Cyprus companies are not subject to Capital Gains Tax. In addition, Cyprus has over 60 double tax treaties to assist with international tax structuring, finally, as a member of the EU, Cyprus has access to all European Union Directives.

Tax Residency

A company that is managed and controlled from Cyprus is considered to be tax resident in Cyprus.

What is Notional Interest Deduction and When Does it Apply?

Cyprus tax resident companies and Cyprus permanent establishments (PEs), of non-Cyprus tax resident companies, are entitled to a Notional Interest Deduction (NID), on the injection of new equity used to generate taxable income.

NID was introduced by Cyprus in 2015, to reduce discrepancies in the tax treatment of equity financing compared to debt financing, and to promote an incentive for capital investment in Cyprus. NID is deductible, in the same manner as interest expenses, but it does not trigger any accounting entries as it is a ‘notional’ deduction.

What Tax Advantages are Available Through the Use of Notional Interest Deduction?

NID is deducted from taxable income.

It cannot exceed 80% of the taxable income, as calculated prior to Notional Interest Deduction, arising from the new equity.

  • A company could therefore achieve an effective tax rate as low as 2.50% (income tax rate 12.50% x 20%).

Initially, the NID rate was defined as; the 10 year government bond yield, as at 31 December of the year preceding the tax year the NID is claimed, of the country in which the new equity was employed, plus a 3% premium. This was subject to a minimum rate equal to the yield of the 10 year Cyprus government bond plus a 3% premium.

  • Since January 1, 2020 the NID rate has been defined as; the interest rate of the 10 year government bond yield of the country in which the new equity is invested, as published annually, plus a 5% premium. The interest rate of the Cyprus 10 year government bond will no longer be used as a general minimum rate. It is only deemed to be relevant, when the country in which the new equity is invested has not issued any government bonds, as of 31 December the year preceding the tax year the NID is claimed.

Additional Information Regarding the Taxation of Companies in Cyprus

The following sources of income are exempt from corporate income tax:

  • Dividend income
  • Interest income, excluding income arising in the ordinary course of business, which is subject to corporation tax
  • Foreign exchange gains (FX), with the exception of FX gains arising from trading in foreign currencies and related derivatives
  • Gains arising from the disposal of securities.

Deductible Expenses

All expenses incurred wholly and exclusively in the production of income are deductible when calculating taxable income.

Additional Information

If you would like additional information about the notional interest deduction and the advantages it can offer, please contact: Robert Homem at the Dixcart office in Cyprus:

Nevis International Exempt Trusts – Trust Creation and Practical Uses for Estate and Succession Planning

Further to the previous note, regarding the basics of Nevis Trust Structuring we look to explore the practical uses of Trusts and detail case studies where Trusts are used as an effective tool for Estate and Succession Planning, and Asset Protection.

A Trust creates a division of ownership between the Trustee, who is the legal owner of the Trust Fund, and the Beneficiaries, who are the equitable owners. The Trustee is bound by a number of Fiduciary and Statutory duties to, at all times, act in the best interests of the Beneficiaries as a whole, whilst adhering to the terms of the Trust Deed. In the meantime, they must also protect, preserve and enhance the Trust Fund.

Trust Creation

When setting up a Trust, there are three certainties which must be fulfilled to validate and establish the Trust.

These are:

  • The certainty of intention: a clear intention that the Settlor intends to create a Trust by transferring legal ownership of the Trust Property to a Trustee to hold for the benefit of defined beneficiaries. This is evidenced by an executed Trust Deed and supported by clear communication between the Settlor / their advisor(s) and the Trustee, discussing the goals and intentions the Settlor has for the Trust, prior to establishment.
  • The certainty of subject matter: clearly defined Trust Property, the initial settled funds are usually $1, $10 or $100 and this is indicated within the Trust Deed, with further assets to be added at a later date.
  • The certainty of objects – clearly defined Beneficiaries or a Beneficial Class who will benefit from the Trust, which can include the Settlor.

Other considerations that the Settlor should make at the outset include; whether there are any contingencies to the Beneficiaries benefitting, and whether a Protector will be appointed to provide some oversight to the structure and to select a trusted and experienced Trustee to administer the Trust on behalf of the Beneficiaries.

Whilst the Settlor has given up legal ownership of the assets, the Settlor can request the Trustee to undertake certain actions and to determine guidelines and conditions as to how and when the Beneficiaries are to benefit from the Trust. These should be expressed as the Settlor’s wish and are not legally binding. This protects the validity of the structure and supports the certainty of intention that the Settlor does intend to hand over the ‘reins’ to the Trustee. For a Discretionary Trust, the Trustee would make the ultimate decision as to whether a Beneficiary should benefit from the Trust, paying close attention to their fiduciary duty to consider the interests of all Beneficiaries, before making any distribution of trust assets.

Whilst a Settlor can reserve some powers, such as to retain investment powers over the trust assets (which is the most commonly used reserved power), by reserving too many powers, the Trust could be set aside as a sham, in contravention of the first certainty of intention.

We shall explore some case studies as to why a Trust might be settled in the first place and the benefits of doing so.

Case Study 1: The Spendthrift Beneficiary

There may be a family member who struggles to spend within their means, has faced trouble with addiction or perhaps has not had access to previous wealth and, on inheriting a lump sum, would risk quickly eroding their inheritance without saving for future events.

A Trust structure could protect this Beneficiary and the Trust Assets from depletion and provide continued support to the Beneficiary over their lifetime, without quickly diminishing the corpus of the Trust Fund.

Some examples as to how the Trust could assist would be; by paying the Beneficiary’s medical and educational bills directly, purchasing a home for the Beneficiary to reside in or by assisting with the financial support of the Beneficiary’s own child.

There could also be a contingent Beneficiary specified within the Trust Deed, that their benefit is contingent on a certain event, such as them attaining the age of 25, or upon their marriage. This provides flexibility regarding future needs and/or potential contingencies.

Case Study 2: Tax Planning and Passing Assets to the next Generation

Whilst independent tax advice should be taken by all clients, the utilisation of a Trust could be an effective tax planning tool and centralise the ownership of worldwide assets, legally owned by the Trustee.

For example, there would be no inheritance tax payable on the assets held within the Trust upon the Settlor’s demise. Although Beneficiaries should seek tax advice before receiving a distribution from a Trust.

Case Study 3: Preservation of Wealth and Selected Distribution of Assets

This leads us nicely onto the preservation of Family Wealth and Estate Planning.

By settling a Trust, this would ensure; an orderly succession of assets after the Settlor’s death, the retention of property within the family, continuity of ownership of a family business after the Settlor’s death, and protection of the family’s property.

The Trust would also establish a clear and unchallengeable basis for distribution of assets after the Settlor’s death and protects family property from dissipation

By securing the services of an independent, expert person to manage and control the assets (the Trustee), capital can be preserved for the next generation and property can be held for minors or other dependants.

Case Study 4: Forced Heirship

In some jurisdictions the local law requires assets held in a person’s estate to pass to specified heirs in stated proportions. By settling a Nevis Trust, the assets would be distributed in line with the provisions of the Trust Deed.

Case Study 5: Confidentiality

A common priority of a high net worth individual looking to establish a Trust is confidentiality. By transferring legal ownership of assets to a Trustee to hold within a Trust, this aids the Settlor in keeping their assets confidential.

There is no beneficial ownership register in Nevis, unlike a number of other offshore jurisdictions and when registering the Trust with the Nevis Registry, the only information which is required to be registered is the Trust name, registered address (the address of the Trustee), and the name of the Trustee. This information is kept confidential.

Case Study 6: Asset Protection

A client may seek the protection of a stable political and social environment for the ownership and management of their assets, or be looking for a safe jurisdiction to maintain their assets, if relocating or working abroad.

They may also be seeking to protect the Trust Property from future litigants who would come to the court in the hope of setting the trust aside in order to access the Trust Fund. An attempt to attack a Trust structure could come from an array of complainants such as; a disgruntled Beneficiary, a divorcing spouse or a future creditor.

The Nevis International Exempt Trust Ordinance states that any creditor must place a bond of USD100,000 with the Minister of Finance in Nevis, before bringing any action or proceeding against a Trust. The burden of proof is also placed completely on the complainant who must establish their claim “beyond reasonable doubt.”

By ensuring that; the goals and intentions of the Trust are discussed with the Trustee at the outset, the three certainties are clearly in place, and that the Deed is properly drafted upon setup, this will provide the Trust with a high level of protection against any potential attack.

Case Study 7: The Charitable Trust

Finally, a philanthropically minded individual might look to set up a Charitable Trust with a specific charitable purpose. This could include providing for; the relief of poverty, the advancement of education, the advancement of religion, the advancement of arts, culture, heritage, or science, and/or the advancement of animal rights, amongst others.

If the charitable purpose specified by the Settlor at the outset cannot be carried out for any reason, the law provides that the court can order that the property can be applied to another charitable purpose similar to that originally intended.


In summary, there are many modern uses for offshore trust structures and these continue to develop.

An emerging trend is the addition of cryptocurrency assets to a Trust structure, although it is worth noting that considerable due diligence is required when accepting these types of assets into Trust, and it is recommended that a specific clause be added to the Trust Deed to allow the investment of the Trust Property into such volatile, high risk assets.

Additional Information

Should you require any further information or wish to discuss your requirements, please contact Beth Le Cheminant at:

Switzerland – Could this be your Next Move?

Switzerland is an enchanting country, blessed with spectacular hiking and skiing trails, beautiful rivers and lakes, picturesque villages, Swiss festivals throughout the year, and, of course, the spectacular Swiss Alps. It appears on almost every bucket list of places to visit but has succeeded in not feeling over-commercialised – even with the tourists flocking to the country to try the world-famous Swiss chocolates.

Switzerland features almost at the top of the list of most attractive countries for high-net-worth individuals to live. It is one of the world’s wealthiest countries and is also known for its impartiality and neutrality.

Switzerland offers an exceptionally high standard of living, first-rate health service, outstanding education system, and boasts a plethora of employment opportunities.

Switzerland is also ideally situated for ease of travel; one of the many reasons high-net-worth individuals choose to relocate here. Perfectly situated in the middle of Europe means moving around could not be easier, especially for individuals who regularly travel, internationally.

Swiss Residence

There are no restrictions imposed on permanent residence for EU/EFTA nationals and these individuals enjoy priority access to the labour market. Should an EU/EFTA citizen wish to live and work in Switzerland, they can freely enter the country but will need a work permit to stay more than 3 months.

Regarding EU/EFTA nationals who do not want to work in Switzerland, the process is even more straightforward. Individuals must show they have sufficient funds to live in Switzerland and take out Swiss health and accident insurance.

The process is a bit longer for non-EU and non-EFTA (European Union Free Trade Association) nationals. Those who wish to live and work in Switzerland are allowed to enter the Swiss labour market, but must be appropriately qualified (such as managers, specialists, and those with higher education qualifications). They will also need to be registered with the Swiss authorities in order to obtain a work visa, and they will need to apply for an entry visa from their home country.

Non-EU/EFTA nationals who want to move to Switzerland, but not to work, are divided into two age categories. Depending on which category the individual falls into (over 55 or under 55), certain criteria must be met (more information can be provided on request:

Taxation in Switzerland

One of the greatest motivations for moving to Switzerland is the attractive tax regime available to individuals who choose to live there. Switzerland is divided into 26 cantons and each canton has its own cantonal and federal taxes that generally impose the following taxes: income, net wealth, and real estate.

A significant advantage of the Swiss tax regime is that the transfer of assets in Switzerland, before death (as a gift), or on death, to a spouse, or to children and/or grandchildren is exempt from gift and inheritance tax, in most cantons. In addition, capital gains are generally also tax free, except in the case of real estate.

The federal and cantonal tax laws of most cantons provide for a special Lump Sum Tax Regime for foreigners who move to Switzerland for the first time, or after an absence of ten years, and who will not be employed or commercially active in Switzerland. It is an extremely attractive tax regime as it enables individuals to manage their worldwide investments from Switzerland.

Individuals benefiting from the Lump Sum System of Taxation are not subject to Swiss taxation on their worldwide income and net wealth, but on their worldwide expenditure (living expenses). The minimum requirement for calculating income tax based on expenses for individuals with their own household, is the equivalent of seven times the annual rental value of their principle residence in Switzerland. In addition, a minimum taxable income of CHF 400,000 is assumed for direct federal taxation. Cantons may also define minimum expense thresholds, but the amount is at their own discretion. Some cantons have already stated their minimum threshold amounts and these will vary from canton to canton.

Living in Switzerland

Although Switzerland has a variety of beautiful towns and alpine villages to live in, expats and high-net-worth individuals are mainly drawn to a few specific cities. At a glance, these are Zürich, Geneva, Bern and Lugano.

Geneva and Zürich are the biggest cities due to their popularity as centres for international business and finance. Lugano is located in Ticino, the third most popular canton, as it is close to Italy and has a Mediterranean culture many expats enjoy.


Geneva is known as the ‘international city’ in Switzerland. This is due to the high number of expats, the UN, banks, commodity companies, private wealth companies, as well as other international companies. Many businesses have set up head offices in Geneva. However, the main attraction for individuals, continues to be the fact that it is in the French part of the country, has a well-looked-after old town full of history and culture and boasts Lake Geneva, with a magnificent water fountain which reaches 140 meters into the air.

Geneva also has fantastic connections to the rest of the world, with a large international airport and connections to the Swiss and French rail and motorway systems.

In the winter months, residents in Geneva also have very easy access to the Alp’s best ski resorts.


Zürich is not the capital of Switzerland, but it is the largest city, with 1.3 million people within the canton; an estimated 30% of the residents in Zürich are foreign nationals. Zürich is known as the Swiss financial capital and is home to many international businesses, especially banks. Even though it gives the image of high-rise buildings and a city lifestyle, Zürich has a beautiful and historical old town, and an abundance of museums, art galleries and restaurants.  Of course, you are also never too far from the lakes, hiking trails and ski slopes if you love being outdoors.

Lugano and the Canton of Ticino

The canton of Ticino is the southernmost canton of Switzerland and borders the canton of Uri to the north. The Italian-speaking region of Ticino is popular for its flair (due to its proximity to Italy) and fantastic weather.

Residents enjoy a snowy winter but in the summer months, Ticino opens its doors to tourists who flood to its sunny coastal resorts, rivers and lakes, or sun themselves in the town squares and piazzas.

In Switzerland, four different languages are spoken, and English is well spoken everywhere.

Additional Information

I hope this article has inspired you to visit Switzerland and to consider this incredible country as a place of residence. No matter which canton draws your attention, or which city you decide to settle in, the rest of the country, and Europe, is easily accessible. It may be a small country, but it offers; a diverse range of places to live, a dynamic mix of nationalities, is headquarters to many international businesses, and caters to a large range of sports and leisure interests.

The Dixcart office in Switzerland can provide a detailed understanding of the Swiss Lump Sum System of Taxation, the obligations that need to be met by applicants and the fees involved. We can also give a local perspective on the country, its people, the lifestyle, and any tax issues. If you would like to visit Switzerland, or wish to discuss moving to Switzerland, please do get in touch:

Guernsey ESG Private Investment Funds – Impact Investing and Green Fund Accreditation

A Very Relevant Topic

‘Environmental Social and Governance Investing’ was the keynote speaker topic at both the May 2022 Guernsey Fund Forum (Darshini David, Author, Economist and Broadcaster), and the MSI Global Alliance conference (Sofia Santos, Lisbon School of Economics and Management), which also took place May 2022.

The reason ESG is becoming main-stream is that it is business and therefore economically critical. It also allows financially savvy investors, investment managers, investment advisors, family offices, private equity and the public to financially benefit from staking their financial vote in companies who are looking to better the global status quo.

Repercussions of this Investment Trend

We are seeing two areas of activity driven by these investment trends;

  1. Clients taking ESG positions, within their managed investment portfolios, in companies and funds which have ESG credentials which those clients have a particular affinity for,
  2. Clients establishing bespoke structures to create a tailored ESG strategy which covers their often very specific, areas of ESG / impact investing interest.

The first trend is generally very well catered for, with internal ESG experts and third party investment managers making equity and fund investment recommendations.

Second Trend and Guernsey PIFs

The second trend is more interesting and often involves the establishment of special purpose structures, which can be a registered and regulated fund, for a small number of (generally less than 50) investors. The Guernsey Private Investment Fund (PIF) is ideally suited to these new, bespoke ESG strategy funds.

In particular, we are seeing family office and private equity investors with very specific and niche areas of ESG investment interest, who are just not catered for by main-stream ESG funds.

Guernsey Green Fund Accreditation

Guernsey ESG PIFs can also apply for Guernsey Green Fund accreditation.

The objective of the Guernsey Green Fund is to provide a platform upon which investments into various green initiatives can be made.  This enhances investor access to the green investment space, by providing a trusted and transparent product which contributes to the internationally agreed objective of mitigating environmental damage and climate change.

Investors in a Guernsey Green Fund are able to rely upon the Green Fund designation, provided through compliance with the Guernsey Green Fund Rules, to present a scheme that meets strict eligibility criteria of green investing and has the objective of a net positive outcome for the planet’s environment.

Additional Information

For further information on ESG investing through bespoke structures, Guernsey Private Investment Funds and the Guernsey Green Fund accreditation please contact: Bruce Watterson or Steve de Jersey, in the Dixcart office in Guernsey:

Dixcart is licensed under the Protection of Investors (Bailiwick of Guernsey) Law 1987 to offer PIF administration services, and holds a full fiduciary license granted by the Guernsey Financial Services Commission.

Offshore Trusts: Misunderstandings, Pitfalls and Solutions (3 of 3)

Establishing an effective Offshore Trust that is both operationally sound and achieves the Settlor’s objectives is of paramount importance, but can be fraught with pitfalls. As a Trust service provider we often find that Settlors and individual Trustees can have misconceptions about their roles, responsibilities and the Trust itself. These misunderstandings can culminate in issues and create unintended liabilities. This series has considered the key elements of Offshore Trusts; If you would like to read the other articles in the series you can find them here:

In the final article in this series, we will examine the most common misunderstandings and pitfalls for Settlors and Trustees to be aware of. Where appropriate, we suggest some best practices for avoiding future problems and how a Trust service provider can help. We will be discussing:

The Nature of the Legal Arrangement

On the subject of Trusts generally, it is important to note that Trusts do not have separate legal personality and therefore do not benefit from limited liability. It is the Trustees who are liable for any actions taken, or not taken, in respect of the Trust.

Often Settlors will either not be aware or overlook the basis of the legal arrangement – the transfer of beneficial ownership – this confers legal title onto the Trustees; the Settlor will no longer have any legal title to the settled assets. To continue to exercise control, as previously, will most likely result in the Trust being deemed a sham and therefore voidable.

Following this, there is also a common misunderstanding that the role of Trustee is simply ceremonial, purely an administrative requirement. Of course, this is not correct. The Trustees have a fiduciary duty to any named or class of Beneficiaries, to manage the Trust Fund in good faith, in line with the Trust Deed. As noted above, they hold legal title over the assets of the Trust. As legal owners, the Trustees are liable for tax due on the Trust assets, which may arise in jurisdictions other than their local jurisdiction of residence.

Subject to Tax Advice

Often, and understandably, clients that come to us directly are not aware of the significant changes in reporting, compliance requirements and the general approach to tax planning and anti-avoidance measures. These changes have made tax advice a necessity from outset. Such advice ensures that, where best practices are followed, business is conducted bona fide and is globally compliant.

The Perception of ‘Offshore’

This neatly leads us to our next common misunderstanding. The level of negative media coverage that Offshore structures have received over the last decade is unfortunate and often disproportionate or even misleading. For example, some of the most recent and prolific stories, the Panama Papers, Paradise Papers and Pandora Papers, all present the use of Offshore planning as immoral or even criminal – whilst the reports do highlight a minority of offenders, 95% of the leaked documents will have related to wholly legal and compliant planning, that is commonplace.

In fact, to use the UK as an example, it is mandatory for UK employers to provide a minimum 3% private pension contribution to employees. Those pensions will more than likely be linked to non-UK domiciled funds. 75% of UK households are directly or indirectly engaged in such asset management services and therefore many UK residents will already have some form of offshore involvement.

Hopefully the above example briefly illustrates the point I am driving towards; to many people, the word Offshore, especially in the context of wealth management, is synonymous with scandal. When, in reality, Offshore is omnipresent – it is the norm, wholly legal and it is almost always advised by highly qualified and regulated intermediaries. In summary, going Offshore should now be a transparent and compliant tool for sophisticated planning, which can lead to legal, tax and various other benefits. Offshore should not be seen as a shortcut to tax evasion or hiding wealth.

One Size Does Not Fit All

Finally, many UK resident and domiciled individuals are unaware of the various rule changes and subsequent erosion of various tax benefits, which previously flowed from the use of Offshore Trusts. Therefore, for many in the UK who are resident and domiciled, there are little to no benefits associated with using an Offshore Trust. The limited benefits can include the regulated nature of Isle of Man Trustees and the ability to benefit from gross roll-up, in certain circumstances.

Unlike Trustees in many other jurisdictions, providing Professional Trustee services is a licensed activity on the Isle of Man. Isle of Man Trustees require a Class 5 License from the Isle of Man Financial Services Authority, and are therefore properly regulated – ensuring that good levels of governance and compliance are followed and informed trustee actions. In addition, due to its illustrious heritage in Trust planning, both the Island and Dixcart have extensive expertise in this area.

Gross roll-up describes an offshore structure’s ability to benefit from untaxed compounded growth for the duration of its lifetime. Offshore Trusts may benefit from gross roll-up in certain circumstances – this has to be caveated as there may be tax to pay on establishing the Trust, periodically (e.g. on 10 year anniversaries), in respect of any distributions, on settlement etc. The taxation of Trusts is complex and will require specialist advice to consider your circumstances.

However, there can still be many benefits to using Offshore Trusts for UK Resident Non-Domiciliary individuals. This, among other topics, is considered in our summative video, available on our website and YouTube here. 

Offshore Trusts – Common Pitfalls

There are many issues that can be avoided by proper planning and expert guidance from outset. Some of the most common considerations include:

Allowing for Flexibility

The Trustees are mandated to follow the provisions of the Trust Deed; contravention of this can lead to legal action being taken against them for breach of fiduciary duty. Therefore, the Settlor needs to foresee the Trusts requirement for flexibility, ensuring that it is not blinkered in the approach to achieving its objectives, or ties the Trustees’ hands regarding effective management of the Trust.

There are several scenarios where an overly prescriptive Trust Deed can cause unintended issues. We will examine some brief examples below.

Distributions: Where, for example, the Trust Deed stipulates that a distribution or distributions are to be made to a Beneficiary on or following a certain milestone (e.g. upon a birthday, marriage, purchasing a first home, graduation etc.), the timing may not always be ideal as circumstances change. For instance, vulnerable or young Beneficiaries receiving a sudden windfall could lead to negative impacts/outcomes.

Further to this, where the distribution schedule is fixed, this can cause unintended tax consequences. Beneficiaries are taxed on distributions received, taxable at their personal rate in their jurisdiction of residence. If the Beneficiary’s income falls into a higher or additional rate of tax at the time of transfer, this can lead to the payment of unnecessarily high tax. Rather, given the flexibility, the Trustees could defer the payment until they either take tax advice or fall into a lower bracket e.g. on retirement, etc.

Asset Selection: It is not unusual for the Trust Deed to name or preclude certain types of activity regarding the management of the Trust fund. For example, it would be perfectly logical to limit the level of risk exposure to certain assets/activities owing to volatility – e.g. Bitcoin investment. On the flipside, where certain investments are specified, this can be far too restrictive and cause various longer-term issues – e.g. what happens if the fund or company specified ceases to trade?

Solution: Discretionary Trusts offer the Trustees complete control over how the Trust achieves its aims. The Settlor can still provide some guidance via a Letter of Wishes, which is persuasive but not binding. As long as the Letter of Wishes is reviewed regularly, the Trustees will be aware of the Settlor’s changing intentions and take this into account when taking any actions. In addition, Isle of Man Trusts can now continue in perpetuity, which provides additional flexibility when estate planning. Dixcart have significant experience in establishing and administering Offshore Discretionary Trusts.

Choice of Trustees

As I am sure you can appreciate by now, the choice of Trustee is extremely important. Several factors need to be considered when choosing who performs this vital role:

Longevity: A key consideration when appointing Trustees is their longevity – will the selected Trustee be able to fulfil their duty for the lifetime of the Trust? If not, you will have to consider succession planning to replace those Trustees as and when they pass away or lose capacity. Longevity also applies to the Trustees’ tax residency i.e. If the Trustee is living in an Offshore jurisdiction, but then moves to the UK, the Trust will also move with the Trustee and could be liable to UK taxation. The Settlor needs to ensure that the Trustee will provide continuity and stability.

Expertise: Depending on the assets held in Trust, or the activity undertaken, there may be certain expertise required to meet the Trust’s objectives. For example, when managing assets such as investments, the Trustees will have to be comfortable dealing with the assets, their administration and any third party professionals involved. This also extends to knowledge of the Trust, as well as the legal and regulatory requirements.

Liability: As noted previously, the Trust does not benefit from limited liability, and therefore the Settlor will need to take the potential risks e.g. litigation etc. into consideration when selecting who to appoint as Trustee. The tax aspects are also worth considering here, as mentioned above, the Trustees will be liable for any due tax on the assets. Therefore, the Trustees will need to be willing and able to perform the role and understand the implicit risks of the undertaking.

Protectors: In many respects Protectors police the Trust, in theory providing a stopgap to wayward Trustees. In practice, giving a third party too much say in how the Trust is run, can make administration of the assets onerous and potentially negatively impact its objectives. Further to this, where a Protector is given too much scope, they can be deemed a de facto co-Trustee, and therefore beholden to the same fiduciary duties and liability as a Trustee. Where a Protector is desirable, ensuring that their powers are narrowly defined is vital to ensuring they add to rather than detract from the objectives of the Settlor.

Alternates: Where the Settlor has appointed an individual to act as Trustee, this can cause issues further down the line. Where the individual is the sole Trustee, if they pass away without making proper provision, there can be unintended burden and unwarranted cost involved in remedying the situation. Where individual Trustees are desirable, you must ensure that a minimum of two are appointed at all times, and ideally provision made for replacement within the Trust Deed to protect against unforeseen events.

Neutrality: Where family members are appointed as Trustees, it is not uncommon for relationships to faulter and communication to breakdown. Such issues can present significant administrative barriers, potentially affecting the Settlor’s intended outcome.

Solution: All of these issues can be abated via the appointment of a professional Trustee rather than individual Trustees. Professional Trustees, such as Dixcart, can provide an unbiased and expert service for the lifetime of the Trust. Using their technical knowledge and adhering to best practices, they can administer the Trust effectively and efficiently, reducing the burden placed on both the Settlor and their loved ones. And as previously noted, unlike in some other jurisdictions, professional Trustees located in the Isle of Man are licensed and regulated – so you can rest assured that the Trust is in capable hands.

Settlor’s Involvement

It is understandable that Settlors may wish to retain control over the Trust assets for as long as possible; after all, they have more often than not spent a lifetime accumulating the wealth they want to pass on. Some may even seek to appoint themselves as Trustee, however, too much involvement from the Settlor can lead to the Trust being deemed a sham, and therefore the Trust assets could form part of their estate for tax purposes. It is worth underlining the fact that there needs to be clear separation between the Settlor and the assets, ensuring that the Settlor cannot be deemed to have retained any unintended beneficial interest. 

A Settlor may also wish to name themselves or their spouse as beneficiary, however, this requires very careful consideration. If the Settlor or his or her spouse can benefit in anyway, the Trust is deemed to be a Settlor Interested Trust, giving rise to adverse tax consequences.

Solution: The Settlor needs to be clear about what they want to achieve from outset. This way, the correct form of Trust and appropriate provisions can be included at planning stage. The client will need to work with the adviser to come to a decision. Referring to my note above, regarding professional Trustees, this can also provide comfort. The Settlor should be able to have confidence that their chosen service provider will always act in the interests of the Trust, taking into consideration the Settlor’s Letter of Wishes where appropriate.


The selection of Beneficiaries needs to be carefully thought out – sometimes it is immediately clear who should benefit, and other times it can be a ‘Sophie’s choice’ dilemma. Of course, the choice will be directly influenced by the type of Trust being setup i.e. in the case of a Discretionary Trust, specific Beneficiaries or classes of Beneficiaries are selected for the Trustees to determine who should benefit. In addition, the Settlor must choose whether or not to make Beneficiaries aware of their interest in the Trust. Depending on the type of Trust, a Beneficiary can have a legal right to the assets held in Trust or information about them. Additionally, the Beneficiary can have a tax liability in certain circumstances.  

Solution: This needs to be considered on a case-by-case basis and will very much depend on the Settlor’s personal circumstances. It can be very useful to either make the Beneficiaries aware, so that open discourse can be had between Trustee and Beneficiary, or alternatively in some cases retaining privacy in this matter until time of distribution may be preferrable – note that depending on the constitution of the Trust, the Beneficiary may have an immediate tax liability, and therefore would need to be immediately notified. Either way, the level of communication desired can be facilitated by professional Trustees, such as Dixcart.


Before establishing the Trust, the Settlor needs to take the costs of administering the assets into account – whether this is for trading investments, the procurement or sale of property, potential tax consequences, professional services, etc. An additional consideration will be the impact of increased regulatory and compliance reporting required in today’s world – this means that administering an Offshore Trust is no longer an exercise that incurs nominal fees.  

Solution: Whilst fees can be paid from an alternative source i.e. outside of the Trust fund, this can provide operational issues. For example, where the Settlor was paying the operational costs of the Trust and the Trust continues after death, alternative provision must then be made for the fees to be met. It is often far simpler to apportion a percentage of the Trust fund to cover the administration in achieving the objective of the Trust. In prosperous times the growth of the Trust Fund often more than covers these costs – however, in times of low interest, depressed markets or even depending on the assets held, such fees must be seriously considered in light of the Trust Fund’s sustainability. Such costs should be illustrated by service providers on receipt of the full details.

Working with a Trust Service Provider – Dixcart

Dixcart have been providing Trustee Services and guidance for over 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 with individuals seeking to immigrate to the UK and the required tax and wealth planning. 

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.

You can read more about our Trust services here in this helpful guide.

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:

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