Month: September 2022

Trusts Versus Foundations: Plus Benefits of Nevis Asset Protection Structures

Posted on | by Charlotte Clabon

Background

Both Trusts and Foundations are effective planning tools with unique legislation in place for both in Nevis.

This Article considers different factors that should be taken into account when deciding between the use of a trust or foundation, and what the specific benefits of using Nevis are.

It provides:

  • A simple summary of what trusts and foundations can be used for
  • Explores when a foundation might be more beneficial than a trust, and vice versa
  • Offers a brief overview of Private Trust Companies
  • Provides details as to what needs to be submitted to the Registry in Nevis
  • Presents the unique characteristics that Nevis offers, in relation to foundations and trusts including asset protection

Why Consider Using a Trust or Foundation: Summary

Trusts and foundations are flexible tools that allow arrangements to remain private.

 Whilst they differ in a number of important respects, they can be used to achieve similar objectives. Both can be effective structures to achieve succession planning, asset protection, charitable or philanthropic aims.  

The continuity of having such structures in place is an important factor, especially after the settlor/founder dies. It is important to ensure, that as far as possible, there is no room for dispute after the settlor/founder has passed away.

Factors to Consider When Choosing Between a Trust and a Foundation

There are a number of circumstances when a foundation might be more beneficial than a trust, one of these may well be the client’s country of residence. Civil law countries are more familiar with the concept of foundations, and common law countries are more familiar with trusts. 

Benefits of Foundations

Foundations have a separate legal personality and can enter into contracts, hold property, and sue, all in their own name. They may also offer a greater degree of control or involvement of the founder and/or family members in administering the structure, in comparison to a trust.

It is possible for family members to sit on the Foundation Council, or the Management Board as it is referred to in Nevis.

In addition, foundations may be better suited to holding high risk or speculative investments or trading companies, as they are separate legal entities.

Benefits of Trusts

There is a substantial body of trust-related case law, which means that there is a great deal of certainty when utilising trust structures.

Foundations are newer concepts in common law jurisdictions, and at present there is minimal supporting case law. The tax treatment of trusts is also better understood in comparison to the tax treatment of foundations in these countries.

It is also generally acknowledged that trusts are easier to establish. Provided that; the intention of the settlor to create the trust, the subject matter of the trust, and the objects of the trust (the beneficiaries and purposes) are all certain, a valid trust will be created.

Private Trust Companies (PTCs) For many years, PTCs have been a popular vehicle for administering the assets of numerous wealthy families.

One of the main attractions of a PTC is that decisions relating to the underlying trusts, are made by directors who are carefully chosen by the family or may even be family members themselves. There are a number of variants of the PTC, which can be limited by either shares or guarantee or even with separate classes of shares for voting purposes.

Careful consideration as to the level of control exerted over the PTC needs to be planned, to minimise the possibility of adverse tax implications. The PTC itself is usually owned by a purpose trust whose sole purpose is to hold these shares.

Nevis: What Needs to be Submitted to the Registry?

Nevis does not have a beneficial ownership register, public or private.

For a Nevis International Exempt Trust; the name of the trust, trustee and registered address must be submitted to the Registry but no details of the settlor.

For a Nevis Multiform Foundation; the details of the management board, supervisory board, purpose of the foundation and the address in Nevis, are required to be submitted to the Registry.

What Unique Characteristics does Nevis Offer in Relation to Foundations and Trusts?

Nevis Multiform Foundations

Nevis offers a unique structure; a Nevis multiform foundation, which can change its form throughout its life to be that of an ordinary foundation, a trust foundation or even a company foundation, so it can be adjusted dynamically, based on the client’s needs.

Unique Asset Protection Laws

Nevis trusts and foundations benefit from unique asset protection laws. If a creditor wishes to bring an action against one of these structures, they must first submit a bond of $100,000 for a Trust, or $50,000 for a Foundation to the Nevis Minister of Finance, before the court will consider the action, and no foreign judgements are recognised.

There is also a 2 year statute of limitations period for trusts and 1 year for foundations, within which a creditor must bring an action, with all proceedings being held privately ‘in camera,’ which is in the judge’s chambers.

Additional Information Regarding Nevis Trusts and Foundations

Existing trusts and foundations can easily be migrated to Nevis.

In addition, as mentioned above, a Nevis Multiform Foundation can ‘chop and change’ its form throughout its life. The fact that an existing company, incorporated either within Nevis or elsewhere and/or an existing trust, can be transformed into a Nevis Multiform Foundation can provide great continuity.

How Can We Help?

If you require any further information about Nevis trusts and foundations and the advantages that they offer, please contact: Beth Le Cheminant at: advice.nevis@dixcart.com.

Superyacht Planning: Working Case Studies (2 of 2)

Posted on | by Charlotte Clabon

Our short series on planning for a superyacht aims to provide a foundation of understanding for those considering building or purchasing a vessel. In this, the second article in the series, we will take a closer look at how the various elements come together in the operation of a superyacht, through two simple case studies.

If you have not read article one and would like to, please follow the link below:

In this article we will take a look at two case studies:

Case Study 1: MY-20

MY-20 is a new build 20m yacht, that has been purchased by a UK resident ultimate beneficial owner (UBO). The purpose of MY-20 is to cruise domestically within the Mediterranean waters, with no intention of sailing internationally. The UBO does not intend to engage a yacht management professional as it will be primarily utilised as a dayboat, and crew will be engaged on a day rate basis.

Ownership

Whilst MY-20 will be used as a private vessel, there are still many potential liabilities that need to be abated. An owning entity is always recommended to mitigate any unwarranted personal liabilities that the UBO may be exposed to through operating MY-20. For example ringfencing any exposure to personal claims e.g. tortious, contractual etc.

Further, to prevent the UBO being deemed an employee or de facto Director of the entity, it is best to utilise a transparent vehicle, such as a Limited Partnership. The Isle of Man Partnership can apply for separate legal personality, and therefore limited liability at outset.

For this arrangement our UBO will be the Limited Partner, whose liability is limited to their contributions to the Partnership. The General Partner has unlimited liability and therefore will be a Special Purpose Vehicle (SPV). Here, the SPV is an Isle of Man Private Limited Company (IOM Co Ltd) which of course also benefits from separate legal personality and therefore limited liability.

As General Partner, IOM Co Ltd will provide management and control of MY-20 and its operations. In doing so, IOM Co Ltd will administer the vessel, including holding board meetings, making decisions, making annual filings, accounts including the settlement of invoices, review and agree any applicable contractual agreements, and of course work closely with the Captain. It is imperative that the UBO is not seen to engage in any of this activity, lest they be deemed a General Partner and defeat the planning.

Flag

The UBO’s choice of flag will define the laws and regulatory standards that MY-20 will sail under. It will also have implications for the ease of administration. Therefore, the choice of registry is an important one.

As MY-20 is due to only sail within EU waters, an EU flag state will make most sense. From the available registries, the Malta Ship Registry is the largest in Europe and one of the biggest ship registers in the world. The Merchant Shipping Directorate defines MY-20 as a private registered yacht, because it is a pleasure yacht used for the sole purpose of the owner, is 6m+ in length, is not engaged in trade and does not carry passengers for consideration.

The Malta flag is beneficial in our case because:

The registration process is relatively straightforward as the Malta registry is a modern and administratively efficient shipping register.

Registration will only be granted once the Malta Maritime Administration is satisfied that the vessel conforms to all of the manning, safety and pollution prevention standards required by the applicable international conventions. During the registration process relevant evidential documentation is also required. The documentation must include evidence of ownership from a former registry unless the vessel is new.

You can read more about why Malta is a great location for flagging a vessel, here.

Import / Export

Whilst the UBO and owning entity are non-EU resident and MY-20 is a private vessel, Temporary Admission will not be an option as the ensign will be Maltase and the yacht will not be travelling outside of EU waters. Therefore, the UBO must pay VAT on the initial importation of the vessel to an EU Member State, and must carry evidence of this thereafter.

Whilst Luxembourg offers the lowest rate of VAT in the EU @ 17%, it is also landlocked, making it logistically unrealistic to import a yacht there. This means that Malta’s rate of VAT @ 18% is the lowest in the EU for the importation of yachts.

As MY-20 is a 20m yacht, special dispensation must be obtained from the Malta authorities for a one-off voyage to cross the Med and sail to Malta for importation. Malta Customs authority require a valuation of the yacht to approve MY-20’s importation.

Upon approval of the valuation and arrival in Malta, Customs authorities will inspect MY-20 and request the payment of VAT @ 18% based on the value of MY-20. After receipt of payment, Malta authorities will issue a VAT paid certificate, at their discretion.

In order to enact this a Malta VAT agent is required. IOM Co Ltd will engage with Dixcart Malta, who will act as VAT agent to ensure that the yacht is imported properly.

Case Study 1: In Summary

The UBO’s solution calls for an Isle of Man Limited Partnership with separate legal personality, which has an SPV acting as General Partner. MY-20 will be registered in Malta and VAT paid on importation. MY-20 will cruise the Med, and on the proviso that it does not leave EU waters for a period long enough to jeopardise its VAT paid status, then the yacht can continue to be in free circulation in EU waters.

Case Study 2: MY-50

For sake of ease, we will use the same UBO, except the vessel is a 50m superyacht. The UBO has purchased the superyacht with the intention of both private and charter usage, to assist with ongoing upkeep. The superyacht may be used to cruise in the EU and further afield.

Due to the intended arrangement, MY-50 will require a suite of professionals, including a yacht manager, yacht broker, tax adviser, a corporate service provider such as Dixcart and possibly a crewing specialist, if the yacht manager does not provide such services.

For our purposes, we will refer to the superyacht as MY-50.

Ownership

Due to the UBO being a UK resident, the same structuring can be used to ensure the individual is not deemed an employee or shadow Director of the owning entity – a Limited Partnership with an SPV acting as General Partner (IOM Co Ltd).

IOM Co Ltd will administer MY-50 in a similar way to MY-20, managing all board meetings, decisions, annual filings, contracts. This will include the management accounting associated with not only the ongoing maintenance and payment of invoices etc. but also the operation of any charter agreements.

IOM Co Ltd will work closely with the UBO, Captain, yacht manager, yacht broker and tax adviser to ensure that the structuring remains effective and the superyacht is managed efficiently.

Flag

In order to utilise the Temporary Admission VAT procedure when the superyacht is being used by the UBO, a non-EU flag will be required. Temporary Admission allows the vessel to cruise in EU waters for a period of time without VAT being due on import/export. You can read more about Temporary Admission here.

Further, as MY-50 will also be used for commercial charter, the UBO can elect to use the Yachts Engaged in Trade Scheme by registering the vessel in either the Cayman Islands or Marshall Islands. Both options qualify for both Temporary Admission and allow commercial chartering to take place, subject to conditions, and are highly regarded registries.

Yachts Engaged in Trade (YET) Scheme

For those with yachts flagged in the Cayman Islands and Marshall Islands the YET Scheme presents a hybrid approach, whereby the yacht can be used for both private and commercial charters, albeit subject to stringent conditions.

For example, the YET Scheme allows private yachts which are ensigned with the Cayman Island flag to sail under commercial charter in the territories of France and Monaco with VAT exemption. The use of the YET Scheme allows the skipper to switch between YET and Temporary Admission, pausing the 18-month Temporary Admission period, when using the boat for commercial purposes.

Whilst the YET Scheme provides clear benefits to the UBO, there are stringent conditions for use, e.g. the area for commercial charter is restricted whilst in EU waters, the period of commercial charter is restricted to a maximum of 84 days, the yacht must be 24m+ in length and requires a compliance verification survey, a French VAT agent is required etc.

If complied with, the YET Scheme can ensure that no VAT will be payable on the hull importation, and as such will not require disbursement. Correct application of the YET Scheme can provide a cashflow neutral VAT solution. Contravention of any of the requirements may be subject to the application of taxes, penalties or fines by the local authorities.

The YET Scheme is currently limited to the Marshall Islands and Cayman Islands registered vessels.

For our purposes, we will use the Cayman flag.

Case Study 2: In Summary

The ownership of MY-50 will also require an Isle of Man Limited Partnership with separate legal personality, once again meaning that the UBO must have no part in the superyacht’s ongoing management and administration. Further, the flag chosen is non-EU and the vessel is equipped to sail in international waters, therefore the Temporary Admission procedure is applicable when MY-50 is being used as a private superyacht.

As the chosen flag is the Cayman Islands, the UBO can use the YET procedure to commercially charter MY-50 in French and Monegasque waters, subject to conditions. How does this work?

The yacht broker engaged would market MY-50 for those seeking a luxury charter experience. Once a customer has requested to charter MY-50, they work with the yacht manager to create a standardised MYBA charter agreement, detailing the dates of the charter along with the costs applicable to the customer including VAT amongst other information.

Once the agreement has been signed and delivered to the Cayman Islands register, the superyacht is issued a Temporary Certificate of Registry for Yachts Engaged in Trade by the flag state. The certificate will state the limitation period regarding the commercial charter.

When the UBO is onboard, the superyacht is a private vessel and can have free circulation within the EU under Temporary Admission (i.e. there is no charter agreement, fee or VAT required).

Get in touch

If you require further information regarding yacht structuring and how we can assist, please feel free to get in touch with Paul Harvey at Dixcart.

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

UK Tax Regulator Focuses on Offshore Corporates Owning UK Property

Posted on | by Charlotte Clabon

A New Campaign

A new campaign was launched by the UK tax regulator (HMRC), in September 2022, aimed at overseas entities that may not have met UK tax obligations in relation to the UK property that they own.

HMRC have stated that it has reviewed data, from HM Land Registry in England and Wales and other sources, to identify companies who may need to make disclosures for; non-resident corporate rental income, annual tax on enveloped dwellings (ATED), the transfer of assets abroad (ToAA) legislation, non-resident capital gains tax (NRCGT), and, finally, income tax under the transactions in land rules.

What is Taking Place?

Depending on the circumstances, companies will receive letters, accompanied by a ‘certificate of tax position’, recommending that they ask connected UK-resident individuals to re-examine their personal tax affairs, in the light of relevant anti-avoidance provisions.

Since 2019, ‘certificates of tax position’ have been issued to UK residents who receive offshore income.

The certificates typically require a declaration of the recipients’ offshore tax compliance position within 30 days. HMRC has previously noted that taxpayers are not legally obliged to return the certificate, which could expose them to criminal prosecution, if they make an incorrect declaration.

Standard advice to taxpayers is that they should consider very carefully whether they return the certificate or not, regardless of whether they have irregularities to disclose or not.

The Letters

One of the letters concerns undisclosed income received by non-resident corporate landlords and liability to ATED, where applicable.

This will also prompt UK-resident individuals who have any interest in the income or capital of a non-resident landlord, whether directly or indirectly, to consider their position as they may fall within the scope of the UK’s ToAA anti-avoidance legislation meaning that the income of the non-resident company can be attributed to them.

The letter recommends that any such individuals should seek professional advice to ensure their affairs are up-to-date.

An alternative letter is being sent to non-resident companies that have made a disposal of UK residential property between 6 April 2015 and 5 April 2019, without filing a non-resident capital gains tax (NRCGT) return.

Disposals of UK residential property by non-resident companies were subject to NRCGT between 6 April 2015 and 5 April 2019. Where the company purchased a property before April 2015 and the whole gain has not been charged to NRCGT, that part of any gain not charged, may be attributable to the participants in the company.

Such corporates may also be liable to pay UK tax on rental profits, as well as income tax under the transactions in land rules and ATED.

The Need for Professional Advice

We strongly recommend that UK-resident individual participants in these companies should seek professional advice, from a firm such as Dixcart UK, to ensure that their matters are up to date.

The Register of Overseas Entities

This new focus coincides with introduction of the new Register of Overseas Entities (ROE), that came into force on 01 August 2022.

Criminal offences may be committed for non-compliance, with the requirement for overseas entities to register certain details (including those of the beneficial owners) to Companies House. 

Please see below the Dixcart article on this topic:

A Comprehensive Guide to the New Registration Requirements for Overseas Owners of UK Property

Additional information

If you have any questions and/or would like advice regarding non-resident status and the obligations in relation to tax on UK property, please speak to Paul Webb: at the Dixcart office in the UK: advice.uk@dixcart.com

Alternatively, if you have any queries regarding the UK public register of beneficial ownership of overseas entities, please speak to Kuldip Matharoo at: advice@dixcartlegal.com

Why the Portuguese D2 Visa, known as the Entrepreneur or Business Visa, is the “New Golden Visa”

Posted on | by Charlotte Clabon

Why Portugal?

Portugal is currently a topic of conversation, across the world, for several reasons. It is more than just the sunny weather, low cost of living, great food, variety of world winning wines and charming people, that everyone is speaking about.

The reason is simple: Portugal is a place people actually want to live and can see the possibility of raising a family and doing business in. A combination of factors now encourages leading entrepreneurs to establish and grow their companies in Portugal.

Portugal- A Few Facts and Figures

Portugal is projected to exceed the European economic growth forecasts, at least until 2024. It has been ranked as one of the best places to live according to the Global Peace Index (currently ranking 6th on the 2022 Global Peace Index), offers very good healthcare according to the Health Care Index (with an average life expectancy of 82.47 years in 2022), and is ranked highly from an education point of view.

Traditional Portuguese Universities have become “Top Ranking” International Universities, the  “Universidade Católica Portuguesa” and “Nova SBE” were included as two of the best universities in the world by the British newspaper, The Financial Times, in 2018.

It is without a doubt a place that ticks the boxes when choosing a place to live.

Portugal’s Golden Visa – Evolution

The Golden Visa program became increasingly popular after its introduction, and attracted world attention to Portugal. The world came to learn about Portugal and having the Golden Visa, as essentially a plan B; not having to move to Portugal to be eligible, but keeping it as a potential second option for the future if things do not work out where individuals currently live, people have now shifted their attention to plan A; making a permanent move to work and live in Portugal.

Of course, moving to Portugal requires more than just a visa and there needs to be economic reasons  to do so. It is becoming rapidly apparent that the economic potential is vast and powerful in Portugal, especially when taking into account that it is a small European country on the tip of the western continent.

The D2 Visa – Becoming ‘Golden’

The D2 visa is the real Golden Visa, as it not only allows you to benefit from living in Portugal, with unlimited access to the Schengen area, but provides the opportunity to benefit from access to one of Europe’s best places to establish a business, by living there.

Portugal has become known as the California or Silicon Valley of Europe. Successful global tech events such as the Web Summit have now taken place in Lisbon for several years running – testament to the fact that it is a place that is finding the right people with the right mindset.

The D2 visa is essentially an entrepreneurial visa.

D2 Visa: The Criteria

Requirements include the following:

  • Be a non-EU national
  • Have sufficient funds to support yourself during your stay in Portugal
  • Incorporate a Portuguese (or Madeiran) company
  • Prepare a business plan
  • Hold a clean criminal record
  • Be willing to reside for more than 183 consecutive days in Portugal (or not be absent from Portugal for more than 8 non-consecutive months in any single calendar year)
  • Show proof of a place to live in Portugal
  • Be willing to become a fiscal resident in Portugal

Why Should You Reach out To Dixcart?

We are celebrating our 50th anniversary this year, with Dixcart having had a presence in the Portuguese market, for over 30 years. We have thus dealt with many structures and arrangements from start to finish, working with international investors and families from many corners of the earth. As a trusted service provider, we look forward to welcoming you as a client.

In addition to assisting entrepreneurs to select the most appropriate legal route to structure their activities in Portugal, Dixcart also provides:

  • A complete range of services relating to the incorporation of a company and its day-to-day obligations; from bookkeeping through to tax compliance.
  • Assistance to entrepreneurs and their families in relocating to Portugal and in obtaining the necessary residence permits.

Additional Information

If you require additional information regarding the D2 visa and the types of company and tax frameworks available in Portugal and/or the types of visa and residence options, please contact Lionel de Freitas at the Dixcart office in Portugal at: advice.portugal@dixcart.com 

Malta

Ten Reasons Why to Relocate your Business to Malta – A Malta Company 

Posted on | by Charlotte Clabon

Establishing a Malta Company

Malta is a beautiful Mediterranean island and is equipped with a high-tech infrastructure that those wishing to establish a commercial operation would expect to find in an international financial service centre.

Additional advantages include; the corporate tax regime, investment and immigration opportunities, fiscal and social benefits, a distinctive lifestyle and a stable economic ecosystem.

Here we examine ten key reasons why businesses look to relocate to Malta.

Reason 1: Opportunities in the stable financial services sector

Building on the success of its robust banking industry, Malta has taken the opportunity to style itself as a European financial service centre and the jurisdiction of choice, for funds in the Mediterranean.

Malta offers a great selection of innovative funds structures, including:

Malta is a member of the European Union and part of the Euro-zone, with the local economy being based on the Euro. This alleviates any foreign exchange issues for companies operating within the European Union.

Malta Enterprise sustains and assists newly formed enterprises and aspiring businesses to start operating profitably from day one. A series of beneficial incentives exist for foreign investors, small to medium-sized enterprises, and mega business set-ups. Some attractive support measures include; Micro Invest, Business Advisory Services, Development and Research Grant Schemes, Business START and more.

Reason 2: Tax and legal framework

Malta was one of the few European countries to adopt a complete imputation system, which is one of the main advantages of Malta’s tax system, along with the fact that Malta has an extensive network of double taxation agreements and a refundable tax credit scheme. Malta does not withhold tax on dividends paid to shareholders.

A Company established in Malta would have to account for tax on worldwide income and is typically taxed at the standard corporate tax rate of 35%. However, upon distributing dividends to a non-Maltese resident shareholder, such a shareholder becomes eligible to a tax refund on the Malta tax paid at the company level. The final tax leakage, after the refund is between 5% and 10%.

In addition to the traditional Limited Liability Company, Malta can offer Partnerships – an alternative vehicle to set up a business.

Reason 3: Simple re-domiciliation of companies

A company formed and incorporated or registered under the laws of an approved foreign country, which is similar in nature to a company as recognised under the laws of Malta, may make a request to the Malta Business Registry of Companies to be registered as ‘continued’ in Malta, provided the laws of the foreign country allow this, and provided the company is authorised to do so by its constitutive documents. 

The request to the Malta Business Registry of Companies must be accompanied by a specific pack of documents.

Reason 4: Business support services

Outsourcing any support required to ensure that all business needs are met, can prove to be a valuable cost-saving exercise. Malta boosts a number of professional service providers, such as Dixcart, that can efficiently handle all of the relevant corporate requirements in Malta.

Such services include; submission of annual returns to the Malta Business Registry, provision of director services, secretarial services, auditing and accounting, payroll, recruitment, employment law, compliance and regulatory advice.

Malta is also well-known within EU as a fast developing  Eco-friendly Jurisdiction. Please let us know if you would like any further information regarding the initiatives being developed in Malta and how these might be of benefit: advice.malta@dixcart.com.

Reason 5: Labour force

The workforce in Malta is highly renowned for its qualified and multi-lingual population which consists of both local and foreign workers. In addition to Maltese, English is an official language in Malta, making communication easy within the business itself and also with the Government and clients worldwide.

Italian is also widely spoken and professionals with a good grasp of French, German, Spanish and other languages are common too.

Reason 6: A perfectly located island

Despite being an island, Malta is highly accessible via both sea and air transport links to main and subsidiary airports in mainland Europe, North Africa, Turkey & UAE. Regular and frequent flights to and from Malta are operated by numerous airlines that make use of Malta International Airport.

Malta has flights departing and arriving from key capital cities, ranging from Berlin to Milan to Algiers, Warsaw, Istanbul, and Dubai amongst others. Not only does Malta boast its own national airline, but its airport welcomes a host of major airlines including low-cost ones. For the last decade Malta has become known as a respected Aircraft Hub.

Reason 7: Biggest yacht registry in the EU

Currently, Malta has the largest shipping register in Europe and the sixth largest in the world. In addition, Malta has become a world leader in commercial yacht registration.

The Maltese authorities are approachable and flexible in their practices, while at the same time meticulously follow a rigid framework of guidelines and regulations. This has helped create the cutting edge, for which Malta is known in this sector.

Dixcart Malta is very experienced in and more than happy to help with Yacht Registration.

Reason 8: IT Infrastructure

Malta is relatively advanced when it comes to IT infrastructure.

Types of services include; co-location and hosting services, data centres, cloud services and internet services. Robust government information systems architecture combined with established service providers, ensures that anyone interested in doing business in Malta will have access to secure, affordable, efficient, and reliable systems.

The new residential programme for Digital Nomad in Malta is open to third-country citizens who would usually need a visa to travel to Malta. Funding is also available for IT and Fintech Business in Malta. Malta is also one of the first countries to have nationwide 5G Data coverage.

Reason 9: Immigration and investment incentives

Third Nationals Country nationals can relocate to Malta and get a work permit with an Employer in a transparent procedure through the online application system supported by the Employer. This process is available for applications when abroad and when the individual is already in the Malta. In addition, some programmes are designed for fast-track highly qualified people and can generate tax benefits, such as Highly Qualified Persons (HQP)and professionals in Key Employment.

Additionally, there are nine citizenship and residence programmes are available, allowing qualifying persons that satisfy a robust due diligence process to take up Citizenship or Permanent and Global Residency in Malta. 

Reason 10: Entrepreneurial climate and safety

Major credit rating agencies repeatedly rate Malta as a solid and stable economy, and many prominent economists, describe Malta’s economy as highly stable. This translates into a secure economic climate which is also protected by highly regularised industries, a robust anti-money laundering system and an extremely low probability of natural disasters.

Even during the COVID-19 pandemic, Malta’s economic size made it possible to get back on its feet after a shorter time than many larger economies. Malta’s population has one of the highest rates, of not only being fully vaccinated but already having received booster injections, in Europe.

Additional Information

If you are considering establishing a Malta company and would like further information regarding the support measures for research and development and the business opportunities available through Malta, please speak to Jonathan Vassallo: advice.malta@dixcart.com at the Dixcart office in Malta, or to your usual Dixcart contact.

Assisting Businesses Moving to the UK – UK Resident Directors and Bank Accounts

Posted on | by Charlotte Clabon

Background

We, at Dixcart in the UK, are asked several times a week if we provide UK resident directors, in order that a UK company owned and sometimes controlled from overseas, can open a UK bank account.

The position is not so simple. Before a UK bank will open a bank account for a UK company that is owned from abroad, there are many compliance and commercial hoops to jump through. Appointing a UK resident director will not magic these away.

Bank Accounts

Banks will not be willing to open accounts where they do not see the opportunity to make a profit. If the proposed account will receive a dividend once or twice a year which is then paid on, leaving only enough to pay the costs of the company, the banks will conclude that the compliance cost of opening such an account will far exceed the money that can be made by providing that banking service. It is just common sense.

Incorporation of a UK Company Run from Outside the UK

Many overseas companies who want to ‘dip their toe’ into the UK market will often want to incorporate a UK company but run it from outside of the UK. They then find it difficult or impossible to open a UK bank account with the end result that we receive several requests every week to act as a director of a UK company owned from outside of the UK. 

UK Director Responsibilities and Associated Fees

Many might think that a professional at Dixcart would be willing to be named as a UK resident director, sign a bank application, and then occasionally sign things as and when requested. 

In reality, if you are a director, you have onerous responsibilities and really need to understand the business, take the key decisions for that business, and ensure that you manage and control that business. 

Clearly one would take the advice of clients, but at the end of the day the ‘buck stops’ with the director. That is why the cost of this service normal carries a risk fee of £5,000 per annum plus a charge for the director’s time costs. In addition, Dixcart would only be willing to accept the position if Dixcart UK did all of the; accounting, company secretarial and tax compliance services for the company. For a relatively quiet holding company the total annual cost is likely to be a minimum £20,000 per annum plus VAT at 20%.  For a trading company the cost is likely to be greater.

The First Year of Operation

In the first year the costs would be higher because you would also have set up fees including; company formation, VAT registration, ICO registration and dealing with commercial contracts and shareholders agreements. The time spent dealing with the potential bank is also likely to be significant, without the guarantee of successfully opening an account.

What are the Banks Looking For?

The banks will typically want to see a business plan that clearly sets out the business opportunity and has budgets and cash flows. They will expect to know who the likely customers and suppliers will be and the size and frequency of deals. They often want to meet the people behind the business and understand how their business is to be done and be confident that there are sufficient human resources to run the business from the UK. Clients are more likely to be successful if they try and open the account with a UK correspondent of the home country bankers.

There are some industries and geographic locations that most banks just will not do business with. Any structure that looks like its prime purpose is tax planning, they will not be keen on either.

Tax Residency Needs to be Considered

The question of tax can be problematic, where the company is in effect being run from outside the UK, as it is likely to mean that, even if you have UK resident directors, the company may be tax resident in the jurisdiction of the individuals managing the day-to-day activity of the company. 

UK companies are tax resident in the UK by virtue of the place of their incorporation. The exception to the rule is where a double tax treaty deems them to be resident in another country. This would typically happen where there is a tie breaker clause in the double tax treaty with the UK, and management and control are not in the UK.

Re-domiciliation of Companies to the UK

The UK is keen to attract genuine businesses to the UK. As well as attracting new businesses the UK is interested in attracting existing businesses to move to the UK. The UK has recently carried out consultation on the introduction of legislation to permit the re-domiciliation of foreign companies into the UK.

Normally when an overseas business wants to set up in the UK, they will want to send people from their own organisation to get things going. There are various visas that can be applied for, and the UK company will need to apply for a sponsor licence. Our Dixcart immigration lawyers can assist with advice regarding visas and guide you through the application process.

What can Dixcart do to Help?

For genuine businesses, with a well thought out business proposal Dixcart can definitely be of help. 

We are a team of Accountants, Lawyers, Taxation, and Immigration advisors who work together to assist new businesses successfully establish themselves in UK. We also operate a business centre with high quality fully furnished offices of varying sizes.

If you wish to discuss setting up a business in the UK, please contact Laurence Binge at the Dixcart office in the UK: advice.uk@dixcart.com.

Why is Switzerland a Favoured Location for a Family Office?

Posted on | by Charlotte Clabon

Background

Switzerland is a very attractive jurisdiction for the establishment and management of Family Offices, from virtually all continents and countries across the world. South America, in particular is a part of the world that particularly appreciates the gravitas of Switzerland as a location for a Family Office, the stability of this international centre and the highest level of confidentiality that is guaranteed. 

Reasons Why Switzerland is a Favoured Location

1. Political, Financial, Social and Economic Stability

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

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

2. Banking Advantages

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

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

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

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

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

3. Trusts and Private Trust Companies as Asset Protection Vehicles 

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

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

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

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

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

Use of a Swiss Company as Trustee

  • A Swiss company can act as Trustee of a Trust, formed under the law of another jurisdiction
  • Trusts are not subject to taxation in Switzerland
  • The Settlor and Beneficiaries are not subject to taxation in Switzerland, as long as they are not resident in Switzerland

Dixcart and Swiss Trustee Services

The Dixcart office in Switzerland has been providing Swiss Trustee services for over twenty two years and is a member of the Swiss Association of Trust Companies (SATC) and registered with the Association Romande des Intermediaires Financiers (ARIF).

In terms of compliance obligations, currently, Swiss Trustees are supervised to ensure that thy meet Swiss Anti-Money Laundering obligations.

However, as from January 2023, the Financial Institutions Act of January 2020, requires that Swiss professional Trustees must be licensed by FINMA (Swiss Financial Market Supervisory Authority) to conduct their business. Swiss Professional Trustees must now comply with; structural, organizational, business conduct and audit requirements. Dixcart meet the necessary obligations and our application has been put in place. 

Private Trust Companies and single family offices are exempt. The exemption also applies if the Beneficiary is a charity.

The Dixcart Swiss office, and the other offices that are part of the Dixcart Fiduciary Group, recognise that the application of compliance procedures, to meet the highest standards, provides our Family Office clients with the most effective and sustainable service.

Additional Information 

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