Malta

Setting up a Company in the EU – Malta Funding Solutions

If you are in the process of setting up a company in the EU and require funding solutions – Malta can assist.

The Maltese Government has launched an attractive loan scheme to support the manufacturing and service industries, investing in projects that will help them further expand their business.  

  • The measures are designed to support companies which plan to; establish innovative products, enter unexplored geographic markets, address environmental concerns, or aim to digitalise various business processes. Projects can be funded through a variety of loan offerings, up to a total of €800,000.

Companies which are based in Malta have access to national and EU funding.

Dixcart Malta can help with the application to the Malta Enterprise, the Government agency which offers support measures to Maltese companies at different stages of their lifecycle. There are attractive funding options that are available for companies in the following sectors; Hi-Tech Sector, Artificial Intelligence, Advanced Manufacturing, Life Sciences Sector, Education and Training, Digital Innovation and Data Science.

Eligibility Requirements

Companies registered as a limited liability company with the Malta Business Registry and engaged in the business of producing goods or services in Malta are eligible for funding.

Businesses must also:

  • have no tax liabilities relating to; VAT, income tax, or contribution payments;
  • not be engaged in activities expressly excluded under the de minimis regulation;
  • have at least one full-time employee registered on Job Plus and residing in Malta;
  • not be subject to collective insolvency proceedings.

Activities

Common examples of activities that may be supported through a soft or start-up loan include:

a) facilitate a development or expansion project, based on a business plan that is focused on developing a new product or entering a new geographic market;

b) address environmental issues such as water usage, water treatment, waste treatment, reduction and reuse;

c) optimise business processes through digitalisation and advanced technologies;

d) achieve a high level of sustainability.

Amount of Contribution

The loan may cover up to 75% of the costs associated with the proposed project, including asset purchases, salary costs, know-how, and other non-recurring costs.

The loan must be secured by a unique mortgage covering at least 50% of the loan amount.

The Soft Loan amount must not exceed:

  • €1 million (or €500 thousand for road freight companies), to be repaid over a period of five years,
  • €500 thousand (or €250 thousand for road haulage companies), to be repaid over a period of ten years.

The Start-up Loan amount must not exceed:

  • €800,000 for innovative projects, provided that all parties in the company structure, including corporate entities, are a maximum of 4 years old.

Artificial Intelligence (AI) Strategy and New Niches

The Maltese strategy and vision for AI aims to map the path for Malta to gain a strategic competitive advantage in the global economy as a leader in the AI field. Malta is becoming a home for technologies that will be shaping the future, such as: 

  1. Distributed Leger Technology (DLT), including blockchain; 
  2. MedTech, including bioinformatics and medical imaging;
  3. Artificial Intelligence, mainly with a focus on machine learning, natural language processing and speech;
  4. Internet of Things and 5G;
  5. Biometrics; 
  6. Virtual Reality and Augmented Reality. 

Malta as a Technology “Test Bed”

Malta is an ideal micro test bed enabling service providers to prove and develop their concepts and create solutions. Malta incentivises companies to introduce innovative technologies and to help build a new infrastructure for the future. The Government of Malta continues to invest in bringing the latest technologies to Malta and aspires to ensure continuous connectivity.

Malta – The Tech Hub in the Mediterranean 

Malta Enterprise is the Maltese Government economic development agency, responsible for attracting Foreign Direct Investment, whilst also assisting businesses to set-up, grow and continue to expand their operation.

This is achieved through various fiscal and financial incentives that are managed and administered by the agency. It is also worth noting that 25% of Malta’s population are expats living and working in Malta, demonstrating that it is very much an Island open to diversity and innovation.

Case Study

An entrepreneur based in Portugal contacted Dixcart to help with an application for the Malta Start-up Support Measure.

After a quick preliminary meeting with Malta Enterprise, it was identified that the product met the eligibility requirements for the Start-up Support programme and would qualify for the €800,000 loan, allocated to projects that are deemed innovative.

Dixcart started to work concertedly, for the next couple of months with the client, to prepare the business plan, the financial projections, and to then assist with the pitch to the Malta Enterprise Board.

A couple of weeks following the pitch, Malta Enterprise informed Dixcart and the client that the project had been successfully approved. Dixcart then helped the client establish the Maltese company, find suitable office space, and recruit staff.

Dixcart will also help the client apply for Research and Development (R&D) Grants, for any expenses that are not covered by the Start-up Loan. We will also provide ongoing management and support, including accounting and secretarial services, and comprehensive reporting and compliance services. 

Additional Information

If you require any further information regarding setting up a company in Malta and our “one-stop shop” corporate services, including support with an application for funding in Malta, please speak to Jonathan Vassallo at the Dixcart office in Malta: advice.malta@dixcart.com.

Benefits Available Through the Cyprus “60 Day” Tax Residency Rule and a Criteria Change for “Employment Income Exemption”

Background to the “60 Day” Tax Residency Rule

In July 2017, the Cyprus Parliament voted for an amendment to the then criteria used to determine Cyprus tax residency. In addition to the 183 day rule, a second test was introduced in relation to an individual’s tax position in Cyprus: the 60 Day Tax Residency Rule.

  • The “183 day rule” applies to individuals who have physically resided in Cyprus for more than 183 days during one calendar year.
  • In addition to this, a second test was implemented whereby an individual can become Cyprus tax resident in 60 days. This rule is applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction.

Since the implementation of the 60 day tax rule, a number of individuals have relocated to Cyprus to take advantage of the various tax benefits that are available.

Criteria to be Met for an Individual to Meet the “60 Day” Residency Rule

The “60 day rule” applies to individuals who in the relevant tax year:

  • reside in Cyprus for at least 60 days;
  • operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus. Individuals must also have a residential property in Cyprus which they own or rent;
  • are not tax resident in any other country;
  • do not reside in any other single country for a period exceeding 183 days in aggregate.

Overview – Cyprus

Cyprus has positioned itself well, as a country of choice for both individuals and corporations, through the availability of various tax incentives and benefits. The numerous tax incentives offered has seen a steady flow of EU and non-EU nationals establishing their business operations in Cyprus. In addition, individuals find Cyprus a tax efficient location to structure their personal tax positions, by taking advantage of flexible tax resident rules and the non-domicile tax regime.

As an EU member state, Cyprus offers a pleasant climate, adequate infrastructure, and a convenient geographical location. There are two main airports which provide frequent flights to most European cities, as well as several international destinations.

Days Spent In and Out of Cyprus

For the purpose of the rule, days “in” and “out” of Cyprus are defined as:

  • the day of departure from Cyprus counts as a day out of Cyprus;
  • the day of arrival in Cyprus counts as a day in Cyprus;
  • arrival in Cyprus and departure on the same day counts as a day in Cyprus;
  • departure from Cyprus followed by a return on the same day counts as a day out of Cyprus.

What are the Advantages of Being a Cyprus Tax Resident?

Non-Domicile Status

The non-domicile tax regime is particularly interesting for individuals whose main source of income is either dividend or interest income, as these sources of income will not be taxable in Cyprus. In addition, individuals can take advantage of the exemption from taxation of capital gains (other than on the sale of immoveable property in Cyprus).

Employment Income Exemption

On 26 July 2022, the long-anticipated enhancement of this tax incentive for individuals took place.

  • The new provisions allow for a 50% exemption from taxation, for income in relation to first time employment in Cyprus, for individuals with annual remuneration over 55,000. The previous remuneration threshold had been €100,000.

This exemption is available for a period of 17 years.

Exemptions on Income from Employment Outside Cyprus

Individuals who are employed outside of Cyprus for more than 90 days aggregate in a tax year, by a non-Cyprus tax resident employer or foreign permanent establishment of a Cyprus tax resident employer, are exempt from income tax on this income.

Additional Information

For additional information about the attractive 60 Day Tax Residency Rule for individuals moving to Cyprus, please contact Robert Homemadvice.cyprus@dixcart.com.

Options and Steps for the Portuguese Golden Visa Residence by Investment Programme

The Golden Visa Residence by Investment Programme was introduced in 2012 in Portugal, and is a five-year Residence Permit Programme, after the first residency card has been issued, for non-EU nationals. Portugal is a full member of the EU, and therefore successful applicants of the Golden Visa Residence by Investment Programme benefit from visa-free access to Europe’s Schengen Area.

The permit requires a low physical presence requirement with an average stay of just seven days a year, or fourteen days in a period of two years in Portugal, over the five-year period. Benefit of the programme include the right to live, work and study in Portugal, with the key benefit of obtaining citizenship at the end of the program and the entitlement to European citizenship.

Portugal has, in recent years, extended its excellent reputation, with many discovering this beautiful Mediterranean region in Europe.

It is considered one of the world’s most globalised and peaceful nations, with a high quality of life. It has been ranked highly on several index rankings (including that of education and living), and offers a warm climate, superb cuisine, and a relatively low cost of living.

Portugal is a place that families want to move to and where businesses can expand and grow, with the forecast Portuguese growth rate expected to exceed the European average.

Step 1: Hire a Legal Advisor

The Golden Visa programme is a relatively complex visa that requires an expert with sufficient experience and knowledge of the programme. Things to consider when selecting a legal advisor are experience in the market specifically in the Golden Visa programme, and the track history of the firm.

Once a legal advisor is appointed, they will assist you in hiring a tax representative, the opening of a Portuguese bank account, and will explore the different investment programs options available in Portugal with you.

Step 2: Choose an Investment Programme

The investment options available under the Golden Visa programme are a capital transfer, a property acquisition, or investment into a business.

  • Capital Transfer

The options available in relation to a capital transfer are:

  1. A capital transfer of €1.5 million into a Portuguese bank account or an approved investment
  2. €500,000 for the acquisition of investment or venture capital fund units committed to the capitalisation of companies incorporated under Portuguese law, with a maturity of at least five years and with at least 60% of the investment portfolio in companies with a registered office in the national territory of Portugal
  3. €500,000 for research activities of public or private entities that are part of the national scientific and technological system (€400,000 in a low population density area*)
  4. €250,000 in support of artistic production or in the recovery or maintenance of national cultural heritage (€200,000 in a low population density area*)

Property Acquisition

The two options in terms of property acquisition are:

  1. 350,000 minimum real estate purchase for the refurbishment of residential properties older than 30 years or in an area of urban regeneration, including the cost of renovations (residential property is limited to designated interior areas), (€280,000 in a low population density area*)

*A low population density area is defined as less than 100 inhabitants per km², or with a GDP per capita lower than 75% of the national average.

Business

The options for the establishment of a business are:

  1. Creation of a minimum of ten new jobs (eight new jobs in a low population density area*)
  2. €500,000 for the incorporation or increase of the share capital of a company that is registered in Portugal, creating, or maintaining a minimum of five permanent jobs for a period of three years

Step 3: Legal Formalities

The next step is preparing all of the necessary information to be submitted to SEF (Portuguese Border and Immigration Service). Some specific documents will be requested by your legal advisor, depending on the type of investment that is chosen, together with other documents, including criminal record details and tax number of the country of origin.

Step 4: Final Steps

Once all of the documents have been provided to your legal advisor, these are submitted to SEF for acceptance. Once accepted, you will be notified to schedule a biometric appointment at SEF, and after this procedure has been completed, will be followed by a residence card which represents the golden visa.

Renewals need to take place every two years, with documentation being updated and biometric appointments to take place in Portugal.

Requirements

The following criteria are applicable for the golden visa programme:

  • Minimum average seven day spend in Portugal per year, over the five year period, after the concession and until the first renewal
  • Minimum fourteen day spend in Portugal for the period of two years between renewals
  • Maintain the investment for a five year period, after receipt of the residency card

Advantages

After the five year residency programme is completed, the investor can keep renewing the temporary residency card as long as wanted while keeping the investment, apply for permanent residency in Portugal where a five year residency card will be issued, or apply for Portuguese citizenship and get a Portuguese passport.

For the second two options, it is mandatory to pass a A.2 level Portuguese exam. 

Tax Consequences

The tax consequences for each investment option vary depending on the investment programme selected. Please refer to the following articles which include more details regarding the tax consequences that need to be considered:

Additional Information

If you require additional information regarding the Golden Visa Programme, including the investment options available and the next steps to take, please contact Lionel de Freitas at the Dixcart office in Portugal: advice.portugal@dixcart.com 

Swiss Accounting Regulations and Auditing Requirements

A number of clients and contacts ask for general details regarding Swiss accounting and audit requirements, and we have therefore provided the following summary.

All Swiss companies have to register with the Swiss Commercial Registry and have their accounting undertaken by a Swiss accountant or by a Swiss Certified Public Accountant.

Swiss Accounting Regulations and Chart of Accounts

A chart of accounts is a list of financial accounts set up, usually by an accountant, for an organisation, and available for use by the bookkeeper for recording transactions in the organisation’s general ledger.

There is no official chart of accounts in Switzerland. Certain industries nonetheless are governed by Swiss accounting regulations and Swiss GAAP.

Companies can refer to principles defined by:

  • Swiss Law
  • The Swiss Audit Manual
  • IAS
  • US-GAAP Standards

Company Obligations

The Board of Directors of a Swiss company is required to produce an annual report for each financial year, within six months of the end of the relevant financial year.

Every company has to keep physical or digital records of all its business transactions for a period of ten years.

Annual Reports

The annual report consists of the Swiss company’s financial statements in the form of, the balance sheet, profit and loss account, the corresponding notes, and a management report.

The annual report includes the turnover for the preceding financial year and must follow the Swiss accounting principles (see below).

The annual report, together with the corporate tax return, must be filed with the relevant cantonal tax authority by 30 November of the calendar year (at the latest), following the end of the financial year.

Publishing Results

In Switzerland, publication requirements are very limited. Only individual and consolidated financial statements of listed companies must be published.

Swiss Audit Requirements

The organisation’s size and economic importance of the Swiss company determine whether a company is subject to an ordinary or limited audit. Under certain conditions, smaller companies are not audited.

1. Ordinary Audit

This is required, if for two consecutive fiscal years, two of the threshold values, detailed below, are exceeded.

  1. Balance sheet of CHF 20 million or more,
  2. Turnover of CHF 40 million or more,
  3. 250 or more full-time employees.

A company must also undergo an ordinary audit; if it has an obligation to consolidate, or if a group of shareholders holding at least 10% of the company’s shares request such an audit to be performed.

An ordinary audit may be specified in the company’s articles of incorporation or voted on a general meeting.

2. Limited Audit

Most Swiss SMEs do not meet the above criteria and are therefore subject to a limited audit.

This requires a summary report to be sent to the members of the general meeting. The process includes an interview with the management, verification of details and an analytical audit.

3. No Audit

If the company employs less than 10 full-time employees and all of the shareholders unanimously consent, it is not necessary to carry out an audit (opting-out).

Swiss Holding Company: Consolidating Financial Statements

Every Swiss holding company must establish consolidated accounts according to the Swiss Code of Obligations.

Consolidation means aggregating annual reports from the different companies which make up the group to obtain a single annual report describing the situation of the group.

In terms of Swiss accounting law, two or more companies form a group, if they meet the following two conditions:

  1. If 50% of the company are held by the Group, holding company of the Group, or by another company within the Group.
  2. If they have similar objectives and purpose.

Small groups are exempt from consolidating their accounts and are so defined if they meet two of the three following criteria:

  • A total balance sheet less than CHF10 million,
  • Fewer than 200 employees,
  • A turnover of less than CHF20 million.

The company must also conform to the conditions detailed below:

  • The company must not have shares quoted on the stock market.
  • No shareholder, owning more than 10% of the capital has demanded consolidation.

Swiss Accounting Principles

  • Swiss Financial Reporting Principles

Financial reporting serves the purpose of presenting the economic situation of a company in such a way to enable third parties to make a reliable judgement.

Financial reporting is based on the assumption that the company will remain an “going concern” for the foreseeable future and is not in danger of insolvency.

  • Currency and Languages

Accounting in Switzerland is carried out in Swiss francs (CHF) or in any other currency required for business operations. If a foreign currency is used, values must also be shown in Swiss francs.

The foreign exchange rates used are those as published by the Swiss Federal Tax Administrator and must be disclosed in the notes.

Swiss accounting has to be undertaken in one of the official Swiss languages or in English. It may be carried out in writing, electronically, or in a comparable manner.

  • Swiss Accounting Principles

The Dixcart office in Switzerland can provide you with comprehensive details regarding Swiss Accounting Principles. If you would like further information, please contact: advice.switzerland@dixcart.com

Additional Information

Please do not hesitate to contact our office in Switzerland, if you have any further questions or would like a cost estimate for the services that we can provide: advice.switzerland@dixcart.com

St Kitts & Nevis  – A Summary of the Benefits Available to Private Clients

Background

St Kitts & Nevis is a modern, forward-thinking financial centre located within the Eastern Caribbean.  It has a unique history of legislative and fiscal independence and is at the forefront in terms of providing practical solutions to an increasingly mobile and international client base.

Nevis has developed a number of attractive options, over the years, to meet corporate and individual needs, and to enable clients to organise their affairs in an efficient and confidential manner.

We at Dixcart Nevis can assist in the  establishment of; Trusts, Foundations, Companies and  help with Citizenship by Investment.

Estate and Succession Planning – a Number of Advantages

Some of the jurisdiction’s key benefits include:

  • Confidentiality – beneficial ownership information is confidential
  • Agility – a structure formed in another jurisdiction may easily redomicile to Nevis
  • Flexibility – with cutting edge foundation legislation, a multiform foundation can take or change its form from either a trust, a company, a partnership or a traditional foundation
  • Security – Trust Asset Protection Laws mean that any potential creditor must place a bond of US$100,000 before bringing any action or proceeding against trust property. The burden of proof is also placed completely on the complainant, who must establish their claim beyond reasonable doubt and within a 2 year statute of limitations period
  • Asset Protection – For Multiform Foundations, all creditors must place a bond of US$50,000 with the Minister of Finance in Nevis, before bringing any action or proceeding against a Nevis foundation. The burden of proof is also placed completely on the complainant, who must establish their claim beyond reasonable doubt and within a 1 year statute of limitations period
  • Friendly tax environment – no income tax, capital gains tax, estate tax, inheritance tax or gift tax

Services Provided by Dixcart Management Nevis Limited

Dixcart Nevis provides a wealth of solutions and expertise with respect to succession planning.  Our bespoke services include:

  • Formation of Asset Protection Trusts and Common Law Trusts, and the provision of Trustee services, and registered agent only services
  • Formation and management of Nevis Multiform Foundations, and registered agent only services
  • Nevis Company incorporation and registered office / registered agent services
  • Estate planning and family office services

Citizenship by Investment

We also offer Citizenship by Investment services for those wishing to relocate to Nevis or to apply for a St Kitts & Nevis passport.

Additional Information

If you require additional information regarding the jurisdiction of St Kitts & Nevis and the services offered, please speak to Beth Le Cheminant at the Dixcart office in Nevis: advice.nevis@dixcart.com.

Guernsey: Private Finance and its Role in Supporting the Transition to Net Zero

Background

While there has been significant attention paid to the role of public finance, until recently there has been less attention on the critical part, private finance can and must play, if the goals of the Paris Agreement; to limit global warming to below 2 degrees Celsius (preferably 1.5) degrees, and for developed economies to invest $100bn annually – are to be met.

The transition to net zero requires a fundamental rewiring of our global energy system. It will drive disruptive innovation across almost every sector and every region globally.

What Role is Guernsey Playing?

There is a significant opportunity for global private finance to partner with the Guernsey finance industry to drive a proactive sustainability agenda, and to establish Guernsey as the leading global centre for financing the transition to net zero.

This includes traditional sectors such as: trusts and corporates, funds, insurance and investment management, as well as the development of new specialist expertise and support services, for example around ESG, data and fintech.

Key differentiators that enable Guernsey to capture this opportunity are:

  • A strong track-record for innovation
  • An engaged, supportive regulator
  • Fast, easy access to global markets
  • A strong, stable, trusted home for private capital
  • A trusted home of specialist solutions
  • A strong pool of experienced advisors

Dixcart Services

Investment Funds: Dixcart Fund services provide an opportunity for private and corporate clients to establish Guernsey fund structures with a responsive and open regulator. Dixcart aims to support the growth of the Guernsey green investment sector, from a total NAV of almost £5bn in 2022, to a projected £56bn+ by 2040. Wider opportunities exist in assisting green projects providing inward investment into regions such as Sub-Saharan Africa and other geographical areas, encouraging net-zero investment project targets for Guernsey Registered, Authorised and Private Investment Funds

Trust & Company: Dixcart remains one of the leading privately owned, fully independent, client relationship and service level driven trust, corporate and fund services groups in the Crown Dependencies and further afield. Dixcart has a clear goal to develop opportunities to become the leading trusted provider for private clients (particularly Family Offices) and corporate clients, who are sustainably investing within the industry.

The Guernsey Way Forward

Guernsey has committed to a 2050 net zero target, and an interim policy commitment to reduce emissions by 57% of 1990 levels, by 2030. Together with the States of Guernsey, Guernsey Finance has set a clear ambition for Guernsey to play a leading role in driving the transition towards a greener, more sustainable future globally.

Via Guernsey Green Finance, Guernsey has already proven itself to be at the forefront of innovation in the green and sustainable finance sector.

A number of key examples include:

TISE Sustainable – Headquartered in Guernsey, The International Stock Exchange (TISE) hosts one of Europe’s most comprehensive sustainable market segments and is aligned to the UN’s Sustainable Stock Exchange initiative

Guernsey Green Fund – the world’s first regulated product in this space, now channelling close to £5bn into green projects

Guidance and Frameworks – developing industry-first frameworks and guidance including an ESG framework for insurers and the green private equity principles

Collaboration & Engagement – Sustainable Finance Week, took place on the 20th to 23rd of September 2022 and brought together global leaders and experts in this field, to act as a catalytic force for innovation and collaboration. The week started with an exciting initiative, with the publication of a Green Fund Report: Guernsey kicks off Sustainable Finance Week with new green fund regime and ‘just transition’ report | We Are Guernsey

Guernsey also actively participates in a number of key international initiatives and networks including; the UN Financial Centres for Sustainability (FC4S) Network, UK Green Finance, and Network for Greening the Financial System (NGFS).

Conclusion

While the challenges are great the solutions exist in Guernsey. For further information regarding Dixcart services and support, and to discuss your requirements and opportunities contact Bruce Watterson, at the Dixcart office in Guernsey: advice.guernsey@dixcart.com

Key Employee Initiative – Fast-track Work Permit in Malta for Non-EU Highly-Skilled Workers

What is the Key Employee Initiative?

The Key Employee Initiative (KEI) provides a fast-track work permit for highly specialised Third-Country Nationals (TCNs), who are employed in Malta.

The scheme enables work permits to be issued to key prospective employees, no longer than 5 working days from the date of application, under normal circumstances.

Third-Country Nationals

Third-Country Nationals require a single work permit to be able to obtain residence and be employed in Malta. This is because TCNs are not members of the EU or EFTA, and are therefore not able to move across borders, in the EU, without the proper documentation. 

However, TCNs who are high-skilled workers, are provided with a fast-track work permit service by the Key Employee Initiative. Under normal circumstances, the scheme will issue work permits in not more than 5 days, as detailed above. In contrast non highly specialised TCNs must wait for at least a couple of months.

Who is Defined as a Highly Skilled Worker?

Highly-skilled workers include individuals who possess advanced technical, academic and interpersonal skills. They usually flourish in the areas of; problem-solving, leadership, system improvement and creativity. Examples of highly-skilled workers include; university professors, engineers, biotech scientists, business directors, and IT experts. 

Criteria

Malta’s Key Employee Initiative (KEI), is available to highly technical or managerial professionals with the relevant qualifications and experience for the job they are applying for.

Eligible highly-skilled workers are required to meet the following requirements: 

  • Have valid travel documents 
  • Receive an annual gross salary of at least €30,000 
  • Be in possession of certified copies of qualifications and necessary work experience 
  • The employer must declare that the individual has the necessary credentials for the assigned role

Benefits:

The following benefits are available through Malta’s Key Employee Initiative:

  • The KEI is a fast-track version of the standard single work permit application, with applications being approved in just 5 days.
  • Applications can be submitted online, without the applicant needing to be present in Malta.
  • Approved applicants are issued with a residence permit valid for 1 year. This  can be renewed, subject to the presentation of a valid definite or indefinite contract, and an original ‘annual tax declaration form’, stamped by the Maltese Inland Revenue Department.
  • Visa-free travel within the 26 Schengen Area Countries, by virtue of the Maltese residence card. This is limited to a maximum of 90 days every 180 days.

Family Members of Work Permit Holders

Non-EU nationals who have been legally residing in Malta for over a year (in specific circumstances this may be reduced), are eligible to apply for the ‘reunification’ of family members. This includes spouses over the age of 21 and children under the age of 18.

Long-term Residents

Long-term residence status may be granted to persons legally residing in Malta for a continuous 5 year period.

A successful application requires; proof of continuous residence prior to the application date, and the ability to show stable and regular income of a stipulated amount. Dixcart can provide details of the other requirements, which include the need to have health insurance and attendance of a language and culture course.

Tax Treatment

  • Tax is charged at progressive rates (capped at a maximum of 35%), on Malta sourced income and capital gains, and on foreign source income (excluding foreign source capital gains), that is remitted to Malta.
  • No tax is chargeable on foreign sourced income that is not remitted to Malta.
  • Capital gains are tax-exempt in Malta, even if they are remitted to Malta.
  • Bank interest earned in Malta can be liable to withholding tax at 15%.
  • Long term residence permit holders are not entitled to benefit from the remittance basis of taxation and will be taxed on their worldwide income in Malta.

Case Study

Dixcart Malta provided advice to a UK citizen who was still living in the UK. An important benefit of the Key Employee Initiative is that it is possible to start the  process before the relevant individual has even arrived in Malta.

This highly-skilled professional, in the ICT industry, secured his position at a Maltese employer and decided to relocate to the island once he received the ‘Approval in Principal Letter’, confirming that his application met all of the requirements and had been successful.

After being provided with all of the essential documents, Dixcart Malta made the application, on behalf of the Employee and Employer and submitted all of the forms and evidence of experience, qualifications, and health insurance, to the Authorities. In addition, we even helped to find an apartment for the newcomer.

After receiving a final decision, the KEI had 90 days to relocate to Malta.

Another Set of Circumstances

Dixcart Malta can also provide support services, relating to the Key Employee Initiative, for TCN Employees and local Employers. There may be situations where positions cannot be filled by the local labour market and where suitable TCNs can fulfil the job in the EU with a fast-track Malta work permit, rather than the company remain with vacant positions.

Additional Information

For further information on the Key Employee Initiative, please do not hesitate to contact Henno Kotze: advice.malta@dixcart.com at the Dixcart office, in Malta or your usual Dixcart contact.

A Review of the Residency Routes Available in Malta

Background

Malta, without doubt, is one of the countries with the greatest number of residency routes; there is a programme for everyone.

Located in the Mediterranean, just south of Sicily, Malta offers all of the advantages of being a full member of the EU and Schengen Member States, has English as one of its two official languages, and a climate many chase all year round. Malta is also very well connected with several international airlines, including: British Airways, Lufthansa, Emirates, Qatar, Turkish Airlines, Ryanair, EasyJet, WizzAir and Swiss, which fly into and out of Malta almost daily.

Its location in the centre of the Mediterranean has historically given it great strategic importance as a naval base, with a succession of powers having contested and ruled the islands. Most of the foreign influences have left some sort of mark on the country’s ancient history.

Malta’s economy has enjoyed large growth since joining the EU and the forward thinking Government actively encourages new business sectors and technologies.

Malta Residence Programmes

Malta is unique in that it offers nine residence programmes to meet different individual circumstances.

Some are appropriate for non-EU individuals, whilst others provide an incentive for EU residents to move to Malta.

These programmes include those offering individuals a fast and efficient way to obtain a European permanent residence permit and visa-free travel within the Schengen Area, as well as another programme designed for third country nationals to legally reside in Malta but maintain their current job remotely. An additional regime is targeted towards professionals earning over a certain amount each year and offering a flat tax of 15%, and finally, there is a programme for those who have retired.

  • It should be noted that none of the Malta residence programmes have  language test requirements.

The Nine Malta Residence Programmes

Here is a quick breakdown:

  • Malta Permanent Residence Programme – open to all third country, non-EEA, and non-Swiss nationals with a stable income and sufficient financial resources.
  • Malta Start-Up Programme – this new visa allows non-European nationals to relocate and live in Malta, by establishing an innovative start-up. founders and/or co-founders of the start-up can apply for a 3-year residency permit, together with their immediate family, and the company to apply for 4 additional permits for Key Employees.  
  • Malta Residence Programme – available to EU, EEA, and Swiss nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000.
  • Malta Global Residence Programme – available to non-EU nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000.
  • Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment – a residence programme for foreign individuals and their families who contribute to the economic development of Malta, which can lead to citizenship.
  • Malta Key Employee Initiative – a fast-track work permit application programme, applicable to managerial and/or highly-technical professionals with relevant qualifications or adequate experience relating to a specific job.
  • The Malta Highly Qualified Persons Programme – available to EU nationals for 5 years (may be renewed up to 2 times, 15 years in total), and non-EU nationals for 4 years (may be renewed up to 2 times, 12 years in total). This programme is targeted at professional individuals earning more than €81,457 per annum and seeking to work in Malta in certain industries.
  • Qualifying Employment in Innovation & Creativity Scheme – targeted towards professional individuals earning over €52,000 per annum and employed in Malta on a contractual basis at a qualifying employer.
  • Digital Nomad Residence Permit – targeted at individuals who wish to maintain their current job in another country, but legally reside in Malta and work remotely.
  • Malta Retirement Programme – available to individuals whose main source of income is their pensions, paying an annual minimum tax of €7,500.

The Remittance Basis of Taxation

To make life even more enjoyable, Malta offers tax benefit to expatriates on some of the residence programme such as the Remittance Basis of Taxation

Individuals on the certain residence programmes in Malta that are resident non-domiciled individual is only taxed on Malta source income and certain gains arising in Malta. They are not taxed on non-Malta source income not remitted to Malta and are not taxed on capital gains, even if this income is remitted to Malta.

Additional Information and Assistance

Dixcart can assist in providing advice as to which programme would be most appropriate for each individual or family.

We can also; organise visits to Malta, make the application for the relevant Maltese residence programme, assist with property searches and purchases, and provide a comprehensive range of individual and professional commercial services once relocation has taken place.

For further information about moving to Malta please contact Henno Kotze:

advice.malta@dixcart.com.

Pre Initial Public Offering (IPO) Planning and Trusts

Trust structures are generally associated with estate and succession planning for private client engagements, because of the advantages and safeguards that a well-structured trust can provide. Trusts, however, can also play an important role within corporate transactions. Consider initial public offering (IPO) planning and Trusts, for the major shareholders (founders) of a company, that are looking to take their company public.

Use of a Trust as Part of Corporate Processes

Careful pre-IPO Trust planning can provide the founders with a number of benefits in respect of their shareholding in the company to be listed (‘List Co’), and may also be used to create employee incentive schemes to reward, motivate and retain employees during and after the IPO process.

Chart of Parties Involved in an IPO Trust Structure:

Founders, the Family and an IPO Trust

Whether the founders are considering a company listing to generate capital or alternatively as an exit strategy, family circumstances are often overlooked, and these can play a pivotal role in the success of a listing.

Before the List Co is listed, it is often the case that the company founder owns a substantial holding of the shares in the List Co through a holding company (Hold Co). By creating a pre-IPO Trust, the founder can transfer all of his/her shares in the Hold Co to the Trustee, and the Trustee then indirectly holds shares in the List Co though the Hold Co, for the benefit of the beneficiaries of the Trust.

Purpose and Benefits

A pre-IPO Trust provides a wide range of benefits, including:

– continuing security without the distraction of hostile bidders, activist shareholders or adverse media;

– risk impact protection (potential mitigation from adverse events such as divorce, incapacity or death);

– concentrated shareholding remains under the control of the Trustee, in the event of the death of the founder. This is compared to the potential dilution of holdings to several family members though the administration of the estate after death;

– family wealth and succession planning;

– potential mitigation of probate costs and issues;

– privacy, irrespective of the number of family members or changes from one generation of beneficiaries to the next;

– potential tax mitigation depending on the jurisdiction of the Trust, the situs of the assets held and the residence and domicile of the beneficiaries.

Employee Benefit IPO Trusts (EBT)

Another important aspect of trust arrangements in IPO planning is the establishment of a trust for the benefit of employees. Although employee benefit or incentive structures can be designed in a variety of ways, many of them are provided through discretionary trusts.

Where the company establishing the structure and settling the assets into the Trust is the settlor, the beneficiaries of the trust may comprise current and future employees of the settlor company.

The rationale for establishing an EBT as part of the IPO process is to hold shares in the newly listed entity and for those shares to subsequently be used to provide efficient incentives for staff.

Purpose and Benefits in relation to Staff

The benefits of establishing an EBT include:

– hold founding IPO stake for the benefit of the management;

– short, medium and long term buy-in and incentivisation of key staff;

– opportunity to offer stakeholder incentivisation to a wide staff base;

– potential protection from the demands of creditors, in the event of a liquidation.

Governing Law of the IPO Trust

When choosing the governing law for the trust, consideration should be given to a jurisdiction which is politically stable and has a well-established legal system, sophisticated and modern trust legislation and offers a low tax regime.

The jurisdiction of Guernsey fulfils these criteria and would be a sound choice for the establishment of pre-IPO Trusts. 

Choice of Trustee

The trustee has responsibility for administering the Trust and determining the amount and timing of distributions, in accordance with the terms of the Trust Deed. Selecting a capable and experienced Trustee is therefore critical.

Why Choose Dixcart in Guernsey as Trustee?

Dixcart Trust Corporation Limited (“Dixcart”), has over 45 years of expertise and experience in the provision of professional trustee and corporate management services.

Dixcart can provide both listing support services and outsourced professional company secretarial services for listed companies and are in a position to assist with supporting both the wider pre and post-IPO processes.

The Dixcart Group remains privately owned and fully independent. Clients benefit from long-term continuity and stability of relationships, and high standards of professional care.

Further Information

For further information on this subject please contact the Dixcart office in Guernseyadvice.guernsey@dixcart.com, or your usual Dixcart contact.

Dixcart Trust Corporation Limited, Guernsey: Full Fiduciary Licence granted by the Guernsey Financial Services Commission. Guernsey registered company number: 6512.