Cyprus as a Gateway for Indian Cross Border Transactions

Introduction

Cyprus and India have long maintained close and friendly bilateral relations, progressively strengthening their economic, scientific, and technical cooperation.

On 18 November 2016, Cyprus and India signed a revised agreement for the avoidance of double taxation and prevention of fiscal evasion concerning taxes on income (Double Taxation Treaty “DTT”), replacing the previous DTT established in 1994.

With minor adjustments, the DTT agreement aligns closely with the OECD Model Convention for the Avoidance of Double Taxation on Income and on Capital.

Advantages of the Cyprus Corporate Tax Regime

Provided a company meets the economic substance requirements and is considered a tax resident in Cyprus then they will enjoy the favourable corporate tax regime on offer. Some of the many benefits a Cyprus company can enjoy include:

  • Corporate tax rate of 12.5%, one of the lowest in Europe. Thiscan be lowered to 2.5% through the use of the Notional Interest Deduction (NID). Please see our detailed article on the NID here.
  • Inbound dividends are not taxable (subject to conditions), and there are also no capital gains tax on the sale of securities and disposal of shares.
  • The revised treaty assigns taxing rights to the source country for capital gains from the alienation of shares. Gains from shares acquired before 1 April 2017 are taxable only in the seller’s country of residence, while gains from shares acquired on or after 1 April 2017 may be taxed by the source country.
  • There is no withholding tax on dividends, interest, and royalties paid from Cyprus, provided the royalty rights were exercised outside Cyprus.
  • The following are the maximum withholding tax (WHT) rates on inbound payments from Cyprus to India under the treaty (subject to possible lower rates or exemptions under domestic law provisions):
    • Dividends: 10%
    • Interest: 0%*/10%
      • NIL, if the beneficial owner of the interest is the Government, a political subdivision, a local authority of the other Contracting State, or specified financial institutions such as the Reserve Bank of India.
    • Royalties: 10%
      • A WHT rate of 10% also applies for payments of a technical, managerial, or consulting nature.
  • Cyprus has a vast network of Double Tax Treaties (DTTs) aimed at preventing double taxation.

Cyprus Holding Company

As a result of the above, Cyprus companies can be effective holding entities for Indian companies involved in international cross-border transactions. A Cyprus company can own 100% of an Indian company engaging in various investments. From a Cyprus perspective, no participation or holding requirements are necessary to obtain tax benefits. Incoming dividends from India are exempt from Cyprus corporation tax and will also be exempt from Special Defence Contribution (SDC) at a rate of 17%, provided that:

  • The Indian company paying the dividend engages directly or indirectly in more than 50% of activities generating non-investment income, or
  • The Indian tax burden on the income of the paying company is not significantly lower than the Cyprus tax burden (defined as less than 50% of Cyprus’s corporate tax rate, i.e., lower than 6.25%).

Additionally, a Cyprus entity can be used as an intermediary for channelling foreign direct investments (FDIs) into India or other countries or can be used to accumulate group profits which can be reinvested without triggering additional tax liabilities.

How Can Dixcart help?

For over 50 years, Dixcart has been a trusted partner, assisting clients with international structuring, company incorporation, and management. Our extensive local expertise and dedicated team have established us as leaders in the field.

We are committed to guiding you through every stage of the process, from setting up and registering a Cyprus company to providing management, accounting services, and fully serviced office space. Dixcart Cyprus is your comprehensive solution for incorporating a Cyprus entity and maximising the advantages it offers.

Our team will support you in gathering and organising all necessary documents while ensuring full compliance with local and international regulations. We will liaise directly with governing bodies on your behalf to streamline the process and safeguard regulatory adherence.

If you would like to explore the benefits of establishing a Cyprus company or have any questions about our services, please contact Dixcart Cyprus for further information at: advice.cyprus@dixcart.com.

Effective First Steps Towards Establishing a Company in Switzerland

The jurisdiction of Switzerland offers numerous advantages.

Based in the heart of Europe, it has a long tradition as an internationally respected finance and banking hub. It is renowned as a centre for private wealth.

The Challenge

Switzerland is considered a top level jurisdiction, in terms of international standards.

This has an impact on the establishment and management of companies, as much as it affects other areas of life in Switzerland.

  • We are often asked by clients, if there might be an alternative, a first step towards setting up a company in Switzerland.

The answer is yes.

The Solutions

Non-Swiss companies often need Swiss based employees, particularly when they are expanding into the Swiss market for the first time. Quite often this is to carry out a business development role, but there are many other situations when a Swiss employee or employees are needed.

Frequently, a local representative is needed in Switzerland, but it might be a little early to establish a Swiss company.

Two Options

There are two options:

  • The non-Swiss company directly hires the employees and Dixcart Switzerland represents the company;

OR

  • Dixcart Switzerland opens a branch, in Switzerland, for the non-Swiss company and runs the branch. This offers the advantage of providing more substance in Switzerland.

What Advice and Support can Dixcart in Switzerland Provide?

We can provide advice as to the best solution to meet the particular circumstances and can help generate an effective business plan. In addition we can provide day to day administrative services to ensure the smooth running of this first step into the Swiss market.

Dixcart Switzerland services include:

  • Bookkeeping
  • Business plans
  • Payroll
  • Preparation of annual accounts
  • Preparation of annual returns
  • Swiss insurance expertise
  • Swiss social security expertise
  • Value added tax reporting and payment (VAT)

Payroll Services

Specific services in relation to the payroll function include:

  • Salary calculations
  • Social security calculations and payments
  • Payroll tax calculations and payments

Serviced Offices

Serviced offices are available in the same premises as Dixcart Switzerland. Desks with internet connection, are used by serviced office clients, with telephone lines and secretarial support available, if required.

What Additional Support is Available – When a Company is Established in Switzerland?

If the business in Switzerland expands and it becomes viable and beneficial to establish a Swiss company, Dixcart Switzerland can assist with:

  • Accounting

Working with clients at every stage of their business life cycle, we are able to set up the complete internal finance function, if required. 

  • Management Accounts

Dixcart frequently provide management accounts for a large variety of different companies. These can be generated monthly, quarterly or annually, to help make running the company as efficient as possible.

  • Provision of Directors

A number of the companies that Dixcart manage have a Dixcart professional on their Board of Directors. The technical professional expertise, impartial perspective and extensive experience at director level  that a Dixcart director can provide, is often of substantial benefit.

Additional Information

If you would like additional information regarding the first steps towards setting up a company in Switzerland, please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

Redomiciling Your Company to the Isle of Man

Global mobility and the portability of Corporate Structures has become increasingly important to Clients and their Advisers, who often move corporate entities from one jurisdiction to another. A prerequisite to Redomiciliation is that both the jurisdiction of incorporation, and the new jurisdiction where the Company will continue, both make provision for this in their Company Law. Like many international financial centres, the Isle of Man’s Companies Acts enable Redomiciliation.

What Effect Does Redomiciliation Have on the Company?

The continuance of a Foreign Company in the Isle of Man does not create a new legal entity or prejudice or affect the continuity of that company, its assets, liabilities, and obligations.

If the Company undertakes a licensable activity, such as Banking, Insurance, E-gaming etc. it will need to contact the corresponding Regulatory Authority or Licensing Body to ensure that there are no issues.

Consideration must also be given to the name of the continuing company, ensuring that it complies with the relevant Companies Acts and any restricted words and phrases where prior permission will need to be sought, as detailed by the guidance provided by the Isle of Man Companies Registry.

Why are Companies Redomiciled?

Redomiciliation is carried out for a wide variety of reasons, which can include:

  • The facilitation of operational efficiencies.
  • To undertake restructuring.
  • Moving to a reputable jurisdiction to provide comfort to investors, lenders, and banking institutions.
  • To benefit from political and economic stability.
  • To change Trust & Corporate Service Provider for better service.

You can read more about the benefits of Isle of Man Companies here.

Why Redomicile Your Company to the Isle of Man?

The Isle of Man is a leading international financial hub that is globally recognised as well regulated and a reputable jurisdiction to do business from.

Those Foreign companies seeking to Redomicile to the Isle of Man have a choice of Companies Acts to register under – the more traditional Companies Act 1931, or the streamlined Companies Act 2006 – which provides a large degree of flexibility.

Once Redomiciled, the company can benefit from the Island’s tax regime, boasting rates such as 0% Corporate Tax, 0% Capital Gains Tax and no Withholding Tax on Dividends.

The Island is politically neutral and business friendly, meaning that the legislative environment is reliable and enduring, particularly as the Isle of Man makes its own laws. In addition, whilst the Case Law of England & Wales is persuasive, it is not binding.

The Isle of Man’s credit strength, diverse economy and ability to comply with global tax standards are all reflected in its Moody’s Credit Rating of Aa3 Stable, per their 01 November 2023 assessment.

How Can Dixcart Assist with Your Redomiciliation?

Dixcart Management (IOM) Limited is Licensed and Regulated in the Isle of Man to deliver Trust & Corporate services and has been in operation since 1989.

Our expert team of qualified professionals has been developed to administer clients’ Isle of Man Companies, Trusts and Foundations to an exceptional standard, delivering a tailored and dedicated service.

You can read more about how our Isle of Man office can support your Corporate Structuring here.

Contact Us

If you are considering Redomiciling your company to the Isle of Man or changing service provider, get in touch with Paul Harvey at Dixcart: advice.iom@dixcart.com

Dixcart Management (IOM) Limited is Licensed by the Isle of Man Financial Service Authority

Exciting Changes to the Cyprus Startup Visa Scheme and New Opportunities for Global Entrepreneurs

Introduction

At the end of 2024 a number of revisions to the existing Cyprus Startup Visa Scheme were approved. These changes make an already very attractive scheme more appealing and accessible.

Overview of the Scheme

The Cyprus Startup Visa Scheme allows talented entrepreneurs from non-EU and non-EEA countries, whether individuals or a team, to enter, reside and work in Cyprus while establishing, operating, or growing a high-potential Startup. The aim of the scheme is to create new job opportunities in Cyprus, promote innovation and research, grow the business ecosystem and consequently the overall economic development of the country.

For the purposes of the Scheme, Innovative Startups are defined as unlisted small enterprises registered within the last 5 years, with no profit distribution and have not been formed through a merger. The enterprise should develop or offer new products, services, or processes that create or disrupt markets. Such innovations are based on new technologies, should adapt existing technologies, and/or employ new business models.

Beneficiaries of the Scheme are categorised under either the ‘Individual Startup visa scheme’ or under the ‘Team Startup visa scheme’.  A team is considered as “a maximum of 5 individuals consisting of non-EU country nationals”. The Team should consist solely of the founders of an innovative Startup or of at least one founder and other senior executives. In both the Individual and the Team Startup visa scheme at least 25% of the company’s shares should be owned by one or more member(s) of the applicant or team of applicants.

What has Changed?

The revisions to the Cyprus Startup Visa Scheme include:

  • An extension to the residence permit offered to successful applicants from 2 to 3 years, with a possibility of 2-year renewals, instead of the original renewal for 1 year;
  • A reduction to the required percentage of equity third country applicants must have in the Cypriot company from 50% to 25%. It is noted that a start-up group applying for this specific visa may consist of up to five founders (or one founder and additional executive members), and must have a minimum of €20,000 capital or €10,000 if the founders are less than two;
  • The ability to increase the number of third country nationals employed from 30% to 50% of the company’s entire staff, with the option of hiring additional foreign personnel if the start-up investment in Cyprus is equal to, or exceeds, €150,000;
  • The implementation of different evaluation criteria for start-ups that have sales revenues of at least €1,000,000, and whose research and development expenditure amounts to at least 10% of the total operating expenses for one of the past 3 years.

While the updated programme offers greater flexibility to foreign entrepreneurs and investors, it also establishes more distinct and objective conditions for the renewal of the start-up visa after the initial 3-year period. Specifically, start-ups wishing to renew their relevant visas will be required to demonstrate either a minimum increase of 15% in their revenues or investments of at least €150,000 during the period of their operation in Cyprus. Additionally, the companies applying for a renewal visa will be expected to have either created at least 3 new jobs in Cyprus, or participated in a local innovation support scheme, or launched at least one product or service.

Tax Benefits

With an ever-expanding double tax treaty network of approximately 70 countries across the globe, Cyprus offers a number of tax benefits to start-ups and foreign investors of such start-ups, such as:

  • A non-Cypriot individual relocating to Cyprus to set-up their startup is exempt from tax on dividends, capital gains and most types of interest income, though they will still be subject to income tax on any income earned as a salary from their employment in Cyprus.
  • Investors in innovative start-up companies (which have been certified as such by the Ministry of Finance in Cyprus) can enjoy up to 50% tax exemption on their annual taxable income in Cyprus.
  • Corporate tax on net profits of Cypriot companies is currently set at 12.5%. Technology companies producing Intellectual Property can apply for an 80% tax exemption, reducing the corporate tax rate to an effective 2.5%.
  • Capital gains arising from the disposal of the qualifying IP are fully exempt from tax. Any gains earned by the entrepreneur from the disposal of his/her shares in a Cypriot tax resident company are generally exempt from tax in Cyprus.
  • Cyprus tax resident companies may carry forward tax losses incurred during a tax year over the following 5 tax years to offset future taxable profits, allowing startups, which are commonly loss making in their early stages, to benefit in the future.
  • Upon the introduction of new equity, a Cyprus tax resident company is entitled to claim a notional interest deduction (NID) as a tax-deductible expense. The deduction is available on an annual basis and may reach up to 80% of the taxable profit generated from the new equity. Depending on the level of capitalisation, a startup company may reduce its effective tax rate to as low as 2.5%.
  • Profits from disposals of corporate ‘titles’ are tax exempted from corporate income tax. However, capital gains on immovable property situated in Cyprus (on non-quoted shares directly or indirectly holding such Cyprus-situated immovable property) are taxed.
  • Special defence contribution is imposed only on non-exempt dividend income, ‘passive’ interest income, and rental income earned by Cypriot tax resident companies and Cypriot permanent establishments of non-Cyprus tax resident companies.

How can Dixcart Cyprus Help?

With over 50 years of expertise in the industry, we bring a deep understanding of supporting individuals, families, and businesses. Our teams combine extensive knowledge of the local regulatory framework with the global reach, resources and expertise of our international group, ensuring we deliver tailored solutions that perfectly meet your needs.

At Dixcart, we recognise that every client is unique, and we pride ourselves on offering personalised services. By working closely with you, we gain an in-depth understanding of your specific requirements, enabling us to provide bespoke solutions, recommend the most suitable structures, and support you every step of the way.

Our comprehensive range of services include company incorporation, management and accounting services, company secretarial support, and even providing a fully serviced office for your Cypriot company.

If you are considering how Cyprus can play a role in managing your wealth or business needs, we would be delighted to discuss your options. Please do not hesitate to contact us at advice.cyprus@dixcart.com.

2024 Overview: Key Articles and Insights from Dixcart Switzerland

Introduction

As we approach the end of 2024, we reflect on the key articles shared by our Switzerland office this year. Below are concise summaries of Dixcart Switzerland’s 2024 articles, offering practical guidance on Swiss residency, trusts, and business opportunities.

1. Swiss Regulation: 2023 Overview and What to Expect in 2024
Key regulatory updates for 2024 include VAT rate increases, a 15% minimum corporate tax for multinationals, and the removal of import duties to boost economic competitiveness. Reflections on 2023 cover the Swiss-UK financial treaty, updates to the Federal Act on Data Protection, corporate law reforms, and enhanced anti-money laundering measures.

2. Setting Up a Business in Switzerland
Comprehensive guidance on starting a business in Switzerland, including legal structures such as sole proprietorships, partnerships, and limited liability companies. Highlights include essential steps for registration, tax implications, and adherence to employment regulations.

3. Dixcart Gains Regulated Trustee Status in Switzerland – Understanding the Significance
Dixcart Trustees Switzerland (SA) attained regulated trustee status from FINMA, aligning with Swiss structural and business-conduct standards. Key advantages of Swiss trusts include confidentiality, tax efficiency, and enhanced wealth preservation opportunities.

4. The Role of a Swiss Trustee: Exploring How and Why They are Beneficial
Swiss Trustees play a pivotal role in estate planning, wealth management, and asset protection. Switzerland’s central location, leading banking infrastructure, and strong commitment to confidentiality make it an ideal jurisdiction for trustee services.

5. How to Become Swiss Resident by Working in Switzerland
Switzerland provides several routes to residency through work, including employment with a Swiss company, forming a business, or investing in one. EU/EFTA nationals benefit from easier processes, while non-EU/EFTA nationals have stricter requirements. Taxation differs by canton, and contributions through business activities often benefit local economies.

6. Introduction of Swiss Trusts
Swiss Trusts and Private Trust Companies (PTCs) offer secure asset protection, confidentiality, and succession planning options. Trusts under foreign laws are recognised in Switzerland, and taxation depends on the residency of the settlor and beneficiaries. FINMA-regulated Trustees uphold strict confidentiality and compliance standards.

7. Guide to Establishing and Managing a Swiss Company
Switzerland is an attractive location for businesses, offering low tax rates, political stability, and a prime European location. Incorporation typically takes three weeks, with options like SARL or SA structures. Flexible labour laws, VAT compliance, and favourable tax treatment for dividends and capital gains strengthen the benefits of operating in Switzerland.

Additional Information

For additional details on any of these topics or assistance with related services, please contact Christine Breitler at our Switzerland office: advice.switzerland@dixcart.com.

Malta Tech Startups

Malta: A Rising Hub for Tech and Innovation Startups

In recent years, Malta has become an increasingly popular destination for startups, particularly in tech, fintech, blockchain, gaming, and iGaming sectors. The island nation offers EU Membership, a business-friendly environment, strategic location, and strong government support, making it an attractive option for entrepreneurs looking to establish and scale their businesses.

A survey carried out by the Europe Startup Nations Alliance (ESNA) across 21 EU countries ranked Malta as the 4th best destination for innovative startups. Events and meetups are increasingly common, fostering connections with investors, mentors, and other entrepreneurs. Malta’s blend of business advantages, strategic positioning, and lifestyle benefits creates a conducive environment for startups to launch and scale successfully.

Why Malta?

As a member of the European Union (EU), Malta provides startups with seamless access to the single European market, which encompasses over 450 million consumers across 27 member states. Also, the EU’s single market policies help reduce costs and simplify logistics, allowing startups to expand rapidly into new regions.

Malta’s strategic location in the middle of the Mediterranean makes it the ideal gateway to access the African market. With English as one of the official languages, foreign entrepreneurs can easily navigate the country’s legal and business landscapes. Malta offers a mix of local talent and international professionals attracted by Malta’s quality of life. The island also encourages collaboration between innovative companies and the University, with the aim of boosting knowledge transfer and tailoring the offering of the education system with the needs of the jobs market.

Government Support to the Startup Ecosystem

Malta Enterprise, the Government agency tasked with attracting new foreign direct investment, has contributed to the development of a vibrant, engaging and talented startup community. The Startup Festival is now a yearly event for start-ups to exhibit their products and services, where attendees can engage directly with cutting-edge technology and innovative products. Malta Enterprise also offers a wide range of incentives not only to attract innovative startups to the island, but also ensuring that those that are already in Malta have the support needed to grow. For more information on incentives available in Malta, please read the article Supercharge your Company in Malta – A Guide to the Support Measures Available for Businesses.

In recent years, the startup ecosystem saw a significant increase in companies offering tech solutions in sectors such as Fintech (Malta is now home to many Electronic Money Institutions and Payment Solution Providers); Blockchain (not only related to cryptocurrencies, even though it should be underlined that Malta was the first country to adopt legislation to regulate Virtual Financial Assets), and Artificial Intelligence (with applications on many industries such as Tourism, Compliance and Medicine).

Attractive Conditions for Founders and Key Employees

The presence in Malta of incubators and accelerator programmes, such as Supercharger Ventures or the Visa Innovation Programme, are a testament to the progress that the jurisdiction has made over recent years to establish itself as a European Startup Hub.

Malta offers a wide array of favourable conditions to founders, co-founders and other key employees of the startup. These measures include attractive income tax, particular residency programmes and fast-track work permits. We have previously covered the Key Employee Initiative in detail.

How Dixcart Can Assist

The Dixcart office in Malta can assist startup founders since their very first steps on the island and for their entire journey in Malta. For further information, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

Cyprus: A Year in Summary – Private Wealth, Business, and Taxation in 2024

Introduction

Throughout 2024, we have shared various articles explaining and highlighting the benefits and routes available to those moving to Cyprus. We have also covered the corporate benefits and the required parameters for establishing a company in Cyprus.

In our final article for 2024, we highlight the key information from the last 12 months, with additional links for those looking for more detail. 

Individuals

Cyprus Tax Residency for Individuals

Cyprus tax residency rules are simple, there are only two rules. The 183-day rule and the 60-day rule. The 60-day rule means you could be considered tax resident after spending only 60 days in Cyprus each year, subject to further conditions.

It is also possible to receive a government issued tax residency certificate to provide to other jurisdictions to evidence your tax residency if required.

The Cyprus Non-Dom Regime

Cyprus has a very competitive Non-Domicile Regime which taxes an individual on their worldwide income at special rates. This means individuals can remit their income to Cyprus and use it, rather than keeping it ringfenced in a separate jurisdiction.

The special rates include 0% income tax on most Dividends, Interest, Capital Gains and Royalties. On top of this there is also no wealth or inheritance tax in Cyprus.

The Non-Dom Regime is available for 17 years in the first 20 years of tax residency and does not have a cost of participation like many others from across Europe.

Moving to Cyprus

There are a number of routes to gain residency in Cyprus, but they can be broken down into routes for EU and EEA nationals and routes for non-EU and EEA nationals, otherwise known as 3rd country nationals.

The route for EU and EEA nationals is simple. Due to EU directives, any EU and EEA national has the right to live and work in Cyprus, which is a member state of the EU. This means that the process is fast and straightforward and comes down to providing evidence to show that you will not become “a burden on the social security system of the Republic of Cyprus”.

For 3rd country nationals there are a number of options but the most common of them is through establishing a Foreign Interest Company (FIC) or through Permanent Residency by Investment (PRP). These both have individual specific advantages and requirements but the most notable is the right to work. Under the FIC method, 3rd country nationals have a residence and work permit, whereas under the PRP they do not have the right to undertake any form of employment within Cyprus.

Corporates

The Cyprus Corporate Tax Regime

Provided that a company has sufficient Economic Substance in Cyprus, it is considered Cyprus Tax Resident, and as a result can make the most of the fantastic Corporate Tax Regime available.

Some of these benefits include 0% Corporation tax on most Dividends, Interest, Capital Gains and Royalties as well as a standard rate of 12.5% corporation tax on revenues, which can be reduced to as little as 2.5% if your company is eligible to apply the Notional Interest Deduction (NID).

There are also no Withholding Taxes in Cyprus and over 60 double tax treaties making disbursing funds and receiving funds highly tax efficient.

The above benefits make Cyprus the perfect place for a Holding Company or a Family office, as it is a fantastic place to manage your investments from.

How Can Dixcart Cyprus help?

With over 50 years of experience in the sector, we have a wealth of knowledge in assisting families, and our teams offer in-depth expert knowledge on the local regulatory framework along with the backing of our international group of offices to help us find the perfect solution for you.

At Dixcart we know that every individual’s needs are different, and we treat them as such. We work very closely with our clients and have an in-depth understanding of their needs. This means we can offer the most bespoke services possible, propose the most appropriate structures, and support your specific requirements every step of the way.

We offer services raging all the way from company incorporation, Management and accounting services, and company secretarial services all the way to providing a serviced office for your Cypriot company.

Get In Touch

If you are interested in discussing your options and how using Cyprus to manage your wealth could help you, please contact us. We will be happy to answer any questions you have and assist in any way we can: advice.cyprus@dixcart.com.

Guide to Establishing and Managing a Swiss Company

Switzerland stands out as an ideal location for setting up a business, due to its economic and political stability, favourable tax rates, and central European location.

This article provides an overview of the essential steps involved in forming, operating, and, if necessary, dissolving a Swiss company.

Incorporating a Swiss Company

Choosing a Legal Structure

When establishing a business in Switzerland, entrepreneurs have several options:

  • Sole Proprietor: Owned by one individual who is personally liable.
  • Limited Liability Company (SARL/GmbH). Minimum share capital CHF 20,000 and partner(s) names are publicly disclosed.  
  • Limited Company (SA/AG). Minimum share capital CHF 100,000, with shareholder names kept private.
  • Branch: An extension of a foreign company that adheres to Swiss regulations with no initial capital requirement.

Selecting the appropriate structure depends on factors such as business scale, liability preferences, and taxation.

Key Steps in Incorporation

Setting up a Swiss company generally involves:

  1. Selecting and registering a unique business name.
  2. Opening a Swiss transitory bank account to deposit share capital.
  3. Preparing essential legal documentation.
  4. Holding a founders’ meeting with a public notary.
  5. Registering the company with the commercial register and tax authorities.
  6. Ensuring at least one director resides in Switzerland.

The entire process takes approximately three weeks.

Operational and Day to day Support

Accounting & Audit

Companies must maintain accurate financial records and comply with Swiss accounting standards. A statutory audit is required if specific thresholds are met, which are relatively high

Taxation

Corporate tax rates vary between 12% to 14% in most regions. Additional tax considerations include:

  • Value Added Tax (VAT): Mandatory registration for businesses earning over CHF 100,000 annually.
  • Dividend Withholding Tax: Eliminated or reduced between 5% and 15% for EU and treaty-based jurisdictions.
  • Zero tax regime for capital gains and dividend income.
Employment Regulations

Swiss labour laws emphasise flexibility and protection. Employment contracts should be detailed, and foreign employees require work permits. Additionally, while there is no national minimum wage, certain regions implement wage regulations.

Administrative Services

For smooth day-to-day operations, comprehensive administrative support is available. This includes:

  • Bookkeeping and Payroll Services
  • Business Plan Development
  • Management Accounts: Prepared monthly, quarterly, or annually, to aid strategic decision-making.
  • Regulatory Compliance: Expertise in Swiss insurance, social security, VAT and anti-money laundering (AML) reporting.

Liquidation and Company Dissolution

If the time comes to dissolve a Swiss company, the process must be carefully managed. The steps include settling all liabilities, distributing remaining assets to shareholders, and deregistering from the commercial register. Proper management throughout the liquidation phase is important to ensure all legal and financial obligations are met.

Additional Information

If you require additional information relating to Swiss companies and the advantages they can offer, please speak to Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

Equity Incentive Plans

Unlocking Growth: How Equity Incentive Plans Drive Success in Growing Corporations

Equity incentive plans have grown in popularity in recent years as they provide a fantastic mechanism for motivating employees, retaining talent and aligning the interests of the workforce and Shareholders. While these plans are particularly beneficial for global corporations with a dispersed workforce, they are equally effective for larger companies seeking to incentivise employees and drive long-term success.

This guide provides an overview of equity incentive planning, exploring how such plans can be structured and managed to meet the needs of large businesses, regardless of their geographical scope.

Understanding Equity Incentive Plans

Equity incentive plans are designed to offer employees shares or share options as part of their compensation package. Early plans were used by publicly listed companies to reward executives through Long-Term Incentive Plans (LTIPs).

In more recent times, the data shows that the scope of such incentive schemes has expanded not only to unlisted companies but are also increasingly established for the benefit of the wider workforce. Equity incentive plans are now widely adopted by private companies across various industries.

The core objective of equity incentive plans is to attract and retain talent while incentivising behaviours that contribute to the sustainable growth of the business. By granting employees a stake in the company, these plans foster a sense of ownership, aligning employee actions with the long-term goals of the organisation.

Key Benefits of Equity Incentive Plans

Alignment of Interests

Offering equity ensures that employees’ interests are closely aligned with those of shareholders, encouraging decisions and actions that enhance the company’s value and long-term profitability.

Talent Acquisition & Retention

Equity-based compensation is a compelling component of a competitive remuneration package, helping companies to attract high-calibre professionals. Conversely, not providing equity incentives can make securing the best team more difficult and place a premium on other elements of the remuneration package. Employees with a vested interest in the company’s success are also more likely to stay, supporting succession planning and business continuity. Therefore, equity incentives can form an important part of the businesses long-term strategy.

Culture & Values

Equity incentives can be strategically used to shape corporate culture by promoting behaviours that align with the company’s values and long-term objectives, such as innovation, collaboration, sustainability and risk tolerances. In this way, the business can ensure that only behaviour and actions aligned with the agreed strategy are rewarded accordingly.

Structuring Equity Incentive Plans

To facilitate equity incentives, companies can choose from a variety of structures. Two common structures utilised to manage the transference and administration of equity are Employee Benefit Trusts (EBTs) or Employee Ownership Trusts (EOTs).

EOTs are a unique type of EBT and a method of transferring more than 50% of the company’s ownership to all eligible employees. This vehicle has a more niche appeal and as such, we will not cover EOTs here – although we have produced a comprehensive article on EOTs for your review if you would like to learn more.

Other types of EBT can also have complex rules but allow for more flexibility than EOTs. For example, in terms of the amount and types of shares made available. Therefore, EBTs have a more universal appeal when it comes to establishing an equity incentive plan.

The Role of Employee Benefit Trusts (EBTs)

An Employee Benefit Trust (EBT) is established by a company to manage and provide various benefits to its employees. These benefits can include share options or awards, but also bonuses, pensions, and other incentives aimed at improving employee welfare and aligning their interests with those of the company. For our purposes, we will purely focus on EBTs used for equity incentive arrangements.

EBTs are particularly advantageous for companies that want to offer equity incentives across various employee levels, from executives to the wider workforce.

EBTs are typically structured through Discretionary Trusts, which allow companies to customise the allocation of benefits, ensuring they align with the broader strategic goals of the business. The Trustees hold the shares on behalf of the Beneficiaries, managing the joiners and leavers buying and selling their interests. The rules governing the equity incentive plan are typically outlined in a combination of the Trust Deed and various agreements and/or policies, e.g. employment contracts, share agreements, or specific equity incentive plan rules.

EBTs can also hold and manage (or ‘warehouse’) unallocated shares, which can be used to support future vesting events, such as restructuring efforts, or preparations for a public listing.

Choosing the Right Trustee for Your EBT

When setting up an EBT, companies must decide whether to appoint Lay Trustees—who are typically internal stakeholders such as directors or employees—or Professional Trustees, who are external Trust management experts.

Lay Trustees

Internal Trustees can bring valuable insights into the company’s operations but may face challenges such as conflicts of interest and a lack of Trust governance expertise. Balancing their primary responsibilities with their Trustee duties can also lead to inefficiencies.

Professional Trustees

Professional Trustees offer independence, objectivity, and specialised knowledge in Trust governance and regulatory compliance. By focusing exclusively on Trust management, they eliminate potential conflicts of interest and ensure that the EBT is administered in the best interest of the Beneficiaries.

Why Choose an Isle of Man Professional Trustee?

The Isle of Man is a globally recognised financial centre, known for its robust regulatory environment and stability. This makes it an ideal jurisdiction for managing complex Trust arrangements like EBTs. Trustees must be licensed under the Isle of Man Financial Services Authority and adhere to high standards, ensuring that your EBT is managed with the utmost professionalism and compliance.

How Dixcart Can Support Your Equity Incentive Plan

With over 35 years of experience in managing complex Trust arrangements and employee share ownership structures, Dixcart is well-positioned to assist growing companies in implementing effective equity incentive plans. Our team in the Isle of Man offers tailored Trustee services that align with your business’s long-term objectives, enhancing your incentive strategies and supporting their success.

Get in Touch

For more information on how Dixcart’s Professional Trustee services can enhance your equity incentive planning, please contact Paul Harvey at Dixcart: advice.iom@dixcart.com.

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

Company in Malta

Supercharge your Company in Malta – A Guide to the Support Measures Available for Businesses

While many are aware of the fact that Malta offers a pleasant climate, a charming lifestyle, a business-friendly environment and an attractive tax regime, fewer are aware that eligible businesses might benefit from a suite of financial incentives to further enhance their offering, which positions Malta as an appealing destination for many companies. This article will explore the various support measures available for Maltese businesses in detail.

Organisations offering Support to Companies

Malta Enterprise

Malta Enterprise is the Maltese Government agency tasked with economic development. They offer the following support measures:

  • Startup Finance targets startups that have not yet distributed profits and provides assistance through repayable advances (interest rate set at 2% plus ECB rate) of up to €1 million for innovative startups. Assistance may be used to cover payroll costs, tangible and intangible assets, procurement of materials and specialised technical services.
  • The R&D Grant aims to boost Industrial Research and Experimental Development by providing financial assistance in the form of cash grants and/or tax credits. It is available to Limited Liability Companies (LLCs), partnerships, and cooperatives and provides 25% of eligible expenditure for experimental development and 50% of eligible costs for industrial research.
  • Micro Invest providestax credits to start-ups, family businesses, and self-employed individuals to innovate and drive economic development.

The assistance is in the form of tax credits ranging from 45% to 65% of eligible expenditure, capped at €50,000 over three years. Eligible expenditures include increase in wage costs that exceed 3%, expenses related to furbishing, refurbishing, and upgrading of Business Premises, investment costs, acquisition of motor vehicles and certification costs incurred for attaining certifications relevant to their business.

  • The Business Development incentive supports the setting up of new ventures, businesses expansions, environmental activities and employment of workers with disabilities. Assistance  is in the form of grants, cash assistance, and tax credits up to €300,000 per single undertaking over a rolling period of three years, capped at 75% of the costs approved.

Fondi.eu

Fondi.eu is a Maltese Government initiative aimed at managing the EU funds available, while ensuring maximum transparency and information in relation to the funds.

  • Digitalise your Business is an initiative targeted to enterprises of all sizes and sectors willing to digitalise their activities. Funding is capped at €10,000 for micro businesses and €120,000 for other enterprises per digitalisation investment in digital technologies for each operation in both cases. This measure covers, among others, expenses for e-commerce websites, hardware purchases and software upgrades, digital infrastructure development, training and skill costs, consultancy services.
  • Start-up Enhance provides grants to micro and small companies to help them overcome initial financial hurdles. It covers 50% of eligible costs, along with a minimum of €10,000 and a maximum of €400,000 per operation. Expenditures on equipment, plants, and machinery, including ancillary items necessary for start-up operations, as well as expenses related to the rent of a workspace may also be eligible.
  • The Business Report for SMEs consists of a grant to help medium-sized enterprises to identify opportunities, mitigate risks, and optimise their operations. The support is a €4,000 grant to cover 80% of eligible costs (expenses related to obtaining a comprehensive business plan and conducting process and system reviews).
  • The measure SME Enhance is available in two frameworks, both of which aim at enhancing productivity and sustainability of micro and small-to-medium enterprises. Eligible expenditures are those related to equipment, plant, machinery and, in some cases, also ancillary costs. Funding can reach up to €500,000 provided that certain criteria are met.

Malta Development Bank (MDB)

The Malta Development Bank (MDB) is a project fully owned, financed and launched by the Government of Malta. It supports the following measures:

  • Guaranteed Co-lending Scheme, targeted to SMEs seeking financial assistance during economic hardship. It provides businesses with additional financing (loan with reduced interest) during economic challenges, to retain employees and invest in growth. Loans may range from €750,000 up to €10,000,000.
  • The SME Guarantee Scheme offers an easier way for SMEs to access affordable finance, simulating economic activity and fostering growth.

This support measure guarantees up to 80% of a loan, provides flexible loan amounts (from €10,000 to €750,000) and extended loan terms (to a maximum of ten years).

Almost all the above-mentioned support measures give particular importance to Gozo, Malta’s sister island. In many cases, companies located in Gozo may benefit of higher capping and/or higher aid intensity.

Dixcart in Malta

The Dixcart office in Malta has professionals that can assist your business applying for appropriate financial assistance. For further information on company incentives and how to obtain them, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

This article is intended to provide general information on company incentives available in Malta as of the publication date. Policies and regulations may evolve, and readers should seek up-to-date advice from industry experts or official resources.